I would probably have taken little interest in yesterday’s announcement that a relatively small regional airline, flybmi, has ceased trading, if it was not for the fact they were placing the blame, in part, on the EU Emissions Trading Scheme (ETS). According to the statement on the airline’s website :
The airline has faced several difficulties, including recent spikes in fuel and carbon costs, the latter arising from the EU’s recent decision to exclude UK airlines from full participation in the Emissions Trading Scheme.
So, I wanted to find out if this was really the case.
First of all, the background. You may recall from my earlier post that the EU is facing a real challenge for its flagship ETS as a result of BREXIT. The problem is that allowances in the scheme can be traded freely between member states of the EU but if the UK leaves the scheme ahead of the current Phase (running to 2020), there is a very real risk that the now redundant UK allowances, would flood the market and so render the ETS ineffective at capping carbon emissions.