Secret Subsidies: How the Government is gifting free money to airlines via its carbon market

(Transport and Environment, 24 Jun 2022) UK airlines were allowed to pollute for free and given subsidies via the UK’s flagship scheme to reduce carbon emissions, new study finds.

The UK government is giving airlines so many free pollution permits through the carbon market for aviation that they don’t have to pay for any of their climate-warming emissions. Airline polluters received £242 million worth of free CO2 ‘allowances’ last year [1], according to a new study by green group Transport & Environment (T&E). The UK’s carbon market is supposed to reduce carriers’ emissions under the polluter pays principle.

The 4.4 million free permits dwarfed the 3.4 million that carriers had to surrender under the UK Emissions Trading Scheme (UK ETS), the study shows. Airlines could have retained the 0.9 million excess allowances for future years or sold them back onto the UK ETS secondary market. Had these excess allowances been sold, airlines could have banked up to £72 million, the study finds. 

Matt Finch, UK director at T&E, said: “The government put in place a scheme meant to reduce aviation emissions, yet it grants get out of jail free cards. Last year was doubly absurd: airlines were allowed to pollute for free, and on top of that the Government awarded excess free allowances that the airlines could sell. That’s a gap in the public coffers needed for public services that taxpayers had to fill instead.”

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Transport and Environment, 24 Jun 2022: Secret Subsidies: How the Government is gifting free money to airlines via its carbon market