Carbon pricing and route economics in the spotlight

Fancy a weekend in New York? As of mid-January 2023, KLM was offering a Berlin-Amsterdam-JFK weekend round trip at the end of January for €365 (US$397) including taxes. Long-haul flights account for 6% of flights from the European Economic Area but produce about half of the region’s CO2 emissions. And those long-haul sectors (which account for most of the emissions) are not subject to any meaningful carbon pricing. The European Union recently decided to wait until 2026 to take any decision on whether to extend the European Emissions Trading Scheme to flights outside the European Economic Area: it wants to wait to see whether ICAO’s CORSIA – the Carbon Offsetting and Reduction Scheme for International Aviation – is an effective tool to cut emissions in line with the Paris Agreement. Spoiler alert: it isn’t. The smart money is on the EU-ETS scope being extended in 2026; the tragedy is that it’s three more wasted years.
What would that mean for our cut-price visit to the Statue of Liberty? Google Flights calculates the round-trip CO2 emissions from that New York itinerary as 832kg. At a current CO2 price around €75/tonne ($82 – likely to climb in the years ahead), this would represent a surcharge of about €62 ($67) on the ticket, hardly an unreasonable price tag. Mark your calendars for 1 July 2026, the agreed deadline for the European Commission to formally decide whether the CORSIA emperor is naked.