By The European Union (EU) reached a deal in the early hours of Wednesday on a law to increase the price that airlines have to pay when they emit planet-heating carbon dioxide emissions, adding pressure to the sector to shift away from fossil fuels.
To cover their carbon dioxide emissions, airlines operating flights within Europe now need to submit permits from the EU’s carbon market, however, the EU provides them with the majority of those permits for free.
The agreement reached by negotiators from the EU nations and the European Parliament is expected to modify that and phase out those free licenses by 2026.
Free licenses would be reduced by 25% in 2024 and by 50% in 2025.
As a result, airlines will be required to pay for their CO2 permits, giving them a financial incentive to reduce their pollution.
From 2024 to 2030, a reduced number of free CO2 permits (20 million) will be made available to airlines that utilize sustainable aviation fuels (SAF) to compensate them for the price gap between SAFs and significantly cheaper fossil fuel kerosene.
