Emissions Hijacking FROM TODAY'S WALL STREET JOURNAL EUROPE July 17, 2008 The mood at this week's air show in Farnborough, England, is less optimi= stic than in years past. Aerospace companies are still making deals, but= the credit crunch, high fuel prices and the ever-weaker U.S. dollar loo= m as concerns. All of which means the European Union's stubborn push to add airlines to= its CO2 emissions-trading scheme couldn't come at a worse time. The Eur= opean Parliament voted last week to require emissions permits starting i= n 2012 for all flights that land or take off in the EU -- regardless of = the airline's nationality or how much of the trip takes place in Europea= n airspace. Member-state governments are expected to approve the measure= soon. There would never be a good time for Europe's unilateral move to regulat= e other nations' airlines, which comes over the objections of nearly eve= ry other country on the planet as well as the U.N. body for civil aviati= on. So much for Europe's commitment to multilateralism. But this cowboy environmentalism isn't even necessary. Carbon trading is= supposed to encourage airlines to reduce their emissions by putting a p= rice on CO2. How would they reduce their emissions? Well, besides better= air-traffic management -- which could reduce emissions by more than 10%= but, inconveniently for politicians, would require actions by governmen= t -- they would need to buy newer, more fuel-efficient airplanes. Airlines had an incentive to do that well before oil prices started spik= ing. From 2000 to 2004, when crude cost less than $40 a barrel, fuel mad= e up about one-sixth of carriers' expenses, according to the Internation= al Air Transport Association. The industry lost money in four of those f= ive years as it recovered from the travel slump that followed the 9/11 t= errorist attacks. So cutting costs by any means, including fuel efficien= cy, was already on its radar. That much is borne out by the thousands of= commercial-aircraft orders that Boeing and Airbus recorded over the pas= t few years, many of them for new kinds of jets that guzzle less gas. Now oil prices are closer to $135 a barrel. If they stay that high, IATA= estimates that airlines' fuel costs could skyrocket to $190 billion thi= s year and $250 billion in 2009, up from around $40 billion earlier this= decade. The industry would be back in the red this year and next after = having finally returned to profitability in 2007. To put those numbers in perspective, consider that Boeing values its 3,6= 00-airplane order backlog at $271 billion. Experts say the order books a= t both Boeing and Airbus could shrink by about one-third in coming month= s as airlines try to conserve cash or even go bust. That means more olde= r planes would still be in service. All of this would be true even if carbon trading weren't in the picture.= But now that it's on the way, upgrading fleets with more fuel-efficient= planes will be even more difficult. IATA estimates that EU emissions tr= ading could cost airlines $3.5 billion in the first year and as much as = $13 billion by 2020, depending on how the permits are allocated and pric= ed. An additional $13 billion in expenses would have turned each of the indu= stry's last four profitable years into losers. Even at $3.5 billion carr= iers would be hard-pressed to find the funds to upgrade their fleets wit= h more fuel-efficient aircraft. As Cathay Pacific CEO Tony Tyler noted y= esterday at Farnborough, "The more governments make it difficult for air= lines to make money, the more difficult it is for them to invest in new = technologies." Making matters worse, the single-aisle Airbus A320s and Boeing 737s that= make up the bulk of airlines' short-haul fleets are about a decade away= from being updated. Both companies say they want to wait for a big step= forward in engine technology. Engine makers are racing to meet their request, but they aren't expected= to reach the needed breakthrough until at least 2016. So airlines will = be stuck with a carbon-trading bill for at least five years before they = can even improve their fleets -- which of course will only reduce their = ability to purchase the new planes once they do become available. The alternative, and the green utopians' real dream, is to sharply reduc= e the amount of air travel. That would only add another anchor to an alr= eady dragging global economy, all to curtail a sector that accounts for = only 2% of global CO2 emissions. The U.S. and other countries have threatened to sue the EU at the Intern= ational Court of Justice over its airline-emissions hijacking. That may = be the only way to keep the eurocrats from bringing the industry down. See all of today's editorials and op-eds, plus video commentary, on Opin= ion Journal. And add your comments to the Opinion Journal forum. The best slide auction on the net: http://www.auctiontransportation.com/sites/psa188/ <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".