Air NZ under pressure from EU to reduce emissions

Air New Zealand must join the EU's emission trading scheme by 2012 or face penalties when it flies there. Photo / Sarah Ivey.

Air New Zealand is among thousands of operators which must join the European Union's emission trading scheme by 2012 or face penalties flying there.

The union has released a list of 4000 airlines and plane makers which must first submit a strategy for reducing their emissions by January 2010.

The bloc adopted legislation in January that requires aviation emissions to reduce by 3 per cent on 2005 levels by 2012, and 5 per cent by 2013.

Air New Zealand's chief executive Rob Fyfe said the scheme would inevitably be a cost for the airline and passengers although it backed principles behind it.

"We'll certainly comply and as a general rule we think that it's important that aviation is captured in any emissions framework because we want to be able to show customers that we are playing our part and willingly able to so.

"That has the potential to reduce demand for travel. At least this has some sound basis for it."

It was difficult to forecast the financial cost for the airline.

Air New Zealand has been at the forefront of biofuel research and sees establishing green credentials as not only being good for the environment but commercially useful in distinguishing it from other carriers and helping promote this country's image.

Fyfe said the airline was working to meet the first deadline from the EU which had taken a tough line.

"The EU has taken a very autocratic approach, dictating to the market how things will be, certainly not a consultative approach as in other jurisdictions."

The policy has been heavily criticised by the International Air Transport Association which says it is particularly unfair to penalise non-EU airlines.

The 2012 a EU-wide cap on aviation emissions is set at 97 per cent of the average annual emissions for the years 2004-2006.

This is lowered to 95 per cent in 2013, IATA says.

Airlines will have to buy 15 per cent of their allowances under this cap through an auction.

They will initially receive 85 per cent free of charge.