Airlines to pay millions extra this year as free emission rights lapse

This year, airlines will either have to invest heavily in sustainability or pay tens of millions of euros extra in emission rights. Until now, they’ve received many free emission rights - intended to give airlines financial room to improve their sustainability - but those lapse this year. KLM expects to spend some €325 million per year on emission rights by 2030, NOS reports.

The polluter pays principle has applied to airlines in Europe since 2012, when aviation became part of the Emission Trading System (ETS). For emissions from flights within Europe, airlines must purchase emission rights from other companies or, for example, at the auction held by the Dutch Emissions Authority.

In recent years, airlines received many free emission rights as part of the European regulations. This was intended to give them time to make their operations more sustainable without being outcompeted. The number of free rights has been phased out since 2024, first by a quarter, then by half, and this year, European airlines will receive zero free emission rights.

According to NOS, airlines haven’t used the period of free rights very effectively, as emissions have hardly decreased. This year, airlines will therefore have to either significantly increase their sustainability efforts or purchase significantly more emission rights.

“In 2019, KLM paid approximately 25 million in ETS costs,” a spokesperson for the Dutch airline told the broadcaster. “By 2024, these amounts increased to approximately €152 million. We expect ETS costs to rise to approximately €325 million per year by 2030.”

KLM, TUI, and Corendon all told NOS that they have become more sustainable in recent years. All three airlines said they bought modern aircraft that are more fuel-efficient, resulting in lower emissions. TUI says its emissions decreased by 16 percent compared to the previous generation of aircraft.

TUI and KLM also said that they are purchasing Sustainable Aviation Fuel (SAF) - a more sustainable kerosene made from materials like biomass or hydrogen. KLM claims to be one of the largest global buyers of SAF and is investing in a new factory in Delfzijl. Yet, the blending of cleaner kerosene remains minimal. In 2024, KLM added roughly 1 liter of SAF to the tank for every 58 liters of fossil fuel, according to its annual report. At TUI, the ratio was about 2 percent last year.

“Going green quickly is difficult,” ABN Amro economist Georgette Boele told the broadcaster. “The aviation industry is highly dependent on fuel. Alternatives are limited in aviation compared to other mobility sectors.” Electric flight is still a pipe dream because batteries are heavy and take up a lot of space. Green hydrogen and biofuels are the best bets, but other types of transport also want to use these fuels. Moreover, alternative fuels are still very expensive. “It’s cheaper to just buy emission rights.”