A new report suggests airlines could make large windfall profits from aviation joining the EU Emissions Trading Scheme in 2012, if airlines charge customers for emission allowances they are given free-of-charge.

The report for The Carbon Trust, an agency part-funded by the British government, calculates that a typical large European airline similar to British Airways or Lufthansa could see its earnings before tax and interest increase by 49% above what it would have been without aviation being in the ETS. The Commission plans to give 82% of emission allowances to airlines without charge. T&E policy officer Bill Hemmings said, 'This is why we have always been against giving away permits for free – it's the perfect way to make people feel cynical about policies to tackle climate change. Instead governments should auction permits and use the revenues to lower other taxes – this way you keep citizens’ support for climate policies.'

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