This report is based on research prepared by Anna Doumnova, Managing Director of Concise Aerospace, who spoke on a panel on the EU ETS at the 10th Russia & CIS Air finance Conference in Moscow on 28 June 2012.
Even if the EU ETS for aviation remains in effect in its current form, we believe that the impact for Russia and the CIS as a whole may be limited, and that most carriers in the region will not be materially affected.
(Note: In this report, we use “CIS” to mean the countries of the former Soviet Union that are not members of the European Union. There are 12 of them — Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic (Kyrgyzstan), Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. In the sense we use it in the report, the CIS refers to these 12 countries, not to the regional association — the Commonwealth of Independent States — that was formed in 1991 and of which Georgia is no longer a member.)
Our thesis in one sentence
Background — the EU ETS and Russia's opposition
For Russia, the overall impact of emissions trading could be neutral or even positive
Europe is an important market for Russia (in terms of volume) and for Ukraine and Moldova (in
terms of passenger concentration); other countries in the region are less affected
For most carriers in the region, the costs of the EU ETS should be manageable
CIS governments seem more likely to cooperate with the EU than to actively oppose it
A chance exists that developing countries could be made exempt from the scheme
Exhibit 1 Ten most popular destinations for Russian tourists (all means of transport)
Exhibit 2 CIS airlines that operate flights to the EU
Exhibit 3 Passengers carried in 2011 by CIS airlines (all traffic, domestic and international)
Exhibit 4 Passengers carried in 2011 by CIS airlines (all traffic, domestic and international) and % of national population travelling