Carbon Pricing

As a leading Australian company with a strong focus on corporate responsibility and managing risks, Qantas continues to advocate a global sectoral approach to tackle climate change.

Our position on carbon pricing

We accept responsibility that we must adapt to our changing climate and that we must do what we can to reduce the impact that climate change is, and will, have on our environment our communities and our economies. We all must play a part.

We are a successful organisation that has prospered for over 90 years largely thanks to our strong risk management principles. We see climate change as another risk that we must mitigate and take precautionary action towards to ensure our continued success.

Our global preferences for carbon pricing:

• Efficient pricing mechanism: While carbon taxes are simple, emissions trading schemes are preferable as they are more economically efficient over the longer term.
• Revenue neutral: Any funds raised by Governments should be directed towards delivering commercially viable renewable energy solutions and used to compensate consumers.
• Global: A global approach is preferable to a country-by-country patchwork approach which is administratively burdensome and may create counter-productive incentives such as encouraging flight stopovers to reduce carbon charges. International carbon markets should be linked so that investment occurs in the lowest cost global options that are most economically efficient.
• Sectoral: An industry sector approach is preferable to an emissions-magnitude threshold approach to help keep a 'level playing field'.
• Reduced uncertainty: Periods of regulatory uncertainty should be minimised so that businesses can comfortably invest in order to unlock solutions that create jobs and benefit the economy. Carbon pricing schemes should include a transition period to enable business and the economy to adapt.
• Secure: Independent bodies should be set up and well resourced to regulate, administer and audit carbon markets to ensure confidence and minimise adverse conduct.
• Effective: Carbon offset credits should be additional, permanent, avoid leakage, avoid double counting, be issued in 'real time', preferably have co-benefits and be monitored and independently verified
• Voluntary action: Voluntary initiatives should be encouraged wherever possible.

Carbon Pricing Policy

Domestic Carbon Pricing and Carbon Tax charge

In the context of the significant challenges facing the global aviation industry, the Qantas Group will be unable to absorb the additional costs associated with the Australian carbon price and there will be a full pass-through to customers.

Because the carbon price does not calculate a price per passenger or per flight, some assumptions have been used to determine a price per passenger and per flight. The estimate is calculated by dividing the domestic network into four zones based on distance then using historical fuel consumption and passenger numbers to calculate a per passenger charge.

This method of calculation provides a good estimation of the share of emissions attributable to each passenger flying in a particular zone. The zones and charges applicable per passenger, per sector are shown below.

Note: that as these calculations are averaged out for all flights over a particular zone and are based on historical data, the estimates produced are not precise and there is a margin for error. The data and estimates will be adjusted and updated periodically. A different method of calculation may also be used at some time in the future.

The carbon price does not apply to international flights. Flights to and from Europe will be affected by the European Union's Emissions Trading Scheme.

Domestic airlines will be exposed to the full starting carbon price of $23 per tonne through an increase in aviation fuel excise from July 2012 and will not have access to transitional assistance or compensation arrangements.

The carbon price estimate calculated will only be added to flights operating on and from 1 July 2012. While the ticket prices will rise initially with the introduction of our carbon price estimate, ticket prices will continue to fluctuate both up and down based on various market and other forces (such as competition, demand and fuel costs).

Carbon Tax Surcharge Vs Fly Carbon Neutral

The Carbon Tax Surcharge is a charge we have applied to all domestic tickets to recover the cost to Qantas of the Australian Government's carbon price system (Clean Energy Future legislation). The carbon tax is charged to Qantas by way of an increase in the fuel excise (tax) payable on the fuel we purchase for domestic operations. The Government collects that fuel excise, like any other tax. The Carbon Tax Surcharge is not voluntary.

The Carbon Offset Program is a voluntary program under which a passenger can elect to pay to offset the emissions associated with the passenger's flight. Qantas uses the whole of the money collected to acquire accredited carbon offsets of at least the same quantity as the emissions associated with the passenger's flight. None of the offsets acquired are ever used to meet Qantas's liability under any legislation and Qantas does not obtain any financial benefit from the Carbon Offset Program.

You are not being charged twice if you chose to pay the voluntary offset charge.

The Carbon Offset Program uses an estimate of the carbon emissions for each individual route on our network. The Carbon Tax Surcharge groups flights together into 4 zones for the purposes of calculating the per passenger price. Because the Carbon Tax Surcharge is applied to all domestic and regional tickets, for administrative simplicity and standardisation. It has been averaged out over four zones that cover the entire domestic and regional network.

European Union - Emissions Trading Scheme

From 1st January 2012, aviation was included in the European Union Emissions Trading Scheme (EU ETS). The EU ETS covers all flights operating into or out of the EU, no matter where the operator is based. The EU ETS requires the operator of the flight to aquire allowances in respect of the emissions generated by any flight into or out of the EU. Qantas as a result will need to comply with the EU ETS, with an estimated cost impact of approximately A$2.3 million in the initial calendar year 2012.

In context of the significant challenges facing the global aviation industry, the Qantas International business will be unable to absorb the additional costs associated with the EU ETS and there will be a pass-through to customers.

Because the EU ETS is based on total annual carbon emissions from the relevant flights and does not calculate a price per passenger, Qantas has calculated an estimated price per passenger to and from the EU. The estimate is based on our historical fuel consumption, our forecast passenger numbers and number of flights, as well as the price of the allowances and the exchange rate. The initial price per passenger will be A$7 per return flight from Australia/Singapore/Bangkok/Hong Kong to London, and on Australia/Singapore to Frankfurt (A$3.50 each way).

Each of the forecast numbers used to calculate the estimate will be reviewed periodically. Because the price per passenger is based on a number of forecasts, the price is not precise and is an estimate only. We may use a different method of calculation in the future. We have also taken into account passengers from whom we will not recover the EU ETS price.

While the Qantas ticket prices to UK/Europe may rise initially with the introduction of the EU ETS collection from 15 February 2012, Qantas ticket prices will remain competitive and are subject to change.

Update: The first review of the ETS Surcharge has been completed. A dramatic fall in the price of EU allowances along with other factors has resulted in the surcharge being reduced to $1.50 per passenger each way.

European Union - Emissions Trading Scheme Vs Fly Carbon Neutral

The European Union - Emissions Trading Scheme (EU ETS) Surcharge is a charge we have applied to all tickets into or out of the EU to recover Qantas' cost of complying with the EU ETS.). The EU ETS Surcharge is not voluntary.

The Carbon Offset Program is a voluntary program under which a passenger can elect to pay to offset the emissions associated with the passenger's flight and associated ground activity. Qantas uses the whole of the money collected to acquire accredited carbon offsets of at least the same quantity as the emissions associated with the passenger's flight and associated ground activity. None of the offsets acquired are ever used to meet Qantas' liability under any legislation and Qantas does not obtain any financial benefit from the Carbon Offset Program.
You are not being charged twice if you chose to pay the voluntary offset charge.

The Carbon Offset Program uses an estimate of the carbon emissions for each individual route on our network. The EU ETS Surcharge is calculated by grouping all affected Qantas flights to and from the EU together to determine an estimated price per passenger.

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