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Airlines might pass on to customers the cost of carbon allowances that they receive for free, providing a windfall that can be used to buy new aircraft, said the head of the bloc’s climate department. 20 billion euros of carbon allowances will be given to airlines for free.

Airlines can use the extra revenue after charging customers for emission permits to cut greenhouse-gas output, Jos Delbeke, the European Commission Director-General for climate, said at a web-cast press conference in Brussels and posted on Bloomberg. The region will give out about 1.6 billion metric tons of free carbon allowances to airlines through 2020, based on data on the EU website.

“A significant share of allowances will be given for free, which represents 20 billion euros ($27 billion)” during the next nine years, Delbeke said. Europe is easing the way for airlines to “upgrade fleets” and introduce efficiency procedures that cut emissions, he said. New aircraft can slash emissions by as much as 20 percent, he said.

It’s unclear whether competition between airlines will allow them to pass on the entire carbon price to their customers, or only a portion of it, Delbeke said.

The European Union today set benchmarks to calculate the distribution of free carbon-dioxide permits among domestic and international airlines from 2012, when they join the bloc’s emissions-trading system.

The regulator of the 27-nation bloc set a level of 0.6422 carbon allowances per 1,000 ton-kilometers for the eight years through 2020, the commission said today. Airlines will receive 0.6797 carbon allowances per 1,000 ton-kilometers in 2012, it said. The free allowances will be distributed over the nine years starting 2012 based on 2010 freight-and-passenger data.

The EU decided in 2008 that international aviation should become a part of the world’s largest cap-and-trade program after airline discharges in Europe doubled over two decades. U.S. carriers including AMR Corp.’s American Airlines and United Continental Holdings Inc. are challenging the carbon plan in court, arguing the EU exceeds its jurisdiction.

Deutsche Lufthansa AG, Europe’s second-biggest airline, said its shortfall of EU carbon permits will cost 150 million euros to 350 million euros in 2012, according to an e-mailed statement from Peter Schneckenleitner, a company spokesman. That’s based on a shortfall of at least 30 percent and a carbon price as low as 15 euros a metric ton and as high as 35 euros, he said. The airline’s cap of carbon allowances was set according to data from the three years through 2006 and the airline has grown since then, he said.

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