Aviation in the EU ETS
European Union Carbon Market Glossary

 


 

 

Aviation activities were included in the EU ETS by Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community.

 

The Directive establishes that since the start of 2012, emissions from all flights within airports in the European Economic Area (EEA), from flights departing from airports in the EEA to third countries and, if not exempted through delegated legislation, from incoming flights to airports in the EEA from third countries are included in the EU ETS.

 

The rules, in principle, apply regardless of whether the aircraft operator is based inside or outside the EEA.

 

Obligations have been imposed on the aircraft operators to monitor, report and verify their emissions, as well as surrender emission allowances corresponding to these emissions.

 

The aviation scope of the EU ETS was limited to flights within the EEA until the end of 2016, pending the adoption of a global approach by the International Civil Aviation Organization (ICAO).

 

This was to allow for the development by ICAO of emission-reduction measures with a global scope and to avoid conflicts with international trading partners.

 

In September 2013 the ICAO Assembly agreed to develop by 2016 a global market-based mechanism (GMBM) to be implemented from 2020 to tackle emissions from international aviation.

 

This outcome was welcomed by the EU, and in response to it, the EU legislation was amended.

Aviation 

In this regard, Regulation (EU) No 421/2014 of the European Parliament and of the Council of 16 April 2014 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in view of the implementation by 2020 of an international agreement applying a single global market-based measure to international aviation emissions (OJ L 129, 30.4.2014, p. 1) temporarily reduced the scope of the EU ETS to emissions from flights within the EEA between 2013 and 2016.

 

 

CORSIA as a global market-based measure to tackle international aviation emissions

 

 

In October 2016, the ICAO adopted a global market-based measure and agreed on a resolution on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which would become operational in 2021.

 

CORSIA has been established in order to monitor, report and ofset any annual CO2 emissions from international civil aviation that are above 2020 levels.

 

It will only apply to international fights, not domestic ones.

 

Participation will be voluntary during the pilot and first phase (2021-2026), and will become mandatory for all states in the second phase, as of 2027.

 

Exemptions would apply to fights from and to small-island developing states, least developed countries, landlocked developing countries, and countries with low levels of aviation activity.

 

Contrary to the ETS, which is a ‘cap and trade’ scheme that sets an upper limit for the total amount of emissions, CORSIA is an ‘ofsetting scheme’, implying that emissions can grow, but must be compensated by offsets.

 

To compensate for CO2 emissions above 2020 levels in international aviation and achieve carbon-neutral growth over time, emitters (that is, airlines) would buy ‘emissions units’ arising from diferent sources of emission reductions achieved through mechanisms (such as the UNFCCC’s Clean Development Mechanism), programmes (such as REDD+ for forest management), or projects.

 

 

European Commission’s legislative proposal of 3 February 2017

 

 

In light of this outcome, in February 2017 the European Commission proposed a regulation to prolong the derogation for extra-EEA fights, gradually reduce the number of aviation allowances from 2021 onwards, and prepare for the implementation of the GMBM (Proposal for a regulation of the European Parliament and of the Council amending Directive 2003/87/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based measure from 2021, COM(2017) 54, 3.2.2017, 2017/0017(COD)).

 

A provisional agreement between Parliament and Council was reached on 18 October 2017.

 

According to the European Parliament’s Briefing of 10 November 2017 “CO2 emissions from aviation, EU legislation in Progress” (p. 7):

 

- the proposal would prolong the derogation for fights departing from or arriving at airports outside the EEA,


- there is no fixed date for when the derogation would end, but the proposed regulation is subject to review, depending on progress with the GMBM,


- flights within the EEA would remain subject to the ETS,


- until 2020, the cap and the free allocation to aviation operators would remain the same as currently,


- from 2021, the same linear reduction factor for the cap would apply as to all sectors under the EU ETS Directive,


- the European Commission should report on progress with the GMBM, consider ways to implement it in EU law through revision of the ETS Directive and possibly through new legislative proposals,


- the European Commission would be empowered to adopt delegated acts to provide for the monitoring, reporting and verifcation of emissions for the purpose of implementing the GMBM,


- in order to reduce the administrative efort, Annex I of the proposed regulation would extend the current exemption for non-commercial aircraft operators emitting less than 1 000 tonnes of CO2 per year, from 2020 to 2030 (although this provision applies to 2 200 aircraft operators, they are responsible for only 0.2 % of the emissions from aviation).

 

 

Emission allowances cap for the aviation sector under the EU ETS

 

 

Starting in 2013, the total number of allowances (the cap) has been set at 95 % of historic emissions in the years 2004-2006.

 

Aircraft operators receive free allowances calculated on the basis of their activity in 2010.

 

The aviation sector cap was originally set at 210 349 264 aviation allowances per year, i.e. 5% below the average annual level of aviation emissions in 2004-2006.

 

The cap was increased by 116 524 aviation allowances on 1 January 2014 due to Croatia joining the EU ETS.

 

This cap was meant to reflect the 2008 legislation which included aviation in the EU ETS and stated that all flights from, to and within the EEA would be included in the EU ETS.

 

However, given the scope of the EU ETS was temporarily limited to flights within the EEA between 2013 and 2016, the number of aviation allowances put into circulation in 2013-2016 has been significantly lower than the original cap.

 

In light of the progress on the global measure in October 2016, the Commission has proposed to continue the current approach beyond 2016 (Report of 23 November 2017 from the Commission to the European Parliament and to the Council on the functioning of the European carbon market (COM(2017) 693 final,p. 10).

 

According to the aforementioned Report of 23 November 2017 (p. 11) volumes for the aviation allowances put into circulation annually for the years 2013-2020 were as follows:

 
 - 2013 - 32 455 312, 
 
 - 2014 - 41 681 025, 
 
 - 2015 - 48 543 026, 
 
 - 2016 - 38 034 475,
 
 - 2017 - 37 833 81914.

 

Free allocation accounts for 82 % of emission allowances and auctioning for 15 %.

 

The remaining 3 % go to a special reserve for later distribution to new entrants and fast-growing airlines.

 

 

CO2 emissions from aviation in numbers

 

 

Greenhouse gas emissions from aviation accounts for approximately 2.1 % of global CO2 emissions.

 

According to the Article 21 reports submitted in 2015, 611 aircraft operators had a monitoring plan.

 

Of these, 50% (305) were Commercial Aircraft Operators and the other 50% (306) were Non Commercial Aircraft Operators. A total of 329 (53.8% of the total) qualified as small emitters.

 

Report of 23 November 2017 from the Commission to the European Parliament and to the Council on the functioning of the European carbon market (COM(2017) 693 final indicates that the number of aircraft operators within the EU ETS is stabilising and refers to the following facts regarding the coverage of monitoring plans as regards the aircraft operators (p. 9):

 

- 503 aircraft operators in 2016 were reported to have a monitoring plan (compared to 524 reported for 2015, and 611 for 2014),

 

- nearly 60% (300) of the reported operators were commercial while the other 40% (203) were non-commercial,

 

- a total of 249 (nearly 50%) qualified as small emitters (compared to 274 (52%) in 2015 and 329 (54%) in 2014).

 

The said Report of 23 November 2017 also mentions that according to submissions in 2017, in the case of aircraft operators with low emissions, four countries have taken advantage of the provision offered by Article 13 of Commission Regulation (EU) No 601/2012 (Monitoring and Reporting Regulation) to allow use of simplified monitoring plans (BE, FI, IS and PL), with Belgium joining since 2015.

 

According to the said Report of 23 November 2017 slightly over 500 aircraft operators flying between EEA's airports.

 

According to EUTL public website verified CO2 emissions from aviation activities carried out between airports located in the EEA amounted to 53.4 million tonnes of CO2 in 2013 and 54.9 million tonnes of CO2 in 2014, which represents an increase of 2.8% in 2014 compared to 2013.

 

Aircraft operators' initial allocation was also adjusted to the reduced intra-EEA scope.

 

The adjusted free allocation amounted to 32.4 million allowances in 2013 and 32.3 million allowances in 2014.

 

The amounts of allowances to be auctioned for the years 2013 and 2014 were determined on the basis of an expected annual amount of 5.7 million, following the adjustments made to auction volumes in accordance with Regulation (EU) No 421/2014.

 

These allowances were auctioned between 1 January and 30 April 2015.

 

As regards developments in aviation emissions within the EU ETS in 2016, according to the said Report of 23 November 2017 (p. 27) verified emissions continued to grow and amounted to 61 million tonnes of CO2, an increase of 7.9% compared to 2015.

 

The free allocation amounted to slightly over 32.0 million allowances in 2016.

 

The amount of allowances auctioned between January and December 2016 was approximately 6.0 million.

 

In 2017, pending the adoption of the legislative proposal on the EU ETS for aviation, allowances were issued in line with the intra-EEA scope.

 

The adjusted free allocation amounted to slightly over 32.0 million allowances in 2017.

 

In addition, nearly 1.1 million free allowances were allocated from the special reserve for new entrants and fast growing operators.

 

This is the first of four annual issuances, corresponding to the 2013-2020 period.

 

The amount of allowances to be auctioned during 2017 will be proportional to the total number of allowances issued.

 

 

CO2 emissions from aviation and the Paris Agreement

 

 

The Paris Agreement on climate change, adopted in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC), does not make explicit reference to international aviation.

 

Emissions from international aviation are calculated as part of the national greenhouse gas inventories of the UNFCCC parties, but are excluded from national totals and reported separately.

 

They are not subject to the limitation and reduction commitments under the UNFCCC and are generally not included in the nationally determined contributions (NDC) to the Paris Agreement.

 

However, emissions from domestic fights are part of the national totals, reduction commitments and NDCs.

 

 

Swiss ETS coverage

 

 

Once the Swiss ETS covers aviation sector, flights within Switzerland, flights between Switzerland and the EU and flights between EU Member States will be treated similarly.

 

The linking agreement clarifies that Switzerland will mirror the EU ETS provisions on aviation in the Swiss ETS before the agreement enters into force.

 

Aviation operators will be administered by an EEA State or Switzerland under the 'one-stop shop' approach, so that a single authority takes responsibility of the implementation of the two systems (Proposal for a Council Decision on the conclusion, on behalf of the European Union, of an Agreement between the European Union and the Swiss Confederation on the Linking of their Greenhouse Gas Emissions Trading Systems, 16.8.2017).

 

 

 

 

IMG 0744

    Documentation    

 

 

 

 

 

European Parliament legislative resolution of 12 December 2017 on the proposal for a regulation of the European Parliament and of the Council amending Directive 2003/87/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based measure from 2021 (COM(2017)0054 – C8-0028/2017 – 2017/0017(COD)) 

 

Proposal for a regulation of the European Parliament and of the Council amending Directive 2003/87/EC to continue current limitations of scope for aviation activities and to prepare to implement a global market-based measure from 2021, COM(2017) 54, 3.2.2017, 2017/0017(COD)

 

Report from the Commission to the European Parliament and to the Council, Report on the functioning of the European carbon market, 23 November 2017 (COM(2017) 693 final

 

Report on the functioning of the European carbon market, accompanying the document Report from the Commission to the European Parliament and to the Council, Climate action progress report, including the report on the functioning of the European carbon market and the report on the review of Directive 2009/31/EC on the geological storage of carbon dioxide of 18 November 2015 (COM(2015) 576 final, p. 22, 23

 

EU ETS Handbook

 

CO2 emissions from aviation, European Parliament, Briefing, EU legislation in Progress, 10 November 2017

 

The International Civil Aviation Organization, EPRS, October 2016

 

ICAO Agreement on CO2 emissions from aviation, EPRS, October 2016

 

Decision-making processes of ICAO and IMO in respect of environmental regulations, Study for the ENVI Committee, European Parliament, September 2016

 

Emission reduction targets for international aviation and shipping, Study for the ENVI Committee, European Parliament, November 2015

 

Main options for a GMBM at ICAO during its High-level Meeting in May 2016, Briefng, European Parliament, DG IPOL, April 2016

 

 

 

 

 

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    Links    

  

 

 

 

 

ICAO, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)

 

EU Emissions Trading System (EU ETS): continuing current limitations of scope for aviation activities and preparing to implement a global market-based measure from 2021, European Parliament, Legislative Observatory (OEIL)

 

 

 

 

 

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Last Updated on Sunday, 17 December 2017 13:24
 

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