What is the impact on the 'stop the clock' proposal from European Commission?
The European Commission (EC) proposed on Monday 12 November that all intercontinental flights should be suspended from the EU ETS for a period of one year. This initiative followed the discussions that took place two weeks ago at ICAO on a global market-based mechanism (MBM) to regulate greenhouse gas emissions from international aviation. On Tuesday 20 November, the EC presented its legislative proposal.
The aim of this special newsletter is to give you an update of the situation and an overview of how this legislative proposal from the EC might affect your EU ETS compliance activities.
The information below has been collected from official information provided by the EC and through informal discussions with the EC and Competent Authorities (CA) and its accuracy cannot be guaranteed. We recommend aircraft operators contact their CA directly for the exact requirements they must follow. Also, until the legislative proposal has been approved by the EU States and passed at the European Parliament, part of these rules might change and VerifAvia cannot be held responsible for any incorrect information provided.
The EC proposed that intercontinental flights (i.e. flights between the European Economic Area (EEA) and third countries) should be excluded from the EU ETS for a period of one year, i.e. until after the completion of the next ICAO Assembly in October 2013. This is conditional on ICAO reaching an agreement on a global carbon reduction scheme. If not, the suspension would be lifted.
This possibly means that aircraft operators operating exclusively intercontinental flights (i.e. no intra-EEA flights) would be exempt from surrendering EU ETS allowances for at least a period of one year. Aircraft operators operating both intra-EEA and intercontinental flights would have to surrender allowances for intra-EEA flights, but possibly not for intercontinental flights. In short, this proposal might not have any impact on aircraft operators operating exclusively intra-EEA flights.
Operators operating only intercontinental flights would not need to surrender allowances corresponding to the 2012 emissions by 30 April 2013. These operators could still submit a verified 2012 annual emissions report by 31 March 2013 but non-compliance penalties would not be enforced. The condition for this is that they return the allowances that may have been allocated to them in relation to intercontinental flights.
However, these operators would still need to keep monitoring their flights and emissions as per their approved monitoring plan and the EU ETS regulations in 2013, in case intercontinental flights are integrated back into the EU ETS in November 2013.
Operators operating intra-EEA flights only would continue to monitor and report their emissions. A verified 2012 annual emissions report would be required by 31 March 2013, and allowances corresponding to the 2012 emissions would have to be surrendered by 30 April 2013. The proposal would not have any effect.
Non-commercial operators operating both intercontinental and intra-EEA flights would have to report intra-EEA flights only, the reporting of the intercontinental flights becoming optional as penalties for non-compliance would not be enforced. The condition for this is that they return the allowances that may have been allocated to them in relation to intercontinental flights.
As long as a non-commercial operator operates at least one intra-EEA flight during the 2012 monitoring period, it would have to submit a verified 2012 annual emissions report by 31 March 2013, and surrender allowances by 30 April 2013.
Intercontinental flights would still be taken into account when calculating the number of flights per four-month period and the amount of annual emissions to determine whether a commercial operator is above or below the de minimis threshold. This means that commercial operators from outside of the EU which operate occasional unscheduled intra-EEA flights (e.g. technical stops) or triangular commercial flights that include an intra-EEA sector would still need to monitor and report these flights if they are above the de minimis threshold.
In general, commercial operators above the de minimis threshold would have to monitor and report intra-EEA flights, and surrender allowances for intra-EEA flights only, if they return the allowances that may have been allocated to them in relation to intercontinental flights. These operators could still add their international flights to their verified 2012 annual emissions report but non-compliance penalties would not be enforced if they do not do so.
Operators performing intercontinental flights must return the allocated free allowances that correspond to the reported 2010 tonne-kilometre data in relation to intercontinental flights if they choose not to surrender allowances corresponding to their 2012 emissions.
Operators who choose not to return the free allowances would have the obligation to surrender allowances for all flights (intra-EEA and intercontinental flights) by 30 April 2013 because they would be deemed to have chosen to participate in the EU ETS.
Monitoring, Reporting and Verification (MRV) would still be required for intercontinental flights but the non-compliance penalties would not be enforced. The condition for this is that operators return the allowances that may have been allocated to them in relation to intercontinental flights.
It is possible that some CAs will decide to keep requiring the MRV for intercontinental flights, although the surrendering of allowances could be waived. Aircraft operators are advised to contact their CA for clarification.
MRV would still be a mandatory requirement for intra-EEA flights, except for commercial operators below the de minimisthreshold. However, some CAs might require a verification to confirm the de minimisstatus.
If there is not an international agreement to design and implement a global system to tackle aircraft emissions at the next ICAO Assembly scheduled in September/October 2013 to the satisfaction of the EU, intercontinental flights will automatically be put back to the EU ETS by law for the entire 2013 period. Aircraft operators would then be required to submit a 2013 annual emissions report that includes both intra-EEA and intercontinental flights, and surrender allowances by 30 April 2014. In case of an acceptable agreement by ICAO, the suspension of intercontinental flights might be extended. Intra-EEA flights would continue to be subject to the EU ETS.
Article 1 of the legislative proposal says that the suspension concerns: '[...] activity to or from aerodromes in countries outside the European Union that are not members of EFTA, dependencies and territories of EEA Member States or countries having signed a Treaty of Accession with the Union [...]'
Since Switzerland is a member of EFTA, this means that flights between Switzerland and EEA Member States would still need to be reported and allowances surrendered.
Similarly, since Croatia has signed a Treaty of Accession with the EU, flights between Croatia and EEA Member States would still need to be reported and allowances surrendered.
In conclusion, in this Q&A below, 'intra-EEA' must be replaced by 'intra-EU/EFTA' (excluding domestic Switzerland, and including flights between Croatia and EEA).
Definitions:
- EU includes 27 Member States
- EEA includes all 27 EU Member States + Iceland, Liechtenstein and Norway
- EFTA includes Iceland, Liechtenstein, Norway and Switzerland
- EU ETS includes all EEA Member States
In conclusion, the suspension proposal concerns flights between EEA (including overseas territories) and third countries except Switzerland and Croatia.
The legislative proposal was published on 20 November 2012. At this stage, this is only a proposal from the EC and the legislative process might take several months to be completed. CAs might show some difference in the interpretation of some aspects of the legislative proposal. In any case, operators are strongly advised to contact their CA for clarification.
Until the new rules come into force, the old rules continue to apply. Operators are strongly advised to keep monitoring their 2012 emissions on all Annex 1 flights until further clarification is received from their CA.
The European Commission (EC) published today a complete set of Frequently Asked Questions about its proposal to defer EU ETS international aviation compliance by one year.
» Download FAQ
» Go to European Commission EU ETS web site
The document confirms the information we provided to you recently in our own FAQ.
In short, the EC confirms that 'extra-European flights' (flights between EEA States and third countries, except Switzerland and Croatia) are now outside the scope of EU ETS.
The condition is that aircraft operators must return the allocated free allowances that correspond to the reported 2010 tonne-kilometre data in relation to extra-European flights. The formula to calculate the number of free allowances to return will be as follows:
This is a business decision as it might be financially beneficial for some operators to continue to report extra-European flights, especially considering the possibility to surrender up to 15% of required allowances using cheap CERs and ERUs.
Section 4 of the FAQ explains in details how the free allowances will have to be returned.
Nevertheless, while proper monitoring, reporting and verification of emissions is obligatory for intra-European flights, aircraft operators are welcome to also report emissions for extra-European flights.
Most importantly, the EC confirms that pending completion of the legislative process, aircraft operators which have either not received, or have returned for cancellation the relevant share of their free allowances for 2012, should not expect the EC to require enforcement activities to be taken against them by Member States in respect of reporting emissions or surrendering allowances for extra-European flights.
In conclusion, aircraft operators are advised to take the decision whether to report all Annex 1 flights or intra-European flights only, then start preparing their 2012 annual emissions report as soon as the last 2012 flight has been operated, and finally get ready for verification.
» European Commission web site
» Press Release
» Commissioner Hedegaard's statement (video)
» GreenAir Online article
» Click here to read the GreenAir Online article 'Commission requests swift decision on EU ETS suspension proposal as Obama passes prohibition bill'» Download this FAQ Back to all F.A.Q.
The aim of this special newsletter is to give you an update of the situation and an overview of how this legislative proposal from the EC might affect your EU ETS compliance activities.
Disclaimer
The information below has been collected from official information provided by the EC and through informal discussions with the EC and Competent Authorities (CA) and its accuracy cannot be guaranteed. We recommend aircraft operators contact their CA directly for the exact requirements they must follow. Also, until the legislative proposal has been approved by the EU States and passed at the European Parliament, part of these rules might change and VerifAvia cannot be held responsible for any incorrect information provided.
What exactly has been proposed?
The EC proposed that intercontinental flights (i.e. flights between the European Economic Area (EEA) and third countries) should be excluded from the EU ETS for a period of one year, i.e. until after the completion of the next ICAO Assembly in October 2013. This is conditional on ICAO reaching an agreement on a global carbon reduction scheme. If not, the suspension would be lifted.
This possibly means that aircraft operators operating exclusively intercontinental flights (i.e. no intra-EEA flights) would be exempt from surrendering EU ETS allowances for at least a period of one year. Aircraft operators operating both intra-EEA and intercontinental flights would have to surrender allowances for intra-EEA flights, but possibly not for intercontinental flights. In short, this proposal might not have any impact on aircraft operators operating exclusively intra-EEA flights.
What if I only operate intercontinental (EEA to / from non-EEA) flights?
Operators operating only intercontinental flights would not need to surrender allowances corresponding to the 2012 emissions by 30 April 2013. These operators could still submit a verified 2012 annual emissions report by 31 March 2013 but non-compliance penalties would not be enforced. The condition for this is that they return the allowances that may have been allocated to them in relation to intercontinental flights.
However, these operators would still need to keep monitoring their flights and emissions as per their approved monitoring plan and the EU ETS regulations in 2013, in case intercontinental flights are integrated back into the EU ETS in November 2013.
What if I only operate intra-EEA flights?
Operators operating intra-EEA flights only would continue to monitor and report their emissions. A verified 2012 annual emissions report would be required by 31 March 2013, and allowances corresponding to the 2012 emissions would have to be surrendered by 30 April 2013. The proposal would not have any effect.
What if I am a non-commercial operator operating both intercontinental and intra-EEA flights?
Non-commercial operators operating both intercontinental and intra-EEA flights would have to report intra-EEA flights only, the reporting of the intercontinental flights becoming optional as penalties for non-compliance would not be enforced. The condition for this is that they return the allowances that may have been allocated to them in relation to intercontinental flights.
As long as a non-commercial operator operates at least one intra-EEA flight during the 2012 monitoring period, it would have to submit a verified 2012 annual emissions report by 31 March 2013, and surrender allowances by 30 April 2013.
What if I am a non-EU commercial operator operating occasional intra-EEA flights?
Intercontinental flights would still be taken into account when calculating the number of flights per four-month period and the amount of annual emissions to determine whether a commercial operator is above or below the de minimis threshold. This means that commercial operators from outside of the EU which operate occasional unscheduled intra-EEA flights (e.g. technical stops) or triangular commercial flights that include an intra-EEA sector would still need to monitor and report these flights if they are above the de minimis threshold.
In general, commercial operators above the de minimis threshold would have to monitor and report intra-EEA flights, and surrender allowances for intra-EEA flights only, if they return the allowances that may have been allocated to them in relation to intercontinental flights. These operators could still add their international flights to their verified 2012 annual emissions report but non-compliance penalties would not be enforced if they do not do so.
What will happen to the free allowances?
Operators performing intercontinental flights must return the allocated free allowances that correspond to the reported 2010 tonne-kilometre data in relation to intercontinental flights if they choose not to surrender allowances corresponding to their 2012 emissions.
Operators who choose not to return the free allowances would have the obligation to surrender allowances for all flights (intra-EEA and intercontinental flights) by 30 April 2013 because they would be deemed to have chosen to participate in the EU ETS.
What about MRV?
Monitoring, Reporting and Verification (MRV) would still be required for intercontinental flights but the non-compliance penalties would not be enforced. The condition for this is that operators return the allowances that may have been allocated to them in relation to intercontinental flights.
It is possible that some CAs will decide to keep requiring the MRV for intercontinental flights, although the surrendering of allowances could be waived. Aircraft operators are advised to contact their CA for clarification.
MRV would still be a mandatory requirement for intra-EEA flights, except for commercial operators below the de minimisthreshold. However, some CAs might require a verification to confirm the de minimisstatus.
What will happen in November 2013?
If there is not an international agreement to design and implement a global system to tackle aircraft emissions at the next ICAO Assembly scheduled in September/October 2013 to the satisfaction of the EU, intercontinental flights will automatically be put back to the EU ETS by law for the entire 2013 period. Aircraft operators would then be required to submit a 2013 annual emissions report that includes both intra-EEA and intercontinental flights, and surrender allowances by 30 April 2014. In case of an acceptable agreement by ICAO, the suspension of intercontinental flights might be extended. Intra-EEA flights would continue to be subject to the EU ETS.
What about flights between Switzerland and EEA countries, and flights between Croatia and EEA countries?
Article 1 of the legislative proposal says that the suspension concerns: '[...] activity to or from aerodromes in countries outside the European Union that are not members of EFTA, dependencies and territories of EEA Member States or countries having signed a Treaty of Accession with the Union [...]'
Since Switzerland is a member of EFTA, this means that flights between Switzerland and EEA Member States would still need to be reported and allowances surrendered.
Similarly, since Croatia has signed a Treaty of Accession with the EU, flights between Croatia and EEA Member States would still need to be reported and allowances surrendered.
In conclusion, in this Q&A below, 'intra-EEA' must be replaced by 'intra-EU/EFTA' (excluding domestic Switzerland, and including flights between Croatia and EEA).
Definitions:
- EU includes 27 Member States
- EEA includes all 27 EU Member States + Iceland, Liechtenstein and Norway
- EFTA includes Iceland, Liechtenstein, Norway and Switzerland
- EU ETS includes all EEA Member States
In conclusion, the suspension proposal concerns flights between EEA (including overseas territories) and third countries except Switzerland and Croatia.
What's next?
The legislative proposal was published on 20 November 2012. At this stage, this is only a proposal from the EC and the legislative process might take several months to be completed. CAs might show some difference in the interpretation of some aspects of the legislative proposal. In any case, operators are strongly advised to contact their CA for clarification.
Until the new rules come into force, the old rules continue to apply. Operators are strongly advised to keep monitoring their 2012 emissions on all Annex 1 flights until further clarification is received from their CA.
The European Commission has published a complete Q&A on the 'stop the clock' proposal
The European Commission (EC) published today a complete set of Frequently Asked Questions about its proposal to defer EU ETS international aviation compliance by one year.
» Download FAQ
» Go to European Commission EU ETS web site
The document confirms the information we provided to you recently in our own FAQ.
In short, the EC confirms that 'extra-European flights' (flights between EEA States and third countries, except Switzerland and Croatia) are now outside the scope of EU ETS.
The condition is that aircraft operators must return the allocated free allowances that correspond to the reported 2010 tonne-kilometre data in relation to extra-European flights. The formula to calculate the number of free allowances to return will be as follows:
Allowances to return = 2010 TK for extra-European flights * Benchmark 2012 = 2010 TK for extra-European flights * 0.0006797
This is a business decision as it might be financially beneficial for some operators to continue to report extra-European flights, especially considering the possibility to surrender up to 15% of required allowances using cheap CERs and ERUs.
Section 4 of the FAQ explains in details how the free allowances will have to be returned.
Nevertheless, while proper monitoring, reporting and verification of emissions is obligatory for intra-European flights, aircraft operators are welcome to also report emissions for extra-European flights.
Most importantly, the EC confirms that pending completion of the legislative process, aircraft operators which have either not received, or have returned for cancellation the relevant share of their free allowances for 2012, should not expect the EC to require enforcement activities to be taken against them by Member States in respect of reporting emissions or surrendering allowances for extra-European flights.
In conclusion, aircraft operators are advised to take the decision whether to report all Annex 1 flights or intra-European flights only, then start preparing their 2012 annual emissions report as soon as the last 2012 flight has been operated, and finally get ready for verification.
Download center
Legislative proposal (provisional text)
Q&A from the European Commission (short)
Q&A from the European Commission (extended)
Q&A from the European Commission (short)
Q&A from the European Commission (extended)
» European Commission web site
» Press Release
» Commissioner Hedegaard's statement (video)
» GreenAir Online article
» Click here to read the GreenAir Online article 'Commission requests swift decision on EU ETS suspension proposal as Obama passes prohibition bill'» Download this FAQ Back to all F.A.Q.
