European Commission proposes to apply EU ETS to European regional airspace from 1 January 2014

16/10/2013

The European Commission (EC) today proposed to amend the EU ETS so that aviation emissions would be covered for the part of flights that takes place in European regional airspace.

The adjustment in the legislation would apply from 1 January 2014 and until a global market-based mechanism (MBM) becomes applicable to international aviation emissions by 2020, as planned by the International Civil Aviation Organization (ICAO)'s 38th Assembly resolution.

The key features of the revised EU ETS resulting from this proposal would be as follows:

All emissions from intra-European flights (i.e. flights between airports in the European Economic Area (EEA, covering the 28 EU Member States plus Norway, Iceland and Liechtenstein)) would continue to be covered.
From 2014 to 2020, extra-European flights (i.e. flights to and from countries outside the EEA) would benefit from a general exemption for those emissions that take place outside the EEA airspace.
In other words, from 2014 to 2020, only emissions from the part of extra-European flights taking place within EEA airspace would be covered.

As a transitional period, in 2013, only emissions from intra-European flights would have to be reported (continuation of stop-the-clock derogation for another year, except flights between the EEA and Switzerland which would now be excluded unlessSwitzerland joins the EU ETS).

To accommodate the special circumstances of developing countries, flights to and from third countries which are developing countries and which emit less than 1% of global aviation emissions expressed in international RTK would benefit from a full exemption from 2014 to 2020.
These developing countries are the Low-income and Lower-middle-income economies as defined by the World Bank with the exception of India which is above the 1% threshold. The exemption would apply to the flights between EEA and these countries; it is not a general exemption for airlines of these countries.
Non-commercial small emitters emitting below 1000 tCO2 (considering all Annex 1 flights, i.e. including both intra- and extra-European flights, and including emissions from both within and outside the EEA airspace) would be exempt from the EU ETS.
Both 2013 and 2014 annual emissions reports would have to be submitted to the Competent Authority by March 2015 (exceptional two-year compliance period).

The EC would like to see the proposal agreed by the European Parliament and the Council by March 2014 to provide clarity for aircraft operators, that would otherwise have to surrender allowances for their emissions on all Annex 1 flights in 2013 by 30 April 2014.

We strongly recommend all operators to prepare their 2013 annual emissions report (covering intra-European flights only) and to complete the verification during the first quarter of 2014 as usual.

Please note that this is only a proposal put forward by the European Commission which will now go through the legislative process where numerous amendments should be expected.