Home > Verifavia News
> The latest on Brexit and the UK ETS

The latest on Brexit and the UK ETS

13/01/2021



With the end of the Brexit Transition period on the 31st of December 2020, the United Kingdom has now officially withdrawn from the European Union, fortunately with a deal in place. In preparation for the withdrawal, on December 17th, the UK government published updated guidelines and information on the implementation of the UK ETS. This has provided all stakeholders with much needed clarity prior to the commencement of the first UK ETS monitoring period on the 1st January 2021.

The first matter of concern for most operators is on the impact of UK ETS on the reporting and verification of 2020 emissions. This has not changed with the recent announcements. The 2020 emissions are still liable to be reported under the EU ETS. Only the emissions from 1st January 2021 will be considered under the UK ETS.

The EU ETS obligations for the 2020 monitoring period still need to be met by aircraft operators (AOs) currently regulated in the UK and this will continue to be done through the existing regulator. This includes the requirement to submit a verified report by 31 March 2021 and surrender sufficient allowances to cover reportable emissions by 30 April 2021.

Regarding the EU ETS obligations for the 2021 monitoring period and onward, aircraft operators currently administered by the UK will be transferred to a new administering Member State indicated in the attribution list of aircraft operators published by the European Commission. Please find the latest attribution list here (8th April 2020). The list is updated every year and the next update is due in February 2021. You may find the update here when it becomes available.

> UK ETS programme section
> UK ETS FAQ


Allowances

We have also received questions from some operators regarding the allocation of allowances. The latest updates from the UK government have shed some light on this matter. It has been confirmed that the UK government’s initial approach to free allocation in the UK ETS will be similar to the EU’s proposed approach for Phase IV of the EU ETS. This is being done to facilitate a smooth transition of emissions trading for businesses in 2021. The benchmarks used to calculate free allocation entitlement will be the same as for Phase IV of the EU ETS. The AO has to submit 2010 and/or 2014 verified tonne-kilometre (tkm) reports to their regulator (for info on regulators see the below section on EMPs). This data should cover all full-scope flights and must contain tkm data associated with UK ETS aviation activity.

“Under the UK Emissions Trading Scheme (UK ETS), a proportion of free allowances will be allocated to qualifying aircraft operators based on their historical aviation activity. Free allocation will be distributed in proportion with UK ETS aviation activity emissions rather than full-scope flight emissions.

The United Kingdom has mandated that all applications for a free allocation entitlement must be made by 31 March 2021. Find the official guidance and the application page here.

Registry

Similar to the EU ETS registry, a UK Emissions Trading Registry has been developed for the UK ETS. Aircraft operators are required to have an Aircraft Operator Holding Account (AOHA) in the UK ETS Registry to acquire and surrender allowances in line with their obligations.

Prior to the opening of an AOHA, the operator is required to have an Emissions monitoring plan (EMP). Once the EMP has been issued, the regulator of the aircraft operator will instruct the Registry Administrator to open an AOHA for the operator in question. The operator will then be contacted by the Registry Administrator and asked to provide details of a primary contact (who is authorized to give instructions to the Registry Administrator on behalf of the operator), and also to nominate authorized representatives to operate the AOHA.

As such, the process of opening a Registry account can take up to 2 months (and longer in some cases) and entails the same amount of scrutiny as with the opening of a bank account. It is advisable that the EMP procedure followed by the registry account creation procedure be started at the earliest.

Emissions Monitoring Plan (EMP)

An Emissions Monitoring Plan (EMP) is required to comply with the UK Emissions Trading Scheme (UK ETS). An aircraft operator does not need to apply for an EMP if they are already regulated by the UK under the EU ETS. Aircraft operators not regulated by the UK for EU ETS will need to apply for a new EMP, and the UK ETS regulator will depend on where the AO is registered or resides. Details for both of these scenarios are included below.

If the AO is currently regulated by the UK for the EU ETS:

The regulator will remain the same and will issue a UK ETS EMP in substantially the same terms as your EU ETS EMP on or after 1 January 2021. The regulator will contact the AO regarding the UK ETS EMP.

The AO will continue to have access to their account in the regulator’s online application and the Emissions Trading System Workflow Automation Program (ETSWAP).

If the AO is not currently regulated by the UK under the EU ETS:

The AO must contact their regulator and apply for an EMP within 6 weeks of becoming an aircraft operator. If the AO has missed this deadline they must contact their regulator as soon as possible otherwise it may result in significant civil penalties.

If you are unsure of who your regulator is or want to apply for an EMP, please use the following link for the official UK government page.

Compliance deadlines

The United Kingdom government has confirmed the following compliance deadlines for the implementation of the UK ETS.
 
Action Time
Monitor aviation emissions in line with the EMP Between 1 January and 31 December in year n
Start preparing the annual emissions report (with time for verification, if required) Towards the end of year n
Submit the annual emissions report via ETSWAP By 31 March of year n+1
Surrender allowances equal to your reportable emissions By 30 April of year n+1

(‘n’ being a monitoring period which an aircraft operator is reporting for)

For example, for the first monitoring year, 2021, operators shall monitor their aviation emissions in line with the EMP from 1 January to 31 December 2021. Towards the end of 2021, operators shall start preparing the annual emissions report (and engage with a verifier, if needed). The 2021 verified (if needed) annual emissions report will need to be submitted via ETSWAP by 31 March 2022, and the allowances equal to the reportable emissions will need to be surrendered by 30 April 2022.

Please note that Verifavia will be able to provide you with the verification services for the UK ETS thanks to our UKAS accreditation. Together with our French (COFRAC) and Singapore (SAC) accreditations, we will be able to satisfy all your verification needs – including UK ETS, EU ETS, Swiss ETS, and CORSIA – and all through a single verification process!

Finally, kindly bear in mind the deadline for the application to receive free allowances has been set for the 31st of March 2021.
 
Conclusion

The UK ETS has taken off and joined the myriad of different climate action initiatives across the world. Following on from a year that most of the aviation industry would describe as nothing short of a nightmare, we can only hope for a brighter and better 2021; a year where we continue to make progress in our endeavors for the planet and a greener aviation industry. Happy New Year !
 
UK ETS programme section
UK ETS FAQ


Useful links:
https://www.gov.uk/government/publications/eu-ets-obligations-and-access-to-eu-registry-systems-in-2021/eu-ets-obligations-and-access-to-eu-registries-systems-in-2021
https://www.gov.uk/government/publications/participating-in-the-uk-ets
https://www.gov.uk/guidance/complying-with-the-uk-ets-as-an-aircraft-operator
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0535&from=EN
https://ec.europa.eu/clima/policies/ets/monitoring/operators_en
https://www.gov.uk/guidance/uk-ets-apply-for-free-allocation
https://gov.uk/guidance/uk-ets-apply-for-an-emissions-monitoring-plan-emp
 
Back to all Verifavia News