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Integration of the aviation in the EU-ETS



1. Introduction

2. Commission Proposal

3. European Parliament first reading

4. European Council first reading

5. Comparison table

6. Next steps



1. Introduction

Since the UNFCCC and the Kyoto Protocol, no compromise has been reached concerning how to allocate direct GHG emissions from international aviation and maritime transport (bunker fuels) to the Parties, while GHG emissions from other transport modes (road, rail, domestic aviation, inland waterways) are covered by these international agreements.

When the EU decided to create a GHG emission market, related to the Kyoto Protocol, through the EU-ETS, no direct emission from the different transport sectors was taken into account.

However, seeing the strong growth of international transport, mainly the aviation sector these last years, and the lack of progress in the negotiations with ICAO to tackle increasing climate impacts of aviation (see the synthesis Aviation climate impacts for more details), the EU decided to act on his own to mitigate aviation emissions. Among the considered policy measures (Communication outlining plans to reduce the impact of aviation on climate change) appeared the support to the development of cleaner air transport, a better air management system, the abolition of the obstacles to the taxation of kerosene and the inclusion of aviation in the EU-ETS.

In this context, the European Commission proposed on the 20th of December 2006 to include the aviation sector in the EU-ETS, based on:

The following points detail the proposal and the conclusions from the first reading of the European Parliament and Environment Council. The last point sets out the next steps needed for the adoption of this inclusion in the EU-ETS.



2. Commission Proposal

Related documentation : Text of the proposal and Impact assessment

The proposal to include aviation in the EU-ETS was made by the European Commission because it was seen as one of the most efficient and cost-effective policy instruments to curb the growing climate impacts of the aviation sector.

2.1. Main points of the proposal

The most important points of the proposal are summarised here:

2.2. The proposed benchmark system

The benchmark system of the proposal is based on a t.km activity indicator, the RTK. Each operator will receive for free a certain amount of allowances calculated as follows :

  1. distances calculated in km for the proposed benchmark are based on the Great Circle Distance (GCD) and not on the real distance flown between two airports;
  2. air carriers have to convert their number of passenger.km in 2010 (reference year for the benchmark) into t.km by using the default value of 100 kg per passenger transported;
  3. the total emission cap to be allocated for free (e.g. global aviation emission cap minus emissions to be auctioned) is divided by the sum of all t.km concerned by the scheme in 2010 (passengers + cargo) to obtain the benchmark factor (kind of efficiency indicator);
  4. each air carrier will receive for free, each year of the commitment period, the amount of allowances determined by the multiplication of the benchmark factor by its own amount of t.km concerned by the scheme in 2010.
The benchmark factor measures a kind of efficiency indicator of each air carrier : the average amount of CO2 emitted per tonne transported on one kilometer distance. An efficient air carrier will proportionally receive more free allowances to cover its real emissions than an air carrier with a lower benchmark factor.


2.3. Main discussion points concerning the proposal

The integration in two-phases proposed by the Commission has provided food for thoughts and discussions because it raises an important risk of market distortion between European airlines and non-EU carriers (cf. the majority of EU carriers flights departs from or arrives in a EU Member States which is not the case of non-EU carriers that could therefore soften the EU-ETS cost thanks to other routes). Moreover, the Chicago Convention explicitly forbids treating differently two airlines operating on the same route, which is the case with an inclusion in two phases.





3. European Parliament first reading

Related documentation : Clear skies ahead: MEPs vote to curb airline emissions by including them in European trading scheme



4. European Council first reading

Related documentation : Summary of the Conclusions of the Council of Environment Ministers (EurActiv)



5. Comparison table

The table below presents the position adopted in the European Commission proposal (December 2006), in the Parliament first reading vote (November 2007) and in the conclusions of the Environment Council (December 2007) for the major thematics where opinions diverge.

The only exception in the table concerns the emission ceiling defined as the average of 2004-2005-2006 emissions, about which a global consensus seems to take form.

Comparison table between the European Commission proposal, the Parliament and Council Environment first reading

Comparison table between the European Commission proposal, the Parliament and Council Environment first reading

(from WP6 of the ABC Impacts project, based on the Ruth Declerck's presentation at the Stakeholders' dialogue in January 2008)
Remark : worlds in blue in the table are detailed in the glossary


6. Next steps