EC Proposes Bringing Air Transport into EU Emissions Trading Scheme

January 2, 2007 // Published as a news service by IHS

The proposed directive will cover aviation emissions from flights within the EU from 2011 and all flights to and from EU airports from 2012. Both EU and foreign aircraft operators would be covered. Like the industrial companies already covered by the EU ETS, airlines will be able to sell surplus allowances if they reduce their emissions and will need to buy additional allowances if their emissions grow. Any increase in ticket costs resulting from the scheme is expected to be limited, and significantly lower than rises due to oil price changes in recent years.

European Commission (EC) Environment Commissioner Stavros Dimas said, "Aviation, too, should make a fair contribution to our efforts to cut greenhouse gas emissions. The Commission will continue to work with our international partners to promote the objectives of a global agreement on aviation. Bringing aviation emissions into the EU Emissions Trading Scheme is a cost-effective solution that is good for the environment and treats all airlines equally."

Growth in aviation emissions
While emissions from domestic flights are covered by the Kyoto Protocol targets, international aviation is not. Moreover, jet fuel for international flights has historically been exempted from taxation. Bilateral air agreements between EU member states and third countries are being changed to allow this possibility, but this will take time to implement.

Emissions from aviation currently account for about 3% of total EU greenhouse gas emissions, but they are increasing quickly – by 87% since 1990 – as air travel becomes cheaper without its environmental costs being addressed. For example, someone flying from London to New York and back generates roughly the same level of emissions as the average person in the EU does by heating their home for a whole year.

The rapid growth in aviation emissions contrasts with the success of many other sectors of the economy in reducing emissions.

Without action, by 2012 the growth in emissions from flights from EU airports will cancel out more than a quarter of the 8% emission reduction that the first 15 member states of the European Union (EU-15) must achieve to reach their Kyoto Protocol target. By 2020, aviation emissions are likely to more than double from present levels.

The proposed directive
The proposal for a directive follows up on a September 2005 communication (Reducing the climate change impact of aviation, COM(2005) 459 final) that concluded that bringing aviation into the EU ETS was the best approach, from an economic and environmental point of view, to tackling aviation emissions. This was subsequently supported by the EU Council of Ministers and European Parliament.

The directive will treat all airlines equally, whether EU-based or foreign. From 2011, all domestic and international flights between EU airports will be covered; from 2012, the scope will be extended to all international flights arriving at or departing from EU airports. It is estimated that by 2020, CO2 savings of as much as 46%, or 183 million tonnes, could be achieved each year, compared to business as usual. Such savings is equivalent, for example, to twice Austria's annual greenhouse gas emissions from all sources.

To limit the rapid growth in aviation emissions, the total number of emission allowances available will be capped at the average emissions level in 2004-2006. Some allowances will be auctioned by member states, but the overwhelming majority will be issued for free on the basis of a harmonised efficiency benchmark reflecting each operator's historical share of traffic.

To reduce administrative costs, very light aircraft will not be covered, and each operator will be administered by only one member state.

The directive is part of a comprehensive approach to addressing aviation emissions that also includes more research into greener technologies and improvements in air traffic management.

Impact on ticket prices
Assuming airlines fully pass on any extra costs to customers, by 2020 the price of a typical return flight within the EU could rise by between €1.8 and €9. Long-haul trips could increase by somewhat more, depending on the exact journey length, due to their higher environmental impact. Nevertheless, ticket price increases are expected to be significantly lower than the extra costs passed on to consumers due to world oil price increases in recent years.

More information
Further information is available on the EU web page on Aviation and climate change. See also MEMO/06/506.

Source: European Commission.