Frequently Asked Questions - Emissions Trading in Europe
These frequently asked questions are meant to help you understand what is needed to prepare for
emissions trading in Europe.
What is an Emissions Trading Scheme?
- Emissions trading is a market-based scheme for environmental improvement that allows participants to buy and sell emissions allowances, i.e. rights to emit a fixed amount of emissions per year.
- Emissions trading allows established emission goals to be met in the most cost-effective way by letting the market determine the lowest-cost pollution abatement opportunities.
- At the end of each trading year, participants have to hand over (“surrender”) allowances corresponding to their actual emissions in that year.
- Participants can either sell unused allowances to other participants in the scheme or must buy the allowances needed to cover their extra emissions from other participants.
- Example: an airline joins the trading scheme in 2012 and is given allowances to emit 1 million tonnes of CO2 for that year.
- If that airline only emits 0.8 million tonnes in 2012, it can sell 0.2 million tonnes worth of allowances to another airline in the scheme.
- If that airline emits 1.2 million tonnes in 2012, it would have to buy the right to emit the extra 0.2 million tonnes from another company in the scheme (e.g. airline, factory, power plant, etc.).
Where can I find out more about the EU ETS?
For information on the EU Emissions Trading Scheme, please refer to
EU ETS How does the EU ETS apply to aviation?
- A directive to include aviation into the EU Emissions Trading Scheme (ETS) was published in the European Union’s Official Journal on 13 January 2009. Key elements:
- Applicable to all flights (by all carriers) to, from and within the EU.
- Effective as from 1 January 2012.
- In 2012, an EU-wide cap on aviation emissions is set at 97% of the average annual emissions for the years 2004-2006. This is lowered to 95% as from 2013.
- Airlines will have to buy 15% of their allowances under this cap through an auction. They will initially receive 85% free of charge.
- Additional allowances (to cover growth) will also have to be purchased.
- No requirement exists for States to put auctioning revenues back in to the industry or even towards climate change initiatives.
- Aviation’s inclusion into the EU ETS will be reviewed in 2014.
- The directive to include aviation has been incorporated in the consolidated version of the general EU ETS directive (Dir 2003/87/EC) (pdf).
Which airlines are captured by the EU ETS?
- In 2009, the EC published a final list of aircraft operators and their administering member states captured by the EU ETS. An updated list was published on 28 January 2010.
- It has also published a description of the methodology used for generating the list (pdf) as well as a detailed FAQ on aviation activities (pdf) under the EU ETS.
- Airlines are advised to double-check their inclusion status directly with the competent authority in their administering Member State (pdf).
- The Commission will update the list every year to include new aircraft operators.
- In addition, the EC has issued a prior compliance list (pdf) specifying the administrative Member State for unlisted aircraft operators who anticipate that their activities will fall under the Directive by the start of the initial monitoring in 2010.
My airline is included - What should I do now?
What types of flights are included?
- All flights that arrive or depart from an aerodrome situated in the territory of an EU Member State are included. However, note that the following flights are exempted:
- Public Service Obligation (PSO) flights within outermost European regions or on (PSO) routes with a capacity offered of fewer than 30,000 seats per year.
- Flights performed by commercial airlines operating fewer than 243 flights (to/from/within the EU) per period (for three consecutive 4-month periods), or flights (to/from/within the EU) with total annual emissions lower than 10,000 tonnes per year.
- Flights by aircraft with a certified maximum take-off mass of less than 5,700 kg.
- Other exemptions such as flights under visual flight rules (VFR), flights for humanitarian reasons, emergency and medical services, police and military flights, cockpit crew training flights, and scientific research flights.
- On 8 June 2009, the Commission issued a detailed interpretation (pdf) of the aviation activities listed in Annex 1 to Directive 2003/87/EC.
What are the trading periods?
- The Commission so far has defined two trading periods. The first trading period consists of the year 2012. The second trading period comprises the eight years to the end of the next Kyoto period, i.e. from 2013 to 2020.
Which is my administering Member State?
- For EU-carriers the administering Member State is the EU Member State that granted the operating license to that aircraft operator.
- For non-EU carriers the administering Member State is the EU Member State with the “greatest estimated aviation emissions” from flights performed by that aircraft operator in the base year (2006) or the first year of operation if an aircraft operator started operating in the Community after 1 January 2006.
- In 2009, the EC published a final list of aircraft operators and their administering member states captured by the EU ETS. An updated list (pdf) was published on 28 January 2010.
- Airlines are advised to double-check their inclusion status directly with the competent authority in their administering Member State.
- The Commission has published a list of competent authority contact details (pdf).
- The Commission will update the list every year to include new aircraft operators.
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