International flights will soon be subject to EU emission limits

As an incentive to airlines to reduce the escalating greenhouse gas emissions^[1] from international flights, the European Commission is proposing^[2] to fix the number of emission allowances for each operator. It will apply to all flights leaving European Union (EU) airports, regardless of nationality. Operators would be entitled to trade their emission allowances in the EU's Greenhouse Gas Emissions Trading System (ETS)^[3].

The ETS is a core tool devised by the Union to meet its commitments under the Kyoto Protocol^[4] to reduce greenhouse gas emissions. The aim is to ensure that aviation does not undermine but rather contributes to efforts to counter climate change.

Extending the ETS to aviation

The ETS began on 1 January 2005 and it covers almost 11,500 industrial installations, which combined account for 50% of all EU CO₂ emissions. Each operator receives a certain number of allowances to emit a certain level of CO₂ per year. They cannot exceed the allowance and must surrender the number of allowances used for emissions for that year. However, an installation that expects to exceed its limit may buy additional allowances on the market. The alternative is to fit more efficient technology. The added incentive of fitting more efficient technology is that any emission allowances that have not been used may be sold or set aside for future emissions.

Working towards not against the Kyoto Protocol

The Kyoto Protocol contains the political commitment of the developed countries to reduce their collective greenhouse gas emissions by approximately 5% by the period 2008-2012 compared to the levels in 1990. Given projected growth in aviation the Commission anticipates that by 2012, emissions from international flights from EU airports will have increased by 150% since 1990^[5]. This growth in the EU's international aviation emissions would offset more than a quarter of the reductions required by the EU's target under the Kyoto Protocol. The adapted ETS system would build the aviation industry into the overall strategy for climate change, which is currently being prepared for the post-2012 phase.

The European Commission expressly states that it is devising a regulatory model that can be extended and even replicated worldwide^[6].

Greener results at the lowest cost

Incorporating the aviation industry in the ETS is preferred to taxes or a charge on fuel both by carriers as well as travellers. The Commission envisages that the system should not raise the price of return tickets by more than EUR 9 and any effect on tourism or outlying peripheral regions of the EU is expected to be limited^[7]. It is generally accepted that participation of the aviation industry in the ETS will have the same environmental benefits as taxes or charges on fuel, but at a lower cost to society.

Why now?

The International Civil Aviation Organisation (ICAO) was designated the task of limiting or reducing green house gas emissions from international aviation. This is specifically set out in the body of the Kyoto Protocol at Article 2.2. But it has, for many reasons, not taken such action. The EU had set itself that task in the absence of action by the ICAO by 2002^[8].

Adapting the ETS for aviation

Following studies carried out on the policy approach to the system^[9], the Commission's legislative proposal will adapt the ETS specifically to the nature and needs of the aviation industry.

• Aircraft operators are responsible
  Aircraft operators are to be made responsible under the ETS because they have the most direct control over the type of aircraft in operation and the way in which they are flown.
• CO₂ and non CO₂ aspects are covered
  In order to prevent a situation arising where CO₂ emissions are reduced at the expense of other types of emissions, the Commission will cover in its proposal all types of environmental impacts of the aviation industry. The ICAO only recognises carbon dioxide as a greenhouse gas under the Kyoto Protocol but does not recognise any other emissions such as nitrogen oxides, water vapour, and sulphate and soot particles. Thus, the system envisaged by the Commission will certainly be broader in scope than any ICAO proposal might have been.
• All flights departing from EU airports are covered
  While the impact on the relative market shares of EU and non- EU carriers is under further examination, the Commission intends to cover all flights departing from the EU - apparently, to limit the system to intra-EU flights, that take-off and land in the EU, would not address even 40% of the emissions of all flights departing from the EU. So this proposal will also present something of a challenge to non-EU carriers.
• Calculating emissions
  In order to calculate and apportion the overall limits on emissions a different approach needs to be taken for aviation compared to installations participating in the ETS currently. Also, a 'harmonised allocation methodology' has to be agreed for the entirety of the EU's air transport market.

Beefing up the system

In parallel a range of other actions are being considered to strengthen the approach. Such actions include:

• giving greater priority through EU research funding to aeronautics research into reducing the negative impacts of air transport on climate change;
• removing all legal obstacles from bilateral air services agreements for the purposes of applying energy taxation to aviation fuel; and
• continuing work on technical design standards for limiting aircraft emissions at source.

The timeframe for introducing the system

The Commission intends to issue a legislative proposal before the end of 2006. A legislative proposal usually takes around two years to pass through the EU decision-making processes. The actual entry into force of the system could be as early as 2008.

Preparations are under way

Preparatory work is already well underway with the public consultation of March through to May this year now completed. Also, aviation is the subject of discussion in one of eight working group sessions on 24 October 2005 as part of the new phase in the broader European Climate Change Programme. The European Climate Change Programme is the Commission's main instrument to discuss and prepare the further development of the EU's climate policy and brings together industry, national experts, the Commission and nongovernmental interest groups.

This group will concentrate on assessing how to frame the EU legislation. It will consider all the elements relevant to adapting the ETS for the aviation industry. The group will submit its conclusions by April 2006 at the latest

Footnotes:

[1] Aviation carbon emissions currently stand at 2% of total carbon dioxide emissions from human activities and is set to rise to 3% by 2050. However, the contribution from aircraft emissions to climate change could be greater due to other emissions such as water vapour and nitrogen oxides. Thus the total contribution of aviation to climate change is predicted to amount to 5% of the total contribution of human activities to climate change by 2050.

[2] See Commission Communication Reducing the Climate Change Impact of Aviation COM(2005) 459, 27 September 2005.

[3] Directive 2003/87 establishing a scheme for greenhouse gas emission allowance trading within the Community, OJ 2003 L 275/32, as amended by Directive 2004/101, OJ 2004 L 338/18.

[4] The Kyoto Protocol to the United National Framework Convention on Climate Change (INFCCC).

[5] See Commission Communication Reducing the Climate Change Impact of Aviation, op. cit. n. 2.

[6] See Commission Communication Reducing the Climate Change Impact of Aviation, op. cit. n. 2, at p. 9.

[7] See the study commissioned by the European Commission Giving Wings to Emission Trading; Inclusion of Aviation under the European Emission Trading System (ETS) – design and impacts (Delft, CE Solutions for Environment, Economy and Technology, July 2005).

[8] See Decision 1600/2002 of the European Parliament and of the Council laying down the sixth Community Environment Action Programme, OJ 2002 L 242/1.

[9] Notably the above study Giving Wings to Emission Trading, op. cit. n. 7.