Aircraft GHG emissions under EU-ETS: Regulations in making

Posted on October 26, 2010 by

International emissions from aviation transport are excluded from the targets set for developed countries by the Kyoto Protocol and the UNFCCC. The International Civil Aviation Organization (ICAO) has been given the responsibility to tackle the issue under the Kyoto Protocol. It is only recently that the ICAO had been able to reach agreement on binding actions aimed at limiting greenhouse gas (GHG) emissions.

This month, the 190 members of the ICAO approved a resolution in which they agreed to improve fuel economy and strive to limit GHG emissions from aircraft. Under this resolution, the ICAO has set a goal to improve fuel efficiency 2 percent per year through 2050, cap GHG emissions at 2020 levels, develop a global framework for the use of alternative fuels, and propose a GHG emission standard for aircraft engines by 2013. The ICAO also intends to develop a framework for market-based measures and has issued guiding principles for the design and implementation these measures for the aviation sector. These principles aim to minimize market distortions, ensure fair treatment to the aviation sector,  ensure that double counting is avoided and that the  efforts in the past and future efforts of carriers in GHG mitigation are recognized. The member countries have been encouraged, but not bindingly mandated to submit action plans to the ICAO by the end of June 2012. Such plans should indicate the reduction and reporting actions planned for international aviation.

Starting in 2012, the EU ETS requires most operators flying in and out of Europe to reduce GHG emissions. The commercial operators that emit less than 10,000 metric tons of carbon per year or operate fewer than 243 flights per period for three consecutive four-month periods are exempted. In 2013, the EU ETS aviation cap will be set at 3% below the established baseline, which is set at the sector’s emissions between 2004 and 2006. The cap will then be reduced to 5% below the baseline. This translates to a required reduction in their emissions by more than 200 million tons of carbon equivalent. Operators will be awarded free allowances based on a formula called revenue per ton per kilometer. This is a measure of weight and distance traveled. The operators will be initially required to purchase 15% of their necessary allowances. The International Air Transport Association (IATA)estimates that compliance with the EU ETS will cost the industry at least 2.4 billion euros, or about $3 billion, a year.

There are few objections being raised to the proposed format. The business aviation operators have complained that the EU ETS favors commercial airlines to the disadvantage of smaller, private operators. Starting December 2009, American Airlines, Continental Airlines and United Airlines, backed by the Air Transport Association have requested for a judicial review in the British courts, challenging their inclusion in the EU ETS. The airlines are arguing that the EU lacks jurisdiction to regulate flights to and from the United States. On January 20, 2010, the UK Government referred the matter to the European Court of Justice. The suit is pending.