CO2 emission limits for airlines under EU ETS

Posted on April 6, 2011 by

As we had earlier mentioned, starting 1 January 2012, aviation sector will be included in the European Emissions Trading Scheme (EU ETS), EU’s mandatory cap-and-trade system for reduction of GHG emissions. Similar to industrial installations included in the EU ETS, more than 4,000 European and international aircraft operators will come under the EU-ETS. Airline operators arriving and departing in the EU will receive tradable emission permits (aviation allowances) covering a certain level of their CO2 emissions per year for their flights operating to and from EU airports.

The mean yearly average for the years 2004, 2005 and 2006 formed the basis of calculating the cap and the amount of aviation allowances to be allotted to the relevant aircraft operators. The number of aviation allowances to be issued each year represents a reduction target of -3% for 2012 and -5% from 2013 onwards compared to the average annual emissions from 2004 to 2006. There is a mechanism for raising money upfront, with only 82% of the available aviation allowances to be given free to operators. For availing such free aviation allowances, operators must submit a third party verified report of its emissions during 2010 by 31 March 2011. If an operator does not meet this requirement, he may have to buy all the allowances it needs in the market. A broader non-compliance with the Aviation Directive entitles the European Commission to ban the operations of the operator. The free allocations will be made by 28 February 2012. The basis of allocations, a 2010 benchmark is to be published by 30 September 2011.


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