Revised EU Emissions Trading System (EU ETS) rules to include the aviation sector can help the bloc reach its ‘Fit for 55’ emissions reduction goal by 2030. The industry has been ineffective in taking action on its own to reduce emissions, which can justify resorting to the ‘polluter’ pays principle.
- The European Union will phase out free allowances for the aviation sector by 2026.
- Aviation accounts for 2-3% of global CO2 emissions, but this share rises to 3.7% in the EU.
- The new measures require the industry to assume greater responsibility for its own emissions, having previously been ineffective in taking action on its own.
Making aviation pay their fair share as part of ‘Fit for 55’
The EU parliament and the European Council have agreed to make the aviation sector take greater responsibility for its emissions. Once the agreement is formally adopted, free allowances for the aviation sector will be phased out by 2026.
The Fit for 55 initiative, part of the European Green Deal, is crucial to Europe becoming the world’s first climate-neutral continent by 2050. It consists of a series of measures to make the bloc’s climate, energy, land use, transportation and tax policies suitable for reducing net greenhouse gas emissions by at least 55% by 2030.
Aviation contributes to 2-3% of global CO2 emissions, but the share rises to 3.7% of the total across the EU. Recognising the EU ETS’ effectiveness as a key tool for addressing CO2 emissions, the EU decided to amend its rules relating to the aviation sector.
The new carbon pricing will apply to flights within the European Economic Area until the beginning of 2027, as well as to flights departing from Switzerland and the UK and landing in the bloc. The Commission will also assess whether the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is sufficiently delivering on the goals of the Paris Agreement, by 2026.
Stakeholder consultations revealed divide between member states, NGOs and businesses
A public consultation was carried out between October 2020 and January 2021 to assess the impact of amending the EU ETS rules relating to the aviation sector. Specifically, it sought feedback on whether respondents favoured an EU ETS option or a CORSIA option in formulating policy on dealing with aviation emissions.
According to the EU, the aviation sector achieved a net saving of 193.4 million tons of CO2 between 2013 and 2020, largely via offsets. To contribute to the goals of the Paris Agreement, however, the aviation sector needs to take broader global action.
NGOs favoured a full implementation of EU ETS-based rules to administer aviation emissions, be they with the existing allowances, the amended rules to phase out the allowances by 2026, or some combination thereof.
Businesses and the aviation sector preferred the CORSIA-only policy option, which allows them to use offsets, and is less stringent than the requirements placed on the sector under the ‘Fit for 55’ timeline.
EU member states supported a mix between the EU ETS but also called for policies to support innovative technologies, operational improvement, and the use of sustainable aviation fuels (SAF).
Financing industry innovation, technology and the development of SAF
The proposed deal by the EU parliament and the EC has provisions to support the aviation industry to help with its transition. For example, an estimated €1.6 billion from EU ETS revenues will be used to fund the development of SAF.
The funding will also help create a system for airlines to monitor non-CO2 emissions and climate effects, which account for two-thirds of aviation’s climate impact. Improving airline operations through the Single European Sky initiative, for example, was also an area to invest funds from ETS revenues.
Other areas of support suggested by respondents of the consultation included support for improved aircraft technology, and changes in tax policy.
EU still lacks regulation to curb business and private jets
The news comes as Belgium proposed to impose taxes on private jets and short-haul flights in a bid to reduce noise and air pollution. Previously, this type of levy only extended to noisier, older planes.
Business aviation accounts for 12% of air traffic in Belgium, and 8% in the EU. While there is no EU regulation to tax corporate aircraft, the inclusion of the sector in the EU ETS scheme could affect the business jet segment as well.
Aviation sector inclusion in EU ETS vital to reaching ‘Fit for 55’
The richest half of the world is responsible for 90% of CO2 emissions from passenger air travel. In the EU, aviation emissions account for a higher proportion of total emissions, than they do in the rest of the world. Including the aviation sector in the EU ETS, therefore, is vital for the EU to achieve a minimum 55% reduction in its CO2 emissions by 2030.
Accelerating the implementation of the polluter pays principle and phasing out free allowances for aviation also seem to be a necessary step, largely because the industry has been ineffective in taking action to reduce emissions on its own.
From 2013 to 2019 air passenger transport-related emissions increased by 33%, amounting to 785 million tons in 2019. At the same time, the industry-funded offsets were only able to provide a saving of 193.4 tons, suggesting that fuel efficiency and operational measures, if implemented, had no effect on lowering emissions.
Frans Timmermans, executive vice-president for the European Green Deal, said: “The EU is fully committed to its 2030 and 2050 climate targets, and we are determined to set all sectors on a pathway to climate neutrality. With this agreement, we will make the ETS system more rigorous to create a stronger economic incentive to reduce emissions and in parallel, we will help fuel suppliers and flight operators make the move towards sustainable aviation fuels.”