Aviation EU-ETS Changes – Part 1: Good News from the European Commission
The European Union Emissions Trading System (EU-ETS) was launched in 2005 and is the largest emissions trading scheme in the world. General Aviation (GA) has been facing the prospect of rather onerous emissions tracking, verification and payments. Thanks to a recent change in stance by the European Commission (EC), the specter of "small emitters" actually having to pay for C02 emissions will be delayed. This is good news for GA.
The following is an overview of what you need to know:
1. Know what’s changed
Just this year, the International Civil Aviation Organization (ICAO) proposed a roadmap for development of a global Market-Based Mechanism (MBM) to tackle aviation emissions. The idea is that a global MBM is a fairer ETS than a regionally-based system like EU-ETS. After intense negotiations, the 191 ICAO member states agreed to develop a global MBM to limit international aviation CO2 emissions. ICAO’s proposed date for finalizing a global proposal is 2016, with implementation in 2020. The EC is now willing to reconsider parameters, and territorial applicability, of its EU-ETS program. ETS amendments are anticipated to be applied to aviation activities covered by the EU-ETS.
2. A new emissions trading roadmap
ICAO’s roadmap for development of a global MBM attempts to tackle the issue of aviation CO2 emissions. This ICAO action promotes momentum towards establishment of a global MBM. This action may result in the EC making rule changes with regard to emissions tracking, verification, and carbon credit offset payments. The agreement promotes international dialogue, focusing on simple, more workable measures in addressing carbon emissions of smaller emitters – i.e., typical business aviation operators. ICAO foresees a decision on actual implementation of an MBM at the next ICAO assembly in 2016. This important achievement is a positive and welcome development for international business aviation operators.
3. International pressure inspired changes
There’s been political pressure from non-EU-based operators who’ve resisted paying carbon taxes for flights – other than actual overflight of EU airspace. Meanwhile, high administrative costs – of both time and money – have been projected for EU authorities in order to have small emitters comply with existing EU-ETS regulations.
4. MBM proposals
MBM proposals are currently being reviewed in terms of who it will apply to and how it will be administered. Any adopted proposal needs to be ratified by ICAO member states and translated into national law.
5. New EU-ETS proposals are aimed at small emitters
Using the EU proposals, the EC is proposing a new exemption threshold of 1,000 tons of CO2 annually for small emitters – based on entire flight leg to, from, or within the EU. If an operator goes over 1,000 tons/year, he or she only needs to purchase credits for CO2 emissions for the portion of applicable flights within EU territorial airspace.
6. What this means to GA operators
EC’s new EU-ETS proposal will be reviewed by the EU parliament and ratified in whole or in part or denied altogether. A final decision is unknown at this time and is not expected until spring 2014. If the new EU-ETS proposal does prevail, operators may still be exposed to administrative costs from EU member states in terms of monitoring plans, etc. If these proposals are approved by the EC, it will be unnecessary for GA operators to employ 3rd-party companies to verify Annual Emissions reports compiled by Eurocontrol’s ETS Small Emitter’s Support Facility. It will also be unnecessary to purchase carbon credits to cover GA operations in either 2013 or 2014.
7. This is very positive for GA
Although EU-ETS is technically now in full force, the ratified EC proposal means that operators could delay emissions reports – and would not have to have annual C02 emissions tracked and validated by third parties – at least until 2015. It’s recommended, however, that operators continue to track all flights to, from, and within the EU. New tools will eventually be introduced to calculate emissions, and it’s important to be prepared for whatever EU-ETS final proposal goes into place.
8. No need to purchase carbon credits this year or next
The only GA operators who should purchase carbon credits are those who owe carbon credits for 2012 qualifying flights. Even though you may be exempt from future carbon credit submissions, you’ll need to settle any negative carbon credit balances currently owing.
9. Best practice is to be prepared
For 2013 and 2014, GA operators should keep a log of all flights to, from, and within the EU. If approved, you may no longer have to have CO2 records audited and verified by approved 3rd-party providers, and this development will save operators significant time/money. If and when a new EC EU-ETS proposal becomes implemented, operators may need to review 2013 and 2014 flight records to calculate any applicable CO2 emission charges that may be owed retroactively.
The ETS regulatory compliance landscape has undergone a significant change thanks to ICAO’s recent efforts in promoting a global ETS scheme. While operators should not assume that this heralds an end to EU-ETS, C02 reporting, and carbon trading, they may have a two-year window during which reporting, verification, and carbon payment responsibilities may be suspended.
If you have any questions about this article or EU-ETS regulations, contact me at email@example.com.
Stay tuned for Part 2, which covers covered areas, calculations, and exemptions for EU-ETS.