Aviation EU-ETS Compliance Update – Carbon Credit Trading
In recent years, more and more layers of procedures and requirements have been added to aviation European Union Emission Trading Scheme (EU-ETS) compliance. The cost of compliance – particularly in terms of administration – can be somewhat high for many typical General Aviation (GA) flight departments. Whether managing your aviation EU-ETS administration on your own or with the help of an experienced 3rd-party provider, here’s an overview of what you should know:
1. 2012/2013 carbon trading phase of EU-ETS
To maintain compliance with aviation EU-ETS, there are many systems that need to be in place and must work together. For example, you must have a registry account and purchase/sell carbon credits. While there’s a clear list of steps that must be taken to achieve and maintain EU-ETS compliance, certain steps can require months to complete. Some GA operators may still not have a registry account, while many EU countries are still waiting for revalidation from those operators who do have them.
2. Be prepared to purchase carbon credits
We’re entering a new phase in EU-ETS compliance this year (with Phase 3 already in place as of January 2013) requiring operators to purchase and surrender carbon credits. Carbon credits are readily available on commodity exchange markets, and prices are based on market demand. Carbon credit pricing has come down lately due to the current economic downturn in Europe. In early 2012, one carbon credit cost about 10+ Euros, but by the end of last year, credits were selling for closer to 4-5 Euros per unit. A small emitter, typically, purchases carbon credits toward the end of the year – after their emission report has been submitted/verified, and required carbon credits have been determined. Keep in mind that the submission deadline of your aviation EU-ETS emission report varies based on your particular assigned member state.
3. Work with a carbon credit broker you trust
The carbon credit market is a fluctuation market, and you’ll need to work with a broker/vendor you trust. Small emitters pay a higher price per carbon credit. This is because the number of credits purchased is small – compared to airlines, coal producing plants, etc. – and small unit surcharges are typically high. Currently, all brokers processing small emitter carbon credits are located in the EU (none are in the US), with many based in the UK. As credits are traded on European markets, you’ll need to submit purchase orders Monday-Friday by early afternoon Eastern time or early morning on the west coast.
4. Moving towards EU-ETS compliance
For operators not in compliance with EU-ETS thus far, it’s best to find a 3rd-party provider to assist in the process. While there are assorted self-help tools and tutorials available to assist with the EU-ETS compliance process, we’ve found that many operators who have tried to “do it on their own” are now turning towards 3rd-party providers due to flight department time commitments in maintaining EU-ETS compliance. When you’re trying to do it all on your own, there are too many parameters to consider to efficiently complete the process with in-house flight department resources alone.
5. 3rd-party provider benefits
While the individual GA operator will always need to be engaged to some extent with the EU-ETS process, much of the detail work in terms of carbon emission tracking and reporting can be offloaded to 3rd-party providers. When working with a 3rd-party provider, the flight department contact person is often the director of operations or a pilot.
6. Additional Reading
For more information on EU-ETS and business aviation, see other articles published on this blog:
- EU-ETS 101: Introduction to EU-ETS for Business Aviation
- EU-ETS for Business Aviation: Implementation, Costs and Risks of Non-Compliance
- Administering Aviation EU-ETS and the Future State of the Program
- Aviation EU-ETS Compliance Update – Essential Considerations
Best practice is to achieve/maintain compliance with EU-ETS now and find a trusted 3rd-party provider to be your advocate, while being prepared to adapt to possible changes in downline carbon emission reporting and/or a new global emission reduction scheme.
If you have any questions about this article or EU-ETS regulations, contact me at email@example.com.