Extending current aviation rules in the EU emissions trading system - provisional deal reached
19 October 2017 | Trading
On 18 October, the Estonian Presidency reached a provisional agreement with European Parliament representatives on a regulation to extend existing provisions covering aviation activities in the EU emissions trading system (ETS) regulation beyond 2016 and to prepare for the implementation of the global market-basedmeasure as of 2021. The provisional text will be submitted to the EU ambassadors for political endorsement.
This new regulation is the follow up to the decision reached in October 2016 by the International Civil Aviation Organisation (ICAO) to introduce a global market-based measure from 2021 in order to regulate international aviation emissions through an offsetting system, also referred to as CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). The EU supports this measure and aims to join the 'pilot' phase of the scheme in 2021 on a voluntary basis.
In the meantime, the adoption of this new regulation before the end of the year is an indispensable requirement to avoid any legal gap as regards compliance with the current ETS regulation in 2017. Today's agreement enables this adoption to happen on time. The dates for reporting and surrendering allowances from emissions in 2017 would be 31 March and 30 April 2018 respectively.
The main elements of the provisional agreement are as follows:
- maintain current limitations within the scope of the EU ETS, particularly by prolonging the derogation for non-intra European Economic Area (EEA) flights until 31 December 2023, when the 'first' phase of CORSIA will begin;
- establish provisions for a review aimed at implementing the global market-based measure within the EU, particularly in the ETS directive, once all ICAO decisions have been taken;
- subject to this review, foresee the application of the Linear Reduction Factor, as set out in the ETS directive, to the aviation sector from 2021 onwards.
A statement was also issued emphasising the need for ICAO to act in full transparency and to reach out to all stakeholders to inform them about the progress and decisions in a timely manner.
In addition, the Parliament and the Council have agreed safeguard measures to preserve the integrity of the EU ETS in case that obligations of aviation operators and other operators from a member state cease.
Timeline and next steps
The Commission submitted its proposal on 3 February 2017 and presented it to the Environment Council on 28 February. On 21 June, EU ambassadors agreed on the Council mandate for negotiations with the European Parliament. The latter voted during the plenary of 13 September. Subsequently, both co-legislators attended a first trilogue meeting on 25 September.
Once the deal is approved by EU ambassadors, the Parliament and the Council will be called on to adopt the new regulation at first reading. Thereafter, it will enter into force on the day of its publication in the official journal.
ETS and ICAO - background
The emissions trading scheme (ETS) was launched in 2005 to promote the reduction of greenhouse gas emissions at EU level. The aviation sector is part of the existing ETS regulation. Emissions from aviation also form part of the EU's goal of cutting greenhouse gas emissions by 20% by 2020 compared to 1990 levels.
In 2014, the EU decided to reduce the scope of the ETS scheme to apply only to intra-EEA flights, in order to facilitate progress in the negotiations within the ICAO, and in the hope of achieving clarity regarding emissions from international flights connecting the EEA and third countries. It was then decided that the derogation for non-intra EEA flights would apply only until the end of 2016.
The ETS reform is currently under negotiation for the 2021-2030 period. A review of the reform is planned for when ICAO legal obligations with regard to the implementation of the global market-based measure become clear. Consistency will also be ensured with the EU's commitment under the Paris Agreement to reduce emissions by at least 40% by 2030 compared to 1990 levels.
The ICAO global market-based measure aims to slow the growth of greenhouse gas emissions in the aviation sector and keep emissions at the same level from 2020 onwards. The application of the measure will become compulsory for major aviation countries in 2027, but a voluntary 'pilot' phase will be launched in 2021.