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Aviation in the EU ETS – Background

On 13 January 2009, the European Commission passed a directive imposing mandatory greenhouse gas (GHG) emission reduction targets on all airlines operating within the European Union (Directive 2008/101/EC amending Directive 2003/87/EC).

All aircraft operators with flights that either depart or arrive in the EU will be included in the EU Emission Trading Scheme (EU ETS), and each foreign airline has been assigned an EU member state to which it must report, called the competent authority.

Under the EU ETS, airlines will be obligated to monitor and report greenhouse gas emissions. Each year, the airline must surrender emissions allowances equal to its GHG emissions. Most of these allowances will be allocated for free, based on the tonne-kilometer data for each airline's flights that either originate or arrive in an EU state. The remainder of the allowances, however, must be purchased by the airline in special auctions or through the international carbon market.

Airlines must begin monitoring and reporting both GHG emissions and tonne-kilometer data on 01 January 2010. In order to do so, the airline must prepare monitoring plans for annual emissions and tonne-kilometer data well in advance. These monitoring plans must outline how the company obtains, processes, records and monitors both its GHG emissions and its tonne-kilometer data. They must also contain information on quality assurance for the entire system. Airlines must receive approval for both of these monitoring plans by 31 December 2009.*

While the deadline for receiving approval for both monitoring plans is 31 December 2009*, airlines would be well-advised to seek approval as soon as possible, as all procedures need to be implemented by 01 January 2010. From that date aviation companies will be required to monitor the annual emissions and tonnene-km data according to the monitoring plan. The procedures described in the monitoring plan should match those implemented and therefore that the monitoring plan contain procedures and activities that the airline is capable of implementing.

*Some EU states have delayed this deadline, although please note that any delays bring additional risks and costs.