EBACE Convention News

The Latest On The EU ETS

 - May 20, 2014, 2:40 AM

Although the intentions were good, in reality rolling out the EU emissions trading system (EU ETS)–considered a cornerstone of the European Union’s policy to combat climate change and the key tool for reducing industrial greenhouse gas emissions in a cost-effective manner–to international aviation has backfired spectacularly.

ETS operates as a “cap-and-trade” plan in which it allocates a total amount of certain greenhouse gases that can be admitted by a particular sector–with the cap being gradually reduced over time so as to lower total emissions. Under this cap, companies can receive or buy emission allowances that they can trade with each another. At the close of a year, a company must surrender enough allowances to cover all its emissions. Failure to do so subjects them to hefty fines.

Business Aviation

Business aviation has always been opposed to the EU ETS, with the NBAA going so far as to label it an “onerous and unnecessary tax that severely harms the industry and limits the economic benefits it provides.”

This is not to say the sector is opposed to the regulation’s fundamental goal of reducing aircraft emissions. According to the European Business Aviation Association (EBAA), the sector has a long track record of improving fuel efficiency–delivering a 40- percent improvement over the past 40 years. As a result, business aviation’s current global carbon emissions are estimated at 2 percent of all aviation related emissions and a mere .04 percent of all man-made carbon emissions worldwide.

Even with these impressive numbers, industry associations are not willing to stop because the industry gets scant recognition for its technical achievements. Instead, they have committed to reaching carbon-neutral growth by 2020, improving fuel efficiency by an average of 2 percent per year through 2020 and reducing total carbon emissions by 2050 to half of what they were in 2005.

So what’s the issue?

“As it currently stands, the EU ETS is a failure,” EBAA CEO Fabio Gamba told AIN. “What was originally intended to be a simple and fair tool was transformed into a discriminatory and complex regulation incapable of delivering its intended benefits.”

Anti-ETS Bill

Initially slated to go into effect in November 2012, under the weight of increasing international pressure, European Commissioner for Climate Action Connie Hedegaard announced a one-year freeze of its application to flights originating outside European airspace.

Although a welcomed reprise, the delay did little to quiet international furor. Just days later the U.S. House of Representatives passed its anti-ETS bill, subsequently signed by President Obama on Nov. 27, 2012. The bill specifically barred all U.S. airlines from participating in the EU ETS. Soon after, China, Russia and India followed the U.S. lead by passing similar measures of their own.

A year later, in October 2013, during its 38th Triennial Assembly, ICAO met with the intent to issue its own international aviation emissions policy. The measure, which was accepted by 185 member states, included such key points as calling on all global governments to focus on accelerating technological development (including sustainable alternative fuels), infrastructure modernization and more efficient operational procedures as a proactive approach to achieving long-term carbon emission reductions. The ICAO measure also calls for the use of market-based mechanisms to provide incentives for emission reductions. Of particular interest to business aviation was the measure’s aim to incorporate potential exemptions for small operators.

At the time, NBAA’s Ed Bolen said of the measures: “Although far from perfect and certainly not everything the business aviation community has worked for, it promotes an international dialogue that is focused on simple, more workable measures for addressing aircraft emissions–measures that can be built around various types and sizes of operators.”

The meeting concluded with the establishment of working groups, whose work product will be proposed for adoption in 2016 during the ICAO’s next triennial meeting. If adopted, the measures will be implemented by 2020.

What It Means for Bizav

In reaction to the ICAO developments, the European Commission did issue some amendments to the ETS, including limiting its scope to the segments of international flights taking place within European airspace, exemptions for small operators and changes to the monitoring, reporting and verification requirements.

In March this year, the European Parliament voted 458 to 120 in favor of postponing until 2017 the date of the EU ETS application to long-haul flights originating or arriving in the EU (even though a prior vote by the European Parliament’s Environmental Committee rejected the postponement). In effect, at least with respect to how the EU ETS applies to international operators, the issue is now solely in the hands of ICAO.

That being said, as the international aviation community patiently awaits the ICAO proposal, as of January 1, the EU ETS went into effect for European operators. However, the EBAA is quick to note the revised regulation provides some very positive benefits for those affected. Perhaps most notable of these benefits is the acceptance of Eurocontrol’s ETS support facility calculations without the need for additional verification by a third party.

“The EBAA has been a proponent of a simplified means of compliance with the scheme whereby the business aviation fleet can be fully accountable for its emissions, but with a proportionate system of monitoring, reporting and verification,” said Gabriel Destremaut, EBAA’s manager of political affairs. “The ETS support facility is an efficient tool to estimate fuel consumption that has been approved by the European Commission.”

The ETS support facility is a comprehensive integrated solution with individual flight database records. It is designed for ETS follow-up and compliance in order to support aircraft operators, verifiers, service companies acting on behalf of aircraft operators and ETS competent authorities. It includes the small emitter’s tool, which is Eurocontrol’s fuel consumption and carbon dioxide estimation tool.

Destremaut notes that all information supplied to the support facility by users is considered verified–a significant improvement from the previous and cumbersome obligation for small emitters to use the services of a recognized verifier.

The revised regulation also includes new exemptions for noncommercial operators with a total maximum annual emission of 1,000 tons of carbon dioxide per year. The exemption runs through Dec. 31, 2020.

“It should be noted that aircraft operators will benefit from the exemption only if they emit less than 1,000 tons of CO2 based on the full scope of the EU ETS,” said Destremaut. “However, in practice, this means an estimated 2,000 business aviation operators are now exempt.”

To learn more about the EU ETS during your visit to EBACE, be sure to join the session Emissions Trading–Toward a Global Market-Based Measure: State of Play, scheduled today from 2:15 to 3:45 in Hall 3, Room Q.–Ed.