Confusion reigns over ETS implementation in Europe

 - September 28, 2010, 9:55 AM
Europe’s emissions trading scheme (ETS) is not much more than a year away, with a mandatory introduction date of January 1, 2012, for all operators making even the shortest flights into the continent’s airspace, and yet there is still widespread confusion about how key aspects of the system will work. In particular, with less than six months until the March 31, 2011 deadline for verified 2010 emissions and activity reports to be submitted, there are serious doubts about what operators need to do to find an accredited verifier and how much the process will cost them.

For many in the business aviation community, and especially those based outside Europe who might log only a small number of flights into Europe, the core dilemma is how user-friendly the rules for small emitters–defined as emitting fewer than 10,000 metric tons of carbon dioxide (CO2) per year–will prove to be in practice.

When the European Commission (EC) approved the so-called small emitters tool for calculating emissions from data generated by Eurocontrol, many bizav operators let out a sigh of relief on the assumption that this would be easy enough for them to figure out their own CO2 numbers and avoid the need to involve costly consultants.
More specifically, it was hoped that there would be no need to use accredited verifiers to check the emissions reports because the data would be accepted as having come from an approved, independent source.

However, there has been no official ruling to excuse small emitters from using a verifier. As things stand, operators accountable to national authorities in many of the 27 European Union (EU) states are still struggling to find lists of the accredited verifiers that they are permitted to use. Even those who can find verifiers are not clear as to what this service will cost them, mainly because authorities have yet to rule on whether to waive the costly site visits that strictly speaking are required to complete the process.

So far only the ETS authorities in Germany and France have published lists of verifiers for the aviation sector, and in the case of France the companies listed have not actually completed the accreditation process and so are not yet legally approved to do the job. Accreditation bodies in other countries, including the UK, are still working on the applications from companies that have applied for approval, but in some states the ground rules and timetable for this key process have not even been confirmed, raising serious doubts as to whether operators assigned to these states will be able to meet the March 31 deadline. Failure to meet the deadline could trigger significant fines.

Prospective verifiers SGS and VerifAvia told AIN that operators should begin the process with companies that they believe are likely to be accredited, in the hope that they will be and that the authorities will then accept the completed ETS reports.

Verifiers are divided as to whether site visits, even for small emitters, will be required. Paulomi Raythatha, UK product manager for SGS, said that at least for the first year site visits would be mandatory as this is the only effective way to ensure that operators are following an acceptable process to monitor and report emissions.
However, Antony Barrett, business development manager with BSI, predicted “sense will prevail” and that expensive site visits will not be required and that confirmation of this could come before the end of next month. VerifAvia CEO Julien Dufour explained that individual states will decide whether or not they waive the site visit, and he expects at least some will do so.

Several verifiers told AIN that they have yet to work out pricing, in part because of the uncertainty as to whether site visits will be needed but also because they are trying to work out what rates the market will bear. Since all the approved verifiers are expected to be based in Europe, in theory, a small U.S. operator might have to meet the cost of a verifier crossing the Atlantic for several days. Pressed by AIN to give estimated prices for a small emitter’s verification, verifiers indicated that these could run from around $1,800 to $3,400. For a medium-sized operator, the estimates increased to as much as $12,000.

Universal Weather & Aviation regulatory services supervisor Adam Hartley said the verification process could be complicated by the fact that many of the accredited verifiers will have a background in dealing with ground-based industries and will have little or no appreciation of the aviation sector’s circumstances. The flight-planning group is looking into setting up its own ETS support subsidiary to help operators with monitoring, reporting and verification. Its online EU-ETS Reporting Resource Center already provides a wealth of information on the process.

“ETS is still totally misfitted to this part of aviation,” Hartley told AIN. “However, we do expect [the authorities to give] more leeway during the pre-trading period into next year.”

The March 31, 2011, deadline for verified emissions reports applies only to those operators who registered to participate in the 2010 reporting period that will result in free CO2 credits being assigned. Many operators who expect to be small emitters effectively decided that this would be more trouble than it is worth. Nonetheless, these operators will need to be ready to monitor and report their emissions from the start of 2012.

Numbers Don’t Stack for Small Emitters Tool
The ETS small emitters tool for calculating CO2 emissions is remarkably simple at first glance, consisting of no more than an Excel spreadsheet into which operators can insert data from flight plans filed with the Eurocontrol central flow management unit. The resulting calculations are based on stored data for fuel burn of listed aircraft types.

But early users of the system have uncovered significant discrepancies. Aaron Misko, co-owner of Ohio-based ETS consultants Shockwave Aviation, has crunched numbers for 60 operators covering more than 100 aircraft operating last year. He found CO2 emission estimates overstated to the tune of 40 to 50 percent in the case of aircraft such as the Bombardier Global Express and Global 5000.

Misko has alerted Eurocontrol and the European Business Aviation Association to the inaccuracies. He told AIN that in ­reality the problem is of no direct consequence yet to operators, which will not be accountable for emissions until 2012 and by then the errors could be rectified.

Some ETS experts have acknowledged that the small emitters tool will be inaccurate but have maintained that it is still a financially viable option if it avoids the need to use consultants and verifiers. If European authorities are, after all, going to insist on data being fully verified then this calculation too could prove to be ill founded.