ETS Goes Live As Political Battles Gather Momentum

 - January 4, 2012, 12:40 AM

The European Union’s controversial emissions trading scheme (EU-ETS) officially takes effect beginning January 1 against a backdrop of ongoing political protests and legal challenges. But for business aircraft operators, the more immediate concern is to be ready to meet the next set of requirements for monitoring, reporting and verifying their carbon dioxide (CO2) emissions and preparing to start trading carbon credits.

The latest headache to confront operators is the requirement to set up a “registry” account, which essentially creates a way to deposit and trade carbon allowances from 2013, when this stage of ETS begins. Operators have complained that states such as France and the UK require extremely detailed and highly personal information from operators to set up the account. As with some other previous ETS requirements, different European Union (EU) states seem to be imposing different deadlines for compliance, and some states have as yet failed to communicate the requirement to operators assigned to them for ETS compliance purposes.

The checks required to established registry accounts include criminal background checks for operator personnel administering the accounts. However, it is unclear what type of check would be considered acceptable and how current it needs to be. France’s deadline for compliance was December 20, but this already appears to have slipped into January and the UK deadline is January 15. The strict requirements for background checks were introduced to counter previous fraudulent activities involving registry accounts set up when ETS was applied to other industries.

“This will be a nightmare for many operators,” said Julien Dufour, CEO of ETS specialist support company VerifAvia. In addition to the intrusiveness of criminal background checks, other burdens include the need to provide notarized–and in some cases translated–documents, such as current proof of a company’s legal incorporation, which may not be available under the legal jurisdiction in which the operator is based.

The accounts will be used to deposit free credits earned by operators who completed the full kilometer/metric ton calculation of emissions for 2010 and 2011. However, according to Dufour, the free-credits process has left many business aircraft operators frustrated. Having spent significant amounts of money to have the required full verification, they found that they will end up with a tiny allocation–in some cases no more than between one and four percent of their total annual needs. Carbon credits don’t actually have to be surrendered for the first time until April 30, 2013.

However, Dufour predicted that the process for reporting and verifying 2011 emissions should prove to be more straightforward than it was for 2010. For most of the 27 EU states, the deadline for filing verified reports is March 31, 2012, but for the Czech Republic it is March 15 and for Spain it is February 28. Dufour suggested that most authorities have proved to be more flexible in practice than their rules and deadlines would suggest. However, he did urge operators not to leave the reporting and verification process until the last few weeks.

According to Adam Hartley, regulatory services supervisor with Universal Weather and Aviation, the company’s EU-ETS web portal has helped operators to work through the compliance process systematically and has streamlined the gathering of correct emissions data. From his experience, the so-called “small emitters” tool that the European Commission eventually approved to make compliance more straightforward for smaller operators has eased the administrative burden.