Design of the EU ETS for aviationDesign of the EU ETS for aviation

Aviation and EU ETS legislationAviation and EU ETS legislation

Directive 2008/101/ECDirective 2008/101/EC– entered into force on 2 February 2009entered into force on 2 February 2009

Each Member State transposeEach Member State transposess the the Directive into national lawDirective into national law

Aviation included in EU ETS from 1 January Aviation included in EU ETS from 1 January 20122012

Aviation activities covered by EU Aviation activities covered by EU ETS:ETS:

Flights arriving at and departing from EU Flights arriving at and departing from EU airportsairports

EU ETS covers 30 European States (the EEA)EU ETS covers 30 European States (the EEA) Exemptions: Exemptions: Small aircraft - of less than 5 700 kg Small aircraft - of less than 5 700 kg State, military, rescue, emergency, VFR, State, military, rescue, emergency, VFR,

training flightstraining flights Commercial air transport operators with:Commercial air transport operators with:

– less than 2 flights per day, orless than 2 flights per day, or– less than 10 000 tonnes of COless than 10 000 tonnes of CO22 per year per year

Aviation eAviation emissions capmissions cap

Emissions capEmissions cap

– Baseline:Baseline: 219.6 Mt CO219.6 Mt CO22 ( (average annual average annual

emissions of 2004-2006)emissions of 2004-2006)

– 2012:2012: cap = cap = 97%97% of baseline of baseline

– 2013-2020: 2013-2020: cap = cap = 95%95% of baseline of baseline

Aviation expands the total EU ETS cap by Aviation expands the total EU ETS cap by approximately 10%approximately 10%

Allocation of allowancesAllocation of allowances

82% allocated to operators free of charge, 82% allocated to operators free of charge, based on a benchmarkbased on a benchmark

15% allocated by auction15% allocated by auction 3% held in reserve for new entrants and fast 3% held in reserve for new entrants and fast

growing operators growing operators – distributed in middle of 2013 -2020 trading distributed in middle of 2013 -2020 trading

period based on tkm activity in 2014period based on tkm activity in 2014

TradingTrading

Allowances can be freely tradedAllowances can be freely traded Aircraft operators can buy and use Aircraft operators can buy and use

allowances from other sectors allowances from other sectors Aircraft operators can use CERs/ERUs:Aircraft operators can use CERs/ERUs:

– 50% of their reduction effort can be met through 50% of their reduction effort can be met through creditscredits

– Will not be below 1.5% of verified emissionsWill not be below 1.5% of verified emissions

Use of auctioning revenuesUse of auctioning revenues

Auctioning proceeds should be spent on tackling climate Auctioning proceeds should be spent on tackling climate change in the EU and third countries:change in the EU and third countries:– Reduce emissionsReduce emissions– AdaptationAdaptation– Administration of schemeAdministration of scheme– Global Energy Efficiency and Renewable Energy FundGlobal Energy Efficiency and Renewable Energy Fund– Avoiding deforestation in DCAvoiding deforestation in DC– Research and development (mitigation and adaptation in Research and development (mitigation and adaptation in

aeronautics and air transport)aeronautics and air transport)– Low emission transportLow emission transport

Member States must report how they spend revenues to Member States must report how they spend revenues to the Commissionthe Commission

Timetable for inclusion of aviation in Timetable for inclusion of aviation in the EU ETSthe EU ETS

20112011– 31 March: Submission by aircraft operators to States of:31 March: Submission by aircraft operators to States of:

– 2010 verified emissions report; and 2010 verified emissions report; and

– Optional 2010 verified tkm (benchmarking) reportOptional 2010 verified tkm (benchmarking) report

– 30 June: Submission of tkm data by States to the COM30 June: Submission of tkm data by States to the COM

– 30 September: COM decision on the benchmarks for 30 September: COM decision on the benchmarks for 2012 and 2013-20202012 and 2013-2020

– 30 December: States publish allocations of free 30 December: States publish allocations of free allowances to aircraft operatorsallowances to aircraft operators

Timetable for inclusion of aviation in Timetable for inclusion of aviation in the EU ETSthe EU ETS

20122012– 28 February Issuing of free allowances for 201228 February Issuing of free allowances for 2012– 31 March: Submission by aircraft operators to States of 31 March: Submission by aircraft operators to States of

2011 verified emissions report2011 verified emissions report

20132013– 28 February: Issuing of free allowances for 201328 February: Issuing of free allowances for 2013– 31 March Submission by aircraft operators to States of 31 March Submission by aircraft operators to States of

2012 verified emissions report2012 verified emissions report

– 30 April: Surrender of allowances equal to the 2012 30 April: Surrender of allowances equal to the 2012 emissionsemissions

Impacts of the EU ETS on aviationImpacts of the EU ETS on aviation

Analysis of the impactsAnalysis of the impacts

The Commission extensively analysed the The Commission extensively analysed the impacts of the EU ETS on aviation when impacts of the EU ETS on aviation when developing the legislationdeveloping the legislation

A comprehensive impact assessment is A comprehensive impact assessment is available on our websiteavailable on our website

http://ec.europa.eu/clima/documentation/transport/aviation/index_en.htmhttp://ec.europa.eu/clima/documentation/transport/aviation/index_en.htm

This considers a range of impacts This considers a range of impacts including environmental and economicincluding environmental and economic

Environmental impactsEnvironmental impacts

Total COTotal CO22 emissions from aviation will continue to emissions from aviation will continue to increaseincrease

The emissions cap means that this growth will be The emissions cap means that this growth will be offset by reductions in other sectors or from offset by reductions in other sectors or from projects in other countriesprojects in other countries

Compared to a business as usual scenario, by Compared to a business as usual scenario, by 2020 the EU ETS will result in a annual emissions 2020 the EU ETS will result in a annual emissions reduction of over reduction of over 190 million tonnes CO190 million tonnes CO22

Total global aviation COTotal global aviation CO22 emissions in 2006 were emissions in 2006 were approximately 750 million tonnes, so this is a approximately 750 million tonnes, so this is a significant savingsignificant saving

Economic impactsEconomic impacts

We examined impacts in 2020 of €30 per We examined impacts in 2020 of €30 per tonne carbon pricetonne carbon price

Our modelling showed that:Our modelling showed that:– Air traffic will continue to grow substantiallyAir traffic will continue to grow substantially– The EU ETS will reduce demand for aviation by The EU ETS will reduce demand for aviation by

a small amount in 2020 relative to business as a small amount in 2020 relative to business as usual forecastsusual forecasts

EU ETS will have a small impact on EU ETS will have a small impact on demanddemandChange in aviation demand

(revenue tkm)

0

50

100

150

200

250

300

2005 2020 - with EU ETS 2020 - no EU ETS

2005

= 1

00

135% 142%

Impacts on airlinesImpacts on airlines

Since all airlines will be treated equally, Since all airlines will be treated equally, competition between airlines would not be competition between airlines would not be significantly affectedsignificantly affected

Airlines costs should be passed on to Airlines costs should be passed on to consumersconsumers

Our modelling showed that by 2020 airline Our modelling showed that by 2020 airline tickets could increase by tickets could increase by €4.6 to €4.6 to €39.6 €39.6 depending on the journey length and depending on the journey length and allowance priceallowance price

Example of impact on ticket Example of impact on ticket pricesprices

Madrid to Mexico City = 9,060 KmMadrid to Mexico City = 9,060 Km Flying one way in economy generates Flying one way in economy generates 712 Kg 712 Kg of COof CO22 (ICAO carbon calculator) (ICAO carbon calculator) At current carbon prices (€17 per tonne), this is At current carbon prices (€17 per tonne), this is €12. €12.

Munich to Cancun = 8,869 KmMunich to Cancun = 8,869 Km Flying one way in economy generates Flying one way in economy generates 620 Kg 620 Kg of COof CO22 (ICAO carbon calculator) (ICAO carbon calculator) At current carbon prices (€17 per tonne), this is At current carbon prices (€17 per tonne), this is €10.50 €10.50

These examples assumes full pass through of These examples assumes full pass through of valuevalue of emissions allowance of emissions allowance Lower cost to airlines as 82% of allowances allocated for freeLower cost to airlines as 82% of allowances allocated for free

Conclusions on the impacts of Conclusions on the impacts of the EU ETSthe EU ETS

EU ETS brings significant environmental EU ETS brings significant environmental benefits in reducing the net CObenefits in reducing the net CO22 emissions emissions from aviationfrom aviation

Economic modelling suggests that the Economic modelling suggests that the system will have little impact on the demand system will have little impact on the demand for aviationfor aviation

Based on current and forecast carbon prices Based on current and forecast carbon prices the EU ETS is likely to have limited impact the EU ETS is likely to have limited impact on the price of air ticketson the price of air tickets

Measures taken by other countriesMeasures taken by other countries

Climate measures taken by other Climate measures taken by other StatesStates

EU ETS legislation recognises that other EU ETS legislation recognises that other States may decide to implement their own States may decide to implement their own climate change measures relating to climate change measures relating to aviation aviation

Recital 17 and Article 25a of Directive Recital 17 and Article 25a of Directive 2008/101/EC are the key provisions2008/101/EC are the key provisions

In summaryIn summary

Where 3Where 3rdrd country adopts measures to reduce country adopts measures to reduce climate change impact of flights to the EU:climate change impact of flights to the EU:– EU will consider options to provide for optimal EU will consider options to provide for optimal

interactioninteraction– The Commission may recommend negotiating an The Commission may recommend negotiating an

agreement with 3agreement with 3rdrd country country– The Commission able to adopt amendments to exempt The Commission able to adopt amendments to exempt

arriving flights from the scope of the EU ETSarriving flights from the scope of the EU ETS

In case of agreement on global measures, EU will In case of agreement on global measures, EU will consider amending Directive as appropriateconsider amending Directive as appropriate

Further informationFurther information

Aviation and climate change Aviation and climate change website:website:

http://ec.europa.eu/clima/policies/transport/http://ec.europa.eu/clima/policies/transport/aviation/index_en.htmaviation/index_en.htm

Any questions?Any questions?