Explanatory Memorandum to COM(2013)722 - Amending the greenhouse gas emission allowance trading scheme in the EU in view of an int. agreement on a global market-based measure to international aviation emissions - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)722 - Amending the greenhouse gas emission allowance trading scheme in the EU in view of an int. agreement on a global ... |
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| source | COM(2013)722  |
| date | 16-10-2013 |
Emissions from aviation are one of the fastest growing sources of greenhouse gas emissions. As the technological potential for emissions reduction is limited in the aviation sector, market-based measures (MBMs) allow aviation to contribute to emission reductions by the airlines offsetting their strong emission growth through funding emission reductions in other sectors.
The suitability of MBMs for international aviation has long been recognised. The 2001 ICAO Assembly endorsed the application of open emissions trading systems to international aviation. Following the ICAO's 2004 endorsement of regional MBMs, the EU led the way by including aviation in its Emission Trading System (EU ETS). Despite its positive environmental effects at low economic costs, the implementation of the EU ETS has had to face significant international opposition (e.g. allegations that regulating emissions from airlines based outside the EU would violate the sovereignty of third states). The European Court of Justice has, however, dismissed appeals by foreign airlines in this respect and confirmed the legality of the EU ETS[1].
At the same time, the integration of aviation into the EU ETS has been decisive in driving forward ICAO discussions. The intensive engagement of the EU in tackling climate change has been crucial in generating momentum in ICAO towards global action for addressing aviation emissions. Clearly, given the EU ETS would only ever cover a proportion of international aviation emissions, the overall strong global growth of these emissions will continue if no MBM is implemented on a global level, and emission reduction goals will remain aspirational.
The 2013 38th ICAO Assembly has now decided on the development of a global MBM to be finalised at the next ICAO Assembly in 2016 and to be implemented by 2020. Progress was not made on a 'framework' for national/ regional MBMs up to 2020, as in particular the Assembly resolution repeated the same language as from the 2007 and 2010 Assemblies and the European States confirmed their position on the 2007 and 2010 Assembly resolutions as concerns so-called mutual agreement. In response to this progress on a global MBM and to promote further momentum, the Commission considers it appropriate to propose lowering the proportion of emissions to which the EU emissions trading system should apply up to 2020, as the further action already envisaged in Decision No. 377/2013/EU.
Contents
Consultations on aviation's inclusion in the EU ETS began in September 2005 with the Communication Reducing the Climate Change Impact of Aviation", COM(2005)459, which led to the proposal of legislation in December 2006. Consultations with third countries on aviation and emissions trading have taken place since then, both formally e.g. in the context of EU-US Joint Committee meetings and through bilateral and multilateral meetings. Most recently, an online public consultation was held for 12 weeks from 21 June to 13 September 2013. The public consultation was carried out using the “General principles and minimum standards for consultation of interested parties by the Commission”, and it asked all stakeholders – including public authorities from third countries – on their views concerning the scope of regional and global MBMs. The Commission will continue to engage in constructive bilateral and multilateral contacts with third countries.
The public consultation confirms strong support for MBMs from public authorities, NGOs and the airlines. All respondents favour MBMs for the aviation sector, with one association opposing regional MBMs in advance of a global MBM. With regard to regional action, airlines emphasise administrative simplicity and political acceptability, as well as environmental effectiveness and avoiding discrimination on routes and between operators. Public authorities and NGOs emphasise covering meaningful emissions, administrative simplicity and political acceptability.
The Impact Assessment has shown that adapting the EU ETS to accord with what was expected to be ICAO's MBM Resolution for the period up to 2020 is feasible at low administrative costs. The chief benefit from reducing the scope of the EU ETS up to 2020 is that, with a global MBM applying from 2020 closing the global 'emission gap', doubling coverage of international aviation emissions compared to the EU ETS, and leading to a halving of these emissions by 2050, this will have significantly greater overall environmental benefits.
In line with the outcome of the 38th ICAO Assembly held in September 2013, there should be a single global market-based measure (MBM) applying to international aviation emissions from 2020 onwards. In response to this progress and to promote further momentum towards the successful establishment of a global MBM, amendments should be made to the aviation activities covered by the EU ETS.
This proposal for a Directive follows on from the Decision No. 377/2013/EU, which was adopted in order to promote progress on global action through ICAO. As with Decision No. 377/2013/EU, it is important that this proposal is agreed swiftly between the European Parliament and Council, so as to be in place for when the next allowance surrender obligations fall due on 30 April 2014. In the absence of a further agreed revision, the ETS reverts to the position before the Decision No. 377/2013/EU. The key features of the revised ETS system resulting from this proposal would be as follows:
– Flights between aerodromes in the EEA remain fully covered, as under the original Directive and Decision No. 377/2013/EU.
– Flights to and from third countries which are not developed countries and which emit less than 1% of global aviation emissions would be exempted. This would exclude routes to around 80 countries on a non-discriminatory basis.
– Flights to and from third countries are responsible for emissions taking place not beyond EEA countries, as from 2014. A simplified procedure is proposed to determine the relevant proportion of emissions of a given flight which is covered by the ETS. It is proposed that operators can choose between approaches to MRV methodology for compliance.
– Overflights of EEA countries are exempt, as are emissions from flights between airports in third countries and EEA airports as regards European dependencies and territories, and flights to and from EEA airports and those territories.
With effect from 2013 onwards, this act derogates from the ETS Directive in respect of a proportion of flight emissions to and from third countries. In 2013, this relates to all emissions from flights to and from countries outside the European Economic Area (EEA). For each calendar year between 2014 to 2020, these proportions are set out in an Annex, and have been calculated by Eurocontrol on the basis of the proportion of the Great Circle Distance between the main airports in the EEA and in third countries, that is not more than 12 miles beyond the furthest point of EEA coastline. The percentages are low estimates of the actual climate change impact from aircraft taking off and landing from aerodromes in the Union since aviation also impacts on climate change from emissions of nitrogen oxides, water vapour and sulphate and soot particles which have been estimated to have climate change effects of the same level as those from the carbon dioxide emissions, which have not been taken into account.
The process of applying percentages for flights to and from third countries is designed to be workable and pragmatic, using existing reporting categories applicable since 2010. Working on the basis of country-pairs means that figures are needed for flights on the routes from each Member State to third countries. Where flights operate to multiple time zones in a third country, a percentage shall be included for each timezone to which flights operate. These percentages are developed based on best available information, including from Eurocontrol. A table containing all these percentages will be inserted in the Annex.
To provide further flexibility and alternative monitoring, reporting and verification (MRV), it is proposed to offer a choice to operators. In respect of flights to and from third countries, an aircraft operator should be able to choose not to report verified emissions from these flights but instead to rely upon a determination of estimated emissions not beyond EEA Member countries from such flights that is as accurate as possible, based on Eurocontrol calculations of the precise distance flown not beyond EEA countries.
The Member States will adjust allocations for the years 2013-2020 in accordance with the proportions set out in the Annex. The number of allowances auctioned by Member States will be adjusted accordingly.
An additional simplification proposed to the ETS Directive is to provide that action not be taken against non-commercial aircraft operators in respect of emissions from small aircraft operators emitting less than 1000 tonnes CO2 per annum. This is expected to reduce the number of aircraft operators regulated by Member States by around 2200 representing 0.2% of emissions. Alongside other measures being taken to simplify adminstration for small aircraft operators, this is a significant lightening of adminstrative tasks for aircraft operators and for Member States' competent authorities, in line with the EU's better regulation agenda.
All other obligations in respect of flights remain unaffected. This limited approach has shown itself to be workable, as was the case under Decision No. 377/2013/EU. Issuing additional free allocations to operators would undermine the emission reductions that the ETS will bring, and carrying out a new benchmarking exercise would place significant requirements on aircraft operators and Member States when the global MBM is expected to apply in 7 years and, if not, new benchmarking would in any case take place in 2018 according to Article 3e of the ETS Directive.
The environmental benefit of this proposal comes from two key elements: First, it gives impetus to the global MBM that will cover the total emissions from international aviation from 2020 onwards. Depending on the ambition level agreed for the global MBM, total international aviation emissions will be capped at their 2020 level and even be halved by 2050 below 2005 levels. Second, the EU ETS will continue to achieve substantial emission reductions that are expected to be up to 250 million tons CO2 in the period from 2013 to 2020.
It should also be noted that, in terms of administration a global MBM, States will need to enact national provisions. After the 2016 ICAO Assembly, the ETS Directive should be amended as appropriate to provide for the implementation of this global MBM. The global MBM to apply from 2020 onwards should, in terms of the recognition of early action called for by IATA, take offsetting of emissions outside the aviation sector under the EU ETS into account, as well as emission reductions within the sector. Paragraph 26 of ICAO Resolution A38/17-2 calls for these emission reductions to be reported to ICAO.
This proposal should be adopted by the European Parliament and Council early in 2014, so as to provide legal certainty and clarity for aircraft operators who would otherwise have to surrender allowances for their full emissions to and from third countries by 30 April 2014, as referred to in Directive 2003/87/EC.