The European Commission’s proposal to include aviation in the EU Emissions Trading Scheme was discussed by the EU Council on 20 December where a political agreement was reached. This will now be formally adopted as a Common Position.

The Council’s position is closer to the original Commission proposal than the Parliament’s position. It has proposed mostly technical improvements to the scheme which incorporate some of the industry’s suggested amendments. The position adopted by the Council will make for a more realistic scheme than that proposed by the European Parliament.

The Common Position will now be sent to the European Parliament where it will go to a second reading during the early part of 2008. At this second reading the final details of the scheme will be determined. This means that changes, for better or for worse, could still be made to the final position. ERA and the industry will therefore continue to lobby the European Parliament to influence the final characteristics of the scheme.

The main elements of the Council’s position agreed on 20 December 2007 are as follows:

Start Date
The one-year introductory phase for intra-EU flights proposed by the Commission has been dropped, and the scheme will now become operational in a single phase, starting in 2012.

Baseline and Cap
Emissions will be capped at 100 percent of the average level for the years 2004-2006.

Benchmarking
Revenue Tonne Kilometers (RTK) will be used where the passenger weight element of the formula is equivalent to 110kg and the distance element includes the addition of 95km to take into account ATC induced longer routings.

Auctioning
A harmonized level of 10% auctioning for 2012 is proposed with the level for 2013 onwards to be negotiated in the wider EU ETS Review negotiations. The revenue from the auctioned allowances should be used to combat climate change.

Special Reserve
A special reserve of free allowances for new entrants or very fast-growing airlines has been added. While this was not contained in the original Commission proposal, it was found to be acceptable as the reserve is taken from within the overall cap and does not therefore affect the environmental effect of the scheme.

Open trading scheme
Access to CERs & ERUs: Open trading scheme but removal of clause that allows converting aviation allowances into EU allowances. 15% access to CERs and ERUs in 2012. Future access to be decided as part of Review negotiations.

Non Compliance
A new mechanism to ensure consistent and robust enforcement throughout the EU has been introduced. As a last resort, Member States could ask for an operator to be banned from operating in the EU if it persistently has failed to comply with the scheme and other enforcement measures have proven ineffective.

Exemptions
Aircraft will need to be above 5.7 tonnes to be included under the scheme. The Heads of State exemption is restricted to non EU. Exemption for PSOs where they are on routes within Ultra Peripheral Regions.

De Minimis Clause
An exemption has been introduced for operators with very low traffic levels on routes to, from or within the EU. Under this mechanism many operators from developing countries with only limited air traffic links with the EU will be exempt. This exemption will apply to operators who operate at a frequency lower than 243 flights in, out or within the EU in a 12 month period.

Further details can be found in: