Sandbag blog: Aviation in the ETS – still no deal

If EU governments have kept their word, letters should now be landing on the doormats of the airlines across the world who haven’t complied with the ETS.  This last minute notice of penalties for non-compliant airlines is a desperate last minute attempt to show that EU laws will be applied when airlines operate in Europe.  Sandbag say that though the EU data is sketchy, a number of airlines, including China Eastern and Air India, were missing from EU records, despite the law saying they should pay for their CO2 when they flew from one EU airport to another (the UK won’t currently confirm who isn’t compliant). Now the proposals for a change to the scheme are in trialogue discussion between the three pillars of the EU government, the Commission, the Parliament and the Council.  MEP Peter Liese, who is leading the ETS proposals, has said he is willing to compromise further, and allow the current limited scheme to continue for 2 more years. This unsatisfactory and weak position suits EU member states afraid of confrontation or trade wars with China, India etc.  Peter Liese wants EU member states to agree that the ETS should revert to full coverage (not only within Europe as at present) in 2016. 

Aviation in the ETS: Still no deal

Posted by Phil on 20th Feb 2014 (Sandbag blog)

Thanks to Flickr user Pommegranny for the photo

If EU governments have kept to their word, letters should now be landing on the doormats of the airlines across the world who haven’t complied with the Emissions Trading Scheme.

This coordinated notice of penalties for non-compliant airlines is a desperate last minute attempt to show that EU laws will be applied when airlines operate in Europe. The EU data is sketchy, but we showed that a number of airlines, including China Eastern and Air India, were missing from EU records, despite the law saying they should pay for their pollution when they flew from one EU airport to another (the UK won’t currently confirm who isn’t compliant).

Now the proposals for a change to the scheme are in trilogue discussion between the three pillars of the EU government.

MEP Peter Liese, who is leading the proposals, has said he is willing to compromise further, and allow the current limited scheme to continue for two more years. Mr Liese has been forced into this position, despite securing the backing of the Parliament’s Environment committee to cover total airspace emissions (a charge for all aviation emissions when a plane is in EU airspace).

Member states, scared of recrimination from China, India, and other nations, are not budging, insisting that the present weak state of affairs remains, and in the hope of a global scheme for aviation in 2020.

So Peter Liese appears to be demanding just two compromises from member states; that the scheme switch back to full coverage in 2016, and that the revenue from aviation in the emissions trading scheme go toward international climate finance.

The climate finance amendment could make the scheme more popular with other countries. But some member states, particularly the UK, make a show of fighting hypothecated revenues; they do not like being told what they can spend their money on.

Whatever is decided in trilogue must be palatable enough to pass through Parliament. If MEPs believe that the legislation is environmentally too weak, or that international airlines might be allowed to ignore it anyway, then the proposal will fail. If that happens, legislation automatically kicks in to charge for emissions across the entirety of flights to or from the EU.

Key dates for the aviation proposal


Aviation emissions: MEPs put forward proposals for a deal with EU ministers

ENVI Press release – Environment Parliament news


All airlines operating in the EU should be treated equally, and their contribution to the EU carbon market should not end up in ministers’ pockets but help climate efforts, said MEPs during talks with the Council and Commission on Tuesday.

During the talks with the Greek Presidency of the Council and the Commission, MEPs presented proposals for a possible deal on the inclusion of the aviation sector in the EU Emissions Trading System (ETS). The current regime, which exempts all intercontinental flights from the ETS, is due to expire in April.

“The Council insists very strongly to extend the full « stop the clock » derogation to 2016. So we made a proposal: this could be OK for us, but only as part of a package which includes that future ETS revenues are earmarked for climate action. We think that earmarking could solve the current crisis of confidence with third countries regarding the ETS”, said rapporteur Peter Liese (EPP, DE).

“This is a highly political point. At the moment, ETS revenues disappear into the pockets of EU ministers, whereas they are supposed to help tackle climate change. This money could instead be allocated, for instance, to the green climate fund and for research and development in the area. This would show our partners, ahead of the Paris negotiations to take place in 2015, that the EU takes the issue seriously” said Environment Committee chair Matthias Groote (S&D, DE).
Full scope after 2016

Messrs Liese and Groote also say the ETS legislation should apply in full, without exemptions, after 2016. “The Parliament’s delegation has made a big move in giving up our position on airspace until 2016. The ball is now in the field of the Council. If the Council rejects our offer, it risks a complete collapse of the negotiation and will have to face the consequences,” they concluded.
The ICAO agreed at its 38th assembly to adopt a global market-based measure (MBM) in 2016, to be implemented by 2020. In response, and in order to further promote the global MBM momentum, the European Commission proposed to reduce the proportion of emissions (from flights to and from countries outside the EU) to which the EU ETS applies for the period up to 2020, when the global MBM begins.
Follow ENVI on Twitter: @EP_Environment




Aircraft face fines as deadline looms for EU pollution penalties

Thu Feb 20, 2014 ( – Reuters)

* EU negotiators haggle over aviation law enforcement, text

* EU must finalise new law by end of April

* U.S. airlines urge EU to waive penalties

By Barbara Lewis and Valerie Volcovici

BRUSSELS/WASHINGTON, Feb 20 (Reuters) – U.S. airlines have stepped up the pressure on EU countries not to impose fines for alleged breaches of emissions rules in the latest twist to an international row over aircraft pollution.

The warning coincided with a deadline on Thursday for European Union nations to start enforcing rules covering 2012 emissions that could lead to fines of millions of euros against aircraft operators.

U.S. airline association A4A said it was calling on the European Commission, the EU executive, and its member states for clarity that there would be no penalties.

“We and various aviation stakeholders continue to push for a clear statement of relief from the application of the pending deadlines,” it said. The next deadline for operators is the end of March, when they should report data for 2013 emissions.

Such a statement, A4A added, would avoid any need to invoke blocking law agreed by the United States, which it can use to shelter U.S. operators from compliance with the EU rules.

Details of airlines that have not complied for 2012 emissions are sketchy and many of the companies are small private jets on lists of Commission data seen by Reuters.

The European Commission says most airlines, covering 98 percent of emissions, have complied and it relies on member states to punish those that have not. It can take EU nations to court if they fail to enforce EU law.

Thomson Reuters Point Carbon analyst Emil Dimantchev calculated total fines owing could be as much as 39 million euros ($54 million) on the basis of an allowance price of 7.5 euros per tonne on the EU Emissions Trading System (ETS).

By far the biggest fine would fall to Italian airline Blue Panorama, which filed forbankruptcy protection in 2012, adding to the problems for EU nations in trying to enforce their law.

A spokesman for Blue Panorama said the company disputed the “unfair and unreasonable” penalty because the bankruptcy procedure had prevented it from fully complying.

Under EU rules, the penalty is 100 euros per tonne of emissions for which an operator failed to submit carbon allowances, plus they have to buy permits to make up for the shortfall.

Britain says it has agreed to go ahead with enforcement of the law from Feb. 20, but it wants consistency across the European Union.

A spokeswoman for Britain’s Department of Energy and Climate Change said it was continuing to follow “as harmonised an approach as possible to enforcement for 2012 emissions”.

Following a closed-door meeting of member states on the issue, an EU diplomat said on condition of anonymity that there was “a broad consensus among member states and the Commission that EU law needs to be implemented”.


Europe’s major trading partners, including the United States and China, said the EU law that took effect at the start of 2012 was a breach of sovereignty and they threatened retaliation. China blocked orders for Airbus jets in protest at the EU law.

In response to the opposition, the European Union suspended its law for intercontinental flights landing or taking off at EU airports, but the legislation has remained in force for flights within the European Union.

Some European carriers say they are at a disadvantage if long-haul flights do not pay and they support enforcement.

How long the suspension for intercontinental flights will continue is the subject of haggling among member states and EU institutions, which need to agree a new law by the end of April or the original legislation will reapply.

A first round of talks on Tuesday focused on how generous a deadline to set for U.N. negotiations to deliver a global deal on aviation emissions and whether revenues in the EU should be earmarked for environment purposes. Talks resume in March.

The European Union said it suspended its law to give negotiators at the U.N. body the International Civil Aviation Organization (ICAO) the chance to come up with an alternative that the world would accept.

ICAO will review progress in 2016 and some in Europe say they should suspend the European Union’s law only until then.

Britain, for instance, has said the deadline should be 2020, which is when ICAO says a global plan to curb aviation emissions should be in place.

Point Carbon’s Dimantchev said there were political sensitivities, but enforcement was “an important test” for the role of aviation in the EU ETS.

Environmental campaigners say EU states will set a dangerous precedent unless they enforce the law as it stands.

“Power plants owned by foreigners have been complying with the EU ETS for years now. Foreign carriers flying in Europe’s airspace must also comply,” Aoife O’Leary, sustainable aviation officer at non-governmental organisation Transport & Environment, said.

($1 = 0.7272 euros)

(Additional reporting by Ben Garside in London, Tim Hepher in Paris and Daniel Fineren in Dubai; Editing by Dale Hudson)




Aviation in the Emissions Trading Scheme: What really happened during “Stop the Clock”?

Posted by Phil (Sandbag)
18th Dec 2013

The EU emissions trading scheme (ETS) was originally intended to cover CO2 emissions from all flights arriving and departing from EU airports. Amid fierce opposition and threats of a trade war, Europe temporarily amended the scheme for 2012 to only include flights within the EU, known as “Stop the Clock”. Sandbag’s latest report on the first year of aviation emissions trading reveals how the rhetoric is out of sync with reality, how the scheme cost much less than many initially claimed, and how the scheme can work in future to tackle aviation pollution.

The Background

To understand where we are, a brief overview is helpful. Global aviation is responsible for 2.5% of global carbon emissions, which increases to 4.9% of total anthropogenic climate effects if all radiative forcing is included. If the sector were a country, it would already be the 7th most polluting on the planet. Emissions from global aviation are growing at a rapid pace; the International Civil Aviation Organization (ICAO) forecasts that by 2036 emissions will increase between 155% and 300% compared to 2006 levels.

After more than a decade of international discussions struggling to find a global solution to cover aviation emissions, the European Union set out to create a system. From the 1st January 2012, the EU took the modest step of including the aviation sector into its carbon market.

Aviation in the Emissions Trading Scheme: What happened in 2012 under Stop the Clock‘What happened during 2012?’

Under the scheme in 2012, over one thousand airlines and operators were involved, and 84 million t/CO2 were emitted (covering about a third of all European aviation emissions). The majority of emissions, 89% (75 million t/CO2), came from EU airlines, with 11% (9 million t/CO2) of emissions from Non-EU airlines operating flights from one European airport to another. 71 million free allowances (‘EUAAs’) were issued, 81% (58 million EUAAs) to EU airlines, and the remaining 19% (13 million EUAAs) going to Non-EU airlines.

Despite a well-reported backlash from aviation officials in a range of countries, major airlines from countries considered part of the “coalition of the unwilling” complied with “Stop the Clock” in 2012, including: Cathay Pacific, Japan Airways, Asiana Airlines, Siberia Airlines (S7) and Delta. Furthermore some airlines from these countries even went beyond what was legally required, and included their international flights within the scheme, covering emissions outside the EU. Among those airlines are: Korean Air, Nippon Cargo, FedEx and Airbridge Cargo. EU airlines such as Lufthansa Cargo also chose not to return their free allowances, instead including their emissions outside the EU. The generous allocation of free allowances to Lufthansa Cargo meant they were left with a valuable surplus; the likely driving factor in their decision not to “Stop the Clock.”

The cost of compliance was also estimated to be lower than expected for those with a shortfall of free allowances. For example, Ryanair originally estimated including its flights in the ETS would cost €15-20 million in 2012. Consequently, the low-cost carrier imposed a €0.25 charge on all tickets to cover their costs. Yet average 2012 carbon prices would suggest compliance costs were lower, implying a cost to passengers of only €0.13 per flight, with Ryanair pocketing the difference, an estimated €8 million.

‘The New Proposal’

The EU Commission has now come forward with a new proposal for the scheme that would cover the percentage of flights within European Union airspace up until a review in 2016, dependent upon the International Civil Aviation Organisation’s progress towards a global scheme in 2020. Whilst this is extremely modest compared to what Sandbag believes is environmentally necessary, an airspace approach seems like a balanced compromise for now, keeping the pressure on ICAO, whilst not impinging on any other country’s airspace or discriminating between airlines and business models. Put frankly an EU airspace approach is the bare minimum needed, and further expansion in 2016 needs to be automatic if ICAO does not reach an agreement.

Sandbag Policy Analyst Rob Elsworth commented:

Despite non-EU airlines’ vociferous opposition to the EU ETS, the reality is that most of them are complying with the scheme, with some even going beyond what is legally required in order to make windfall profits. This utterly contradicts the position of those nay-saying airline officials and their governments. The EU must, as a bare minimum, control pollution in its own, sovereign airspace.

Sandbag Research Assistant Phil MacDonald commented:

Until the international community can agree on a global measure for tackling aviation pollution, the scheme remains an important trailblazer. The EU must not back down any further if it wishes to retain international credibility. An airspace-only approach is a fair and workable compromise, for now, and is the best route towards global action on aviation and climate change.

Click HERE for the full report.







EU’s aviation emissions ETS law ‘puts Europe’s global power to the test’, MEPs say

January 27, 2014

Euractiv reports that members of the European Parliament and industry representatives say the ETS for aviation is rapidly turning into a “political question of the EU’s influence on the world stage”. There will be a key vote by the European Parliament’s environment committee on 30th January. The Parliament’s rapporteur on aviation ETS, Peter Liese MEP, has threatened to block the EU’s efforts to amend the existing legislation if the EC does not mention which countries have undermined the ETS so far. There remain foreign carriers operating intra-EU flights without paying their ETS share, including Air China (Athens – Munich) and China Eastern (Frankfurt – Hamburg) and even intra-German ones. Airbus stakeholder states – the UK, France and Germany – have surrendered to “economic blackmail” from China, which threatened to no longer buy Airbus planes if the EU carried on with its legislation. Peter Liese is pushing the EC to shorten its current 2020 deadline and revert to a full-scope ETS from 2016, if no agreement on global measures is found in ICAO. T&E commented that “Pursuing anything less than coverage of emissions in EU airspace is environmentally unacceptable. At the same time, not enforcing the existing ETS sends a clear signal to third countries that EU sovereignty doesn’t matter and it won’t advance efforts to secure agreement on global measures either.”    Click here to view full story…



More problems for aviation in the EU ETS as France and Germany will not enforce sanctions for non- compliance

January 24, 2014

German centre-right MEP Peter Liese, the European Parliament’s environment committee rapporteur, wants the European Parliament to refuse to ratify proposed changes to the law on the ETS unless member states start enforcing the existing law. He is supported in this by both the environmental groups, who want better control of aviation carbon emissions, and from a very different perspective, the European Low Fare Airlines Association, which fears that if non-EU airlines are not forced to pay for carbon permits, while EU airlines are, they will be at a competitive disadvantage. Since the freeze (“stop the clock”) ended in October, the Commission proposed to change the legislation so that only the portions of flights taking place within EU airspace would be charged. But France, Germany and the UK are pushing to exempt until 2016 all emissions from any flight that enters or leaves EU airspace. At present the EU is not charging foreign airlines for the flights they operate within EU airspace. These flights are mostly American and Chinese. Liese wants the Parliament to withhold its backing until the regulators start punishing the foreign airlines for not paying their ETS charges. And to do it before May – Germany and France don’t want to do this.     Click here to view full story…


and more news stories about the ETS at