UK government issues list of number of free carbon permits for airlines in the UK ETS

The government has announced that Britain has published a list of the number of free UK carbon permits each aircraft operator will receive from 2021-2025 under the country’s domestic emissions trading system (ETS). The UK has initiated its own system, after Brexit. Only domestic flights and flights within the EU are covered – not all international flights, as was the case with the EU ETS.  The number declines slightly betweeN 2021 and 2025. Aircraft operators can apply for free allocation based on their historical aviation activity.  Free permits for the 2021 scheme year will be allocated to operator holding accounts in the UK ETS registry in the coming weeks. Operators had to apply by 31st March. This is organised through BEIS. The website says:  “Aircraft operators have to submit 2010 and/or 2014 verified tonne-kilometre (tkm) data to their regulator. This data should cover all full-scope flights and must contain tkm data associated with UK ETS aviation activity. Free allocation will be distributed in proportion with UK ETS aviation activity emissions rather than full-scope flight emissions.”  The government says the free allocation is “to reduce the risk of carbon leakage for businesses.”
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Government UK ETS stuff

https://www.gov.uk/government/publications/participating-in-the-uk-ets/participating-in-the-uk-ets

and

https://www.gov.uk/guidance/uk-ets-apply-for-free-allocation

and the table showing the number of free permits is at

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/997221/uk_ets_aat.csv/preview


Britain publishes CO2 permit free allocation list for aviation

Reuters

29.6.2021

LONDON, June 29 (Reuters) – Britain has published a list of the number of free UK carbon permits each aircraft operator will receive from 2021-2025 under the country’s domestic emissions trading system (ETS), the government said.

The ETS is a method of charging power plants and other industrial entities for each tonne of carbon dioxide they emit. Britain launched its own market to replace the European Union’s ETS after it left the bloc.

The UK’s ETS applies to energy intensive industries, the power generation sector and aviation.

Under the scheme, some installations and aircraft operators can get free emissions permits to reduce the risk of businesses transferring their activities to other countries due to climate costs.

The government said free permits for the 2021 scheme year will be allocated to operator holding accounts in the UK ETS registry in the coming weeks, following administrator approvals.

Reporting by Nina Chestney, editing by Louise Heavens

https://www.reuters.com/business/aerospace-defense/britain-publishes-co2-permit-free-allocation-list-aviation-2021-06-29/

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See earlier:

 

Pressure on UK as Germany backs EU ending free carbon permits for airlines

The German government is backing an extension of EU carbon pricing that will end free carbon permits for airlines, putting pressure on the UK to put in place a similar package to meet climate targets. The European Commission will propose several climate policies on 14th July, to try to cut greenhouse gases faster in line with an EU goal to cut net emissions by 55% by 2030 from 1990 levels. The package will include reforms to the EU carbon market. Germany has backed the EC’s plan to impose CO2 prices on transport through a separate system to the EU’s existing ETS.  Germany said the reforms to the EU’s carbon market should prolong free carbon permits “to an appropriate extent”, but end them soon for aviation. The UK has created its own carbon pricing market since leaving the EU, but it mostly follows the existing EU model and focuses on heavy industries and energy providers.  The UK’s pledge to reduce CO2 emissions 78% by 2035 will dramatically force up the cost of fuel for transportation, including flying. Not all MPs are happy with that.

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After years of cheap carbon allowances, price has doubled from around €25 to around €50 in the past 6 months

Airlines flying within Europe have to pay for their carbon emissions, through the Emissions Trading System (ETS). They have to buy carbon allowances, for the carbon emitted. Until 2020, the price of those allowances did not rise beyond about €25. Before that, till around 2018 it was more like €8 per tonne. But there has been a sharp rise in the price in the past 6 months or so, reaching €56 recently and now being around €49.  This is not what airlines like, as like other carbon intensive sectors in Europe, they must buy the tradable credits to cover the amount they pollute under parallel emissions systems in both the UK and the EU. The nascent UK carbon trading system, which launched this month, started trading at higher prices, of above £50 a tonne.  The higher prices hit the dirt-cheap airlines hardest, with their low ticket prices – Ryanair, easyJet and Wizz Air have been hit particularly hard as almost all their flights are in Europe or the UK, requiring carbon allowance payments.  Traders and market participants expect the price of carbon to keep rising as net zero pledges of governments and corporates become more ambitious. 

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CORSIA: World’s biggest plan to make flying green ‘too broken to fix’

So far the only scheme that might be used globally, to try to reduce the CO2 emissions of aviation, is the UN’s CORSIA. But it is wholly inadequate for the task. Now an assessment by the German DW shows that the scheme would not even require airlines to offset their CO2 emissions for another 6 years, and the cost will be much to small to have any deterrent effect.  The CORSIA scheme finally launched this month, with the aim of stopping the total emissions of aviation from rising about their level in 2019. Critics say the scheme is unambitious and ineffective. The baseline above which offsets must be paid is so high that it will take until 2026 before any airline has to purchase any.  Magdalena Heuwieser, co-founder of the Stay Grounded activist group: “CORSIA is a wreck that is too broken to fix.  It is even worse than doing nothing because it distracts from real solutions.” That is because it could delay investments in the technologies needed to decarbonise flights.  A lot of smaller countries, with new aviation sectors, and not required to be part of CORSIA.  Many large countries might join, on a voluntary basis, before 2027.  Others will only join then.

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Domestic flights and flights to European countries now covered by UK ETS (replacing EU ETS)

Having left the EU, there is now a UK Emissions Trading Scheme (ETS) and aviation will be covered in that, in the same way as it was in the EU ETS.  So only applies to flights within the UK, or any flight within Europe (the countries that are the EEA). In response to a question in Parliament by Ben Bradshaw (Labour), Anne-Marie Trevelyan, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth) said: “The UK ETS initially covers around one third of UK greenhouse gas emissions, and applies to the power sector, heavy industry, domestic aviation, and flights from the UK to the European Economic Area. We recognise that meeting Net Zero will require us to build on this ambition. That is why in the next 9 months we will consult on how to align the UK ETS cap with an appropriate net zero trajectory. The cap will provide certainty about the UK’s decarbonisation trajectory over the long-term … We are also committed to explore expanding the UK ETS and will set out our aspirations to continue to lead the world on carbon pricing in the run up to COP26.”

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