New study: Expanding the EU ETS to non-European flights would significantly reduce aviation CO2
A new analysis, commissioned by Carbon Market Watch and Transport & Environment (T&E), shows the expansion of the scope of the EU’s Emission Trading System (EU ETS) for aviation could bring several environmental and economic benefits without significantly increasing operating costs for airlines. The study showed that including flights to areas outside the EU would lead to significantly higher emission reductions, create more balanced pricing between low-cost carriers and legacy airlines and generate higher EU ETS revenues that can be used to decarbonise aviation, all with limited costs for airlines. Currently, only intra-European Economic Area (EEA) flights are included in the EU ETS proposal, but the study shows that expanding the scope to all departing flights, not only European, would result in 50% more emissions reductions. Including all departing and arriving flights could lead to reductions113% greater than the EEC’s proposal. The cost would be minor, compared to the total operating costs of airlines – some 3.4 to 5.5% more, or a maximum 6.8% more. This would be far more effective in limiting CO2 than the feeble international CORSIA scheme.
New study: Slashing aviation emissions at little cost to airlines
By Daniele Rao (Carbon Market Watch)
10 Jun 2022
A new analysis shows the expansion of the scope of the EU’s Emission Trading System (EU ETS) for aviation could bring several environmental and economic benefits without significantly increasing operating costs for airlines.
The major benefits of expanding the scope of the EU ETS for aviation has this month been demonstrated by a new study. Research showed that including more flights in the EU carbon market would lead to significantly higher emission reductions, create more balanced pricing between low-cost carriers and legacy airlines and generate higher EU ETS revenues that can be used to decarbonise aviation, all with limited costs for airlines.
This study was commissioned by Carbon Market Watch and Transport & Environment (T&E), and conducted by TAKS, and aims to provide more nuance and data for the ongoing discussion on the revision of the EU ETS for aviation.
Big emissions reductions
Currently, only intra-European Economic Area (EEA) flights are included in the Commission’s EU ETS proposal, but the study shows that expanding the scope to departing flights (semi-scope), would result in 50% more emissions reductions, and applying the EU ETS to all flights leaving and arriving (full scope) in the EU would lead to reductions that are113% greater than the Commission’s proposal.
The study also showed that the additional carbon cost for airlines related to the purchase of EU allowances and international credits is minor compared to the total operating costs of airlines. In the semi-scope scenario, the cost for intra-EEA flights would take a 5.5% share of total airline operating costs, and for flights outside the EEA would only amount to 3.4%. Even the full scope scenario, the most ambitious option for the climate, would only cost a forecasted 6.8% of total airline operating expenditure.
Funding climate action
Moreover, the study shows that the revenues raised from the sale of EU allowances would be much higher with an expanded scope: compared to the Commission proposal where €26.1 billion is raised, the inclusion of departing flights in the system would raise up to €60.8 billion and the expansion to full scope up to €95.4 billion.
If the polluter pays principle was applied, ending the allocation of free allowances to airlines, there could be a further increase in the auctioning revenues: €68.4 billion for semi-scope and €107.4 billion for full scope. This means that full scope, combined with an immediate phase-out of free allocation, will raise the most revenues and presents the best option for the urgent climate action that is desperately needed from the aviation sector.
The cracks in CORSIA exposed
The last important finding of the report relates to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with the study detailing how weak and uncertain the system is. CORSIA could lead to 77% less emissions savings compared to the Commission proposal, due to uncertainties related to the baseline that will be used from October 2022 and the fact that some countries (Brazil, China, India, Russia and Vietnam) are unwilling to join the scheme. The EU cannot rely on this ineffective offsetting scheme to regulate long-haul aviation emissions.
This study was conducted in a crucial moment, where lawmakers and EU institutions are discussing the review of the EU ETS for aviation. On Wednesday 8 June, MEPs agreed in a plenary vote to further increase ambition for the ETS for aviation: the adopted text proposes to expand the scope of the EU ETS to all departing flights and to phase out free allocations by 2025.
While this is an improvement on the Commission proposal, there’s still space to increase the ambition of the whole system further. As the study shows, accelerating the phase-out of free allowances not only ensures the application of the polluter pays principle, but is also the most effective solution in light of the climate crisis, if accompanied by a further expansion of the scope to all arriving and departing flights.
EC draft shows EU to propose aviation fuel tax in efforts to cut European CO2 emissions
The European Commission has drafted plans to set an EU-wide minimum tax rate for aviation fuels, as it seeks to meet more ambitious targets to fight climate change. The EC is drafting an overhaul of EU energy taxation, as part of a package of measures it will propose on July 14, to meet a target to reduce EU greenhouse gas emissions by 55% by 2030, from 1990 levels. The draft proposes taxing aviation fuel, as its continuing exemption “is not coherent with the present climate challenges and policies.” From 2023, the minimum tax rate for aviation fuel would start at zero and increase gradually over a 10-year period, until the full rate is imposed. The draft proposal did not specify what the final rate would be. A recent survey suggests that Europeans support the taxation of aviation fuel. Even factoring in the impact of the pandemic, aviation emissions are expected to grow between 220-290% by 2050 compared to 2015 levels, which would be disastrous for the climate. Airlines favour carbon offsetting schemes, rather than fuel tax; but these allow them to continue polluting even though offsets have been repeatedly found to be largely ineffective.
Report for the European Commission shows the CORSIA carbon scheme inadequate – EU ETS more effective in cutting CO2
The aviation industry’s carbon offsetting system (Corsia) risks being ineffective and poorly enforced. A report commissioned by the European Commission (EC) is highly critical of Corsia, which it says may do almost nothing to reduce international aviation emissions. The EC is expected to propose in June how aviation industry emissions should be mitigated, including whether to include international flights in the EU Emissions Trading Scheme (ETS) – currently only those within the European Economic Area are included. The ETS has its faults, but would be hugely more effective in cutting European aviation carbon. A key problem with Corsia, apart from it being voluntary, is the use of cheap, ineffective carbon credits. Currently the price of Corsia-eligible offsets is under $2.50 per tonne. The ETS price is up to $43. Many of the credits are dubious, with inadequate certification or quality control of offsets. The rationale of just allowing airlines to compensate for their emissions, rather than encourage reductions, is misguided. The report concludes that the most effective way to cut EU aviation carbon would be to use the ETS, not Corsia, and include all international flights. The UK is considering how to do its own ETS, including aviation.
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.