Aviation Update – EU ETS Developments, and the proposed de minimis exemption for non-commercial operators
Following the recent General Assembly of the International Civil Aviation Organisation (ICAO), the European Commission has put forward a series of proposals for the amendment of the current EU Emissions Trading Scheme (EU ETS) and its operation from 2014 – 2020. The proposals include further exemptions for flights to and from 3rd countries and proportionate calculation mechanisms for flights to/from EEC airspace after 2013.
In addition, a de minimis exemption and further simplified procedures have been put forward for small emitters, which could mean thousands of operators no longer have to comply with complicated reporting requirements under the scheme or may be eligible for simplified procedures.
Directive 2008/101/EC placed aviation within the EU ETS, in respect of emissions for flights departing and arriving EU/EEA airports. The applicability of the scheme in respect of flights to and from 3rd countries (and the extra-territorial effect the EU regime had on foreign carriers) was highly controversial.
The industry challenged the legality of the Directive in Case C-366/10, and, while the CJEU upheld the scheme, the “Stop-the-clock” Decision was passed (Decision No. 377/2013/EU). This permitted a derogation from the Directive in respect of 2012 emissions, and a deferral of enforcement for emissions from flights to and from most 3rd countries operated in 2012. For flights within the EU and to/from countries with close economic connections and a common commitment to dealing with climate change, the EU ETS continued to apply in full.
38th ICAO General Assembly
The apparent aim of the Stop-the-Clock decision was to reduce the tension which had gripped relations between the EU and 3rd countries such as the US, China and Brazil as a result of the far-reaching EU ETS, and to encourage international cooperation on a global solution to aviation emissions brokered through ICAO.
Recently, at the 38th ICAO General Assembly in 2013 which took place in September/October, the 191 ICAO Member States agreed to develop a global market-based measure to limit CO2 emissions from international aviation, which should be ready for implementation by 2020. To many observers, and participants at the General Assembly including the EU, this timeline is considered to be ambitious.
Commission proposals of 16 October 2013
In response to progress made towards this global measure, the Commission has acknowledged that amendments should be made to the aviation activities covered by the EU ETS, in particular during the run-up to the anticipated implementation date in 2020.
In its proposals, the Commission appears to have adopted a pragmatic approach, with a number of measures aimed at making provision for the operation of global market-based measures alongside the EU regime, and also addressing some perceived inadequacies in the current system. Some of the proposals are summarised below:
- For 2013 emissions the scheme will continue not to apply to emissions to or from 3rd countries, restricting coverage to emissions from flights within the EEA.
- Beyond 2013, there will be equal treatment on routes to/from the EEC by a system of proportional calculation of emissions within EU airspace.
- The number of free allowances will be reduced in proportion to distances not covered on flights to and from 3rd countries.
- An exemption is proposed for routes to and from around 80 lower-middle and low income countries with less than 1% of international aviation traffic.
An exemption is also proposed for small emitters, and simplified procedures including:
- Small non-commercial aircraft operators emitting less than 1,000 tonnes of CO2 per annum – no enforcement shall be taken against such operators;
- Small aircraft operators emitting less than 25,000 tonnes (whether commercial or non-commercial) – the small emitters tool approved by the Commission and populated with Eurocontrol data can be used; and
- Small non-commercial aircraft operators emitting less than 25,000 tonnes – Member States may implement further simplified procedures for small non-commercial operators provided they are no less accurate than the approved small emitters tool.
With the next deadline for regulated operators to surrender their emissions allowances looming on 30 April 2014, it is hoped that these proposals are agreed quickly between the European Parliament and the Council.
The proposals could significantly reduce administrative tasks required by the EU ETS for a number of aircraft operators. It is expected that the proposals would reduce the number of aircraft operators regulated by Member States under the EU ETS by around 2020. Business and private jet operators and other small emitters currently falling within the monitoring and reporting requirements may benefit from voicing support for the proposals.
Quentin Bargate, Senior Partner
Lauren Payne, Associate
For further information on the proposals or the aviation requirements under the EU ETS, contact the Aviation Group at Bargate Murray: email@example.com