2 Aviation and the EU Emissions Trading
System
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15051/13
+ ADD 1
COM(13) 722
| Draft Directive amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in view of the implementation by 2020 of an international agreement applying a single global market-based measure to international aviation emissions
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| Legal base | Article 192(1) TFEU; co-decision; QMV
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| Document originated | 16 October 2013
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| Deposited in Parliament | 22 October 2013
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| Department | Energy and Climate Change
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| Basis of consideration | EM of 5 November 2012
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| Previous Committee Report | None, but see footnotes
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| Discussion in Council | See para 2.10 below
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee A
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Background
2.1 The EU's main market-based measure for limiting emissions
of carbon dioxide is its Emissions Trading System (ETS), which
was established by Directive 2003/87/EC, and came into operation
on 1 January 2005. However, this does not apply to undertakings
in all areas, and the question of extending it to include aviation
was addressed in a Commission Communication[3]
in September 2005, against a background where that sector's relative
contribution to the EU's greenhouse gas emissions was still small,
but increasing rapidly. The Communication also noted that, although
the Kyoto Protocol covered only domestic flights, it did place
upon the parties concerned an obligation to pursue a wider limitation
on emissions through the International Civil Aviation Organisation
(ICAO), and that, although the Organisation had not so far been
able to agree on regulatory standards for carbon dioxide emissions,
it had endorsed the concept of international open emissions trading.
2.2 The Communication concluded that including
aviation within the ETS appeared to be the most promising way
forward, and, in the light of its further examination of the practical
implications, the Commission put forward a proposal in December
2006, which was subsequently adopted as Directive 2008/101/EC,
and introduced appropriate amendments to Directive 2003/87/EC.
As a result, all aircraft operators who fly into or out of aerodromes
in the European Economic Area (EEA) were required to monitor their
carbon emissions each calendar year from 1 January 2010, and then
to submit an independently-verified report to their respective
regulator by 31 March of the following year. Also, as from 30
April 2013, aircraft operators had to surrender the corresponding
number of carbon allowances and project credits to their regulator,
to account for their annual verified emissions.
2.3 However, it was also recognised that the
best outcome still lay in an international agreement on the global
regulation of aviation emissions within the ICAO, and, in order
to reinforce the significant progress which had been made towards
this, and to enhance the chances of a successful outcome in October
2013, the Commission put forward in November 2012 a draft Decision[4]
to "stop the clock". In particular, the Decision adopted
(377/2013/EU) suspends for one year the enforcement of the obligations
of aircraft operators operating flights to or from aerodromes
located in the EEA[5] and
third-party countries under the ETS, on the condition that they
returned any free allowances which had already been allocated
for 2012 in respect of their international flights.
2.4 The effect of the measure has been that only
flights between EAA aerodromes face enforcement for failing to
submit emissions reports and surrender allowances and project
credits for their 2012 emissions, but the Commission said that,
if progress was made within the ICAO in developing a global market-based
measure and adopting a framework to facilitate its application,
it would propose further legislative action. However, if no "clear
and sufficient" progress was made, obligations on international
flights would once again apply from the end of March 2014.
The current document
2.5 The Commission recalls that the EU has had
two main objectives for aviation emissions within the ICAO —
to seek agreement on a framework for national and regional Market
Based Measures (MBMs) and a roadmap for a global MBM, to be agreed
by 2016 for implementation in 2020, thus superseding the Aviation
EU ETS. It says that, following very challenging negotiations,
a strong text on a global MBM has been agreed, but that the EU
lost a number of key votes in relation to the framework for national
and regional MBMs. This has resulted in the adoption of a text
which specified that the inclusion of foreign carriers in national
and regional MBMs for international aviation, such as the Aviation
EU ETS, should be subject to the agreement ("mutual consent")
of other States, and that exemptions should be granted to routes
to and from developing States with less than a 1% share of international
aviation activity.
2.6 The Commission says that, if the concept
of 'mutual consent' were to be applied, it could create significant
competitive distortions, thus contradicting the EU position, which
firmly asserts that states have sovereignty over their airspace
(as set out in Article 1 of the Chicago Convention[6]
on International Civil Aviation, which, unlike the ICAO Resolution,
is legally binding). In the light of these developments, it has
proposed an amendment to the scope of the Aviation EU ETS, which
seeks to respond to some of the concerns raised by reducing its
scope to cover only the portion of a flight which takes place
in the European Economic Area (EEA) from 2014, following a further
year similar to that in 2013 under the "Stop the Clock"
proposal. More specifically, Directive 2003/87/EC would be amended
to include a partial derogation from compliance obligations in
respect of aviation emissions from 2013 until 2020 (when the global
MBM as agreed at ICAO is due to be implemented) by moving the
Aviation EU ETS from an approach based on intra-EEA flight routes
in 2013 to one based on both intra-EEA routes and EEA Airspace
from 2014 until 2020.
2.7 The proposal would take effect in a phased
manner, effectively extending 'Stop the Clock' for an additional
year, before putting in place the following provisions:
- flights arriving and departing
in the EEA — including the outermost regions of the EU —
remain fully covered, as under the original Aviation EU ETS and
the 'Stop the Clock' measure;
- from 2014, the proportion of international flights
departing or arriving at an EEA airport which occur in EEA airspace[7]
are included;
- however, emissions over Switzerland, Kaliningrad,
Serbia, Bosnia, Montenegro and Albania will be exempt, as will
emissions over sea areas greater than 400 nautical miles from
another EEA State;
- in order to allow time to implement new provisions,
there will be an extraordinary two-year compliance cycle for aviation
emissions for 2013 and 2014, with data for both years being reported
by 30 March 2015 and allowances surrendered by 30 April 2015;
- flights arriving from and departing to third
countries classed as 'developing' for the purposes of the proposal,[8]
and which have less than 1% share of international aviation emissions,
will be exempt;
- over-flights of EEA countries (e.g. Dubai-New
York) will be exempt under the proposal, as will flights to and
from third countries and territories and dependencies of EEA countries,
flights arriving and departing at airports in overseas territories
and crown dependencies, and emissions over the sea areas between
mainland Europe and dependencies and territories and over the
landmass of those areas (e.g. Greenland and the seas between Greenland
and mainland Europe);
- non-commercial operators emitting less than 1000
tonnes of carbon dioxide per annum will also be exempt, reducing
the number of aircraft operators regulated by Member States by
around 2200 but only representing 0.2% of emissions.
2.8 There will be a review in 2016 following
the ICAO General Assembly, where the Commission will report on
progress towards a global MBM and consider any appropriate proposals.
The Government's view
2.9 In his Explanatory Memorandum of 5 November
2013, the Minister of State for Energy and Climate Change (Gregory
Barker) says that carbon dioxide emissions from aviation currently
represent around 2% of the global total, but are projected to
grow rapidly, by up to 500% by 2050. It is therefore essential
that measures are put in place to limit these in order to meet
UK and EU climate objectives, and he confirms that, as the aviation
sector operates across international borders and serves global
markets, action is best taken at international level. The UK and
EU priority has therefore always been to obtain a global agreement
towards addressing aviation emissions, and the Government welcomes
the progress made at the ICAO Assembly towards this goal.
2.10 In the meantime, the Minister says that
the UK firmly supports the inclusion of international aviation
in the EU ETS, as a cost effective solution to tackling its emissions,
adding that, importantly, the EU ETS allows the aviation industry
to grow sustainably, whilst ensuring that it pays for commensurate
emissions reductions elsewhere. At the same time, he stresses
the crucial importance of understanding and taking into account
third country reactions to the proposal, recalling the widespread
international opposition to Directive 2008/141/EC, and the concerns
which some key third countries and industry have already registered
that the current proposal is in conflict with the agreement reached
at the ICAO General Assembly.
2.11 The Minister also says that the Government's
objective will be to ensure that agreement to amend aviation EU
ETS is secured within the tight timescale before the system reverts
to its full scope in spring 2014, on the expiry of "Stop
the Clock".
Conclusion
2.12 Although the concept of extending the EU's
Emissions Trading System to include aviation is in itself simple
and logical, it is clear from the recent attempts to do this that
there are very significant practical and political difficulties
involved. In particular, this latest proposal appears to be technically
complex and difficult to administer; although its environmental
impact will be somewhat greater than the current "Stop the
Clock" arrangement, the many exemptions suggest that it will
still cover only a relatively small proportion of relevant traffic
outside EEA airspace; but, despite this, the Government has said
that it still contains elements which certain key third countries
believe conflict with the agreement reached within the ICAO.
2.13 In view of this, we believe that the
proposal gives rise to issues which should be considered by the
House at an early opportunity, and we are therefore recommending
it for debate in European Committee A.
3 See (26885) 12790/05: HC 34-viii (2005-06), Chapter
1 (2 November 2005), and Stg Co Deb, European Standing
Committee, 24 November 2005. Back
4
See (34438) 16723/12: HC 86-xxv (2012-13), chapter 15 (19 December
2012). Back
5
Including for this purpose Croatia, Switzerland and the dependent
territories of EEA States. Back
6
The Chicago Convention, which established the ICAO, establishes
rules of airspace, aircraft registration, safety and details the
rights of signatories in relation to air travel. Article 1 states
that "Every State has complete and exclusive sovereignty
over airspace above its territory". Back
7
Extending no further than 12 nautical miles beyond the furthest
point of the EEA coastline and including adjacent sea areas between
EEA countries. Back
8
Countries which are not classified in 2013 by the World Bank as
high income or upper-middle income. Back
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