European Commission publishes historical aviation emissions figure on which EU ETS allocations are to be based
Mon 7 Mar 2011 – After delays in order to further refine the data, the European Commission has finally decided on the aviation emissions base that will be used in calculating the number of aviation allowances to be made available to eligible aircraft operators under the Aviation EU Emissions Trading Scheme (EU ETS), which starts next January. The decision on historical aviation emissions, as the EC terms the baseline, of 219,476,343 tonnes of CO2 represents the average of the estimated annual emissions for the years 2004, 2005 and 2006 of all flights that would have been covered by the EU ETS. The Commission said it would publish its benchmark decision on how many free allowances operators will receive by the end of this coming September, along with formal details of the emissions cap and the percentages of allowances to be auctioned, given for free and allocated to the special reserve. It also dismissed reviewing the impact of the Icelandic volcano on the free share allocation process.
The baseline emissions figure is in line with industry predictions. “It is within the range of 215 +/- 5 million tonnes of CO2 expected by many and which I have personally been using on various airlines’ carbon scenarios,” said Andrew Pozniak, Project Director & Sustainability Advisor of consultants Green Aviation Solutions. “This value was raised in the press as an estimate back in 2009, so despite all this delay the result is only a 2% difference from that estimated. At least we now have certainty and can move forwards.”
According to VerifAvia CEO Julien Dufour, there is no surprise in the figure. “I don't think this will have any implication to anybody, other than provide an official figure for people who had never seen any estimate before,” he said. “But anyway, what matters most is the tonne-kilometre (TK) benchmark, which is extremely difficult to estimate. Without the TK benchmark, the baseline has little value.”
The baseline was calculated from data compiled by Europe’s air navigation agency Eurocontrol and actual fuel consumption information provided by around 30 aircraft operators of different types and sizes. According to the Commission, the reason for the delay in publishing the figure was in order to spend more time in increasing the accuracy of the data and to implement a methodology to assess the fuel consumption of onboard auxiliary power units (APUs) used by aircraft on the ground.
The number of aviation allowances to be created in 2012 amounts to 212,892,052 tonnes of CO2 – 97% of the baseline emissions figure, as set out in the Aviation EU ETS Directive – falling to 208,502,525 each year from 2013 as the cap tightens to 95%.
Aircraft operators will be allocated 82% of the allowances for free, with 15% allocated for auctioning and the remaining 3% allocated to the special reserve for later distribution to fast growing airlines and new entrants into the market. All operators to be included in the scheme must submit verified emissions and tonne-kilometre data by the end of this month to their respective Competent Authority. The free allowances will be allocated by a benchmarking process that measures the activity of each operator in 2010 in terms of the number of passengers and freight that they carried and the total distance travelled.
The Commission said the benchmark “should” be published by 30 September 2011, three months before the start of the scheme on 1 January 2012.
A plea from airlines affected by last year’s Icelandic volcanic ash cloud, which believe they will lose out on valuable free allowances as a result of the grounding of flights, has fallen on deaf ears in Brussels.
“We have not seen data to suggest that the impact of the ash cloud will have a material impact on the distribution of free allowances between aircraft operators,” said the Commission in a briefing note. “Redistribution might occur if certain airlines had to cancel a greater proportion of flights than others, while the vast majority of operators have been impacted by the flight restrictions resulting from the volcanic ash cloud. Indeed, all the estimations that we have seen confirm that distributional impacts are very small.
“For the regulator to change or adapt the 2010 benchmarking year for the allocation of free allowances to aircraft operators, it would require a change in primary EU legislation. Adopting such legislation usually takes two years and there are no plans to start this process.”
The briefing note acknowledged the legal challenge to the EU Directive by a number of US airlines and the referral to the European Court of Justice. It said the Commission, European Parliament, Council and a number of member states have submitted observations, in addition to other organisations intervening in the case. “The airlines involved are complying with the Directive’s requirements in full pending the resolution of this challenge.”
Supporting the principle of aviation emissions trading at a global level, the Commission said: “The EU ETS provides a good model for applying market-based measures to aviation. Development of other national programmes covering international aviation, compatible with the EU ETS, is a pragmatic way in which global action can be implemented.”
EU emissions from aviation are increasing fast, it maintained, and are higher than from certain entire sectors already covered by the EU ETS, for example refineries and steel production. When it joins the scheme, aviation is forecast to be the second largest sector in terms of emissions, second only to electricity generation. By capping aviation emissions below their 2004-2006 level, the Commission estimates that given predicted increases in air traffic, an estimated 183 million tonnes of CO2 will be saved per year on the flights covered, a 46% reduction compared with business as usual.
“Firm action is needed,” said Connie Hedegaard, European Commissioner for Climate Action, commenting on the release of the baseline figure. “By publishing the data on which allocations will be based, we prepare for the full inclusion of aviation in the emissions trading system.”
The Commission expects the impact of the EU ETS on airline ticket prices to be minor. Assuming airlines fully pass on the extra costs to customers, by 2020 the ticket price for a return intra-EU flight could rise by between €1.80 and €9, with a return flight to New York costing an additional €12 at current carbon prices.
“However, ticket price increases are in any case expected to be significantly lower than the extra costs airlines have passed on to consumers due to world oil price rises in recent years,” it added. “Including aviation in the EU ETS will also have a smaller impact on prices than if the same environmental improvement were to be achieved through other measures such as a fuel tax or an emissions charge.”
Responding to the baseline announcement, European NGO Transport & Environment (T&E) calculates the cost to the aviation sector will be the equivalent of a one-cent per litre tax on aviation fuel – which, it notes, is currently untaxed in the EU – and represent an average of less than 1% on the top of ticket prices if passed on.
“This negligible impact on fuel costs is in stark contrast to rates of tax for road transport,” it said. “The average level of road fuel tax in the EU is around 48 cents per litre. The EU also sets minimum levels for road fuel taxes, currently 36 cents per litre for petrol and 33 cents per litre for diesel.”
T&E Programme Manager Bill Hemmings added: “Aviation, by far the most polluting transport sector, still operates in a European-wide fuel and VAT tax haven. Inclusion of the sector in the EU ETS is no more than a minor first step. And it is no excuse for prolonging the massive subsidy of fuel tax and VAT exemptions. In times of fiscal austerity these subsidies are more irresponsible than ever.”
The Commission reminded member states that all auction revenues raised from aviation allowances should be used to tackle climate change, including in the transport sector, and to adapt to the effects of climate change.