Commission prepares for no-deal Brexit with list of reassigned airlines administered by the UK under EU ETS
Fri 15 Feb 2019 – In the event of a no-deal Brexit, the European Commission has issued a revised list of aircraft operators covered under the EU Emissions Trading System (EU ETS) that shows the new EU competent authority of those operators currently administered by the UK. The list is contained in a new regulation published in the Official Journal earlier this week but only enters into force if the UK leaves the European Union on March 29 without a withdrawal agreement. The UK administers the largest number of operators compared with other EU States. The UK has brought forward the deadlines for operators to report their 2018 emissions to March 11, who must also surrender allowances by March 15. Meanwhile, ICAO has released a preliminary incomplete list of operators and the State to which they are attributed under the global CORSIA carbon scheme.
According to the UK government, it administers around 140 aircraft operators under the EU ETS. The list published by the Commission shows Germany taking on a fair proportion of the additional burden although flag carrier British Airways has been assigned to Italy and leading low-cost carrier easyJet to Spain (see list below). Leisure airlines Thomas Cook and TUI would also be administered by Spain under the no-deal Brexit scenario. The regulation says changes to the list of aircraft operators have been based on the latest data provided by Eurocontrol.
Unless an extension is agreed, the UK formally leaves the European Union at midnight (CET) on March 29, so becoming a third country. In a notice to stakeholders published on December 19, the Commission said that subject to an agreed transition period agreed in the draft withdrawal agreement, EU rules governing the EU ETS will no longer apply to the UK. The derogation in place regarding the temporary exclusion of flights between airports in the European Economic Area (EEA) and those outside would then also apply to flights from the UK to the EU and vice versa.
The notice also said, as of the withdrawal date, aircraft operators administered by the UK will not be able to access their accounts in the EU ETS Union Registry. The UK’s EU ETS administering body, the Environment Agency (EA), has advised operators to take “appropriate action” if they wish to retain access to their allowances in a no-deal scenario, which could include moving these to an existing registry account in another EEA State’s registry.
The Commission’s notice also said that as of 1 January 2019, the UK will not be able to auction allowances, allocate allowances for free to aircraft operators or exchange of international credits. This is a contingency in case of a no-deal outcome but the suspension would be lifted in the event of a withdrawal agreement and after the necessary ratification instruments had been deposited.
In the event of a no-deal, operators should therefore prepare for the possibility of having to meet their 2018 obligations without the use of their 2019 free allocation, advises the EA. It also warns that despite there being less than five days between having to report their 2018 emissions and surrendering the required allowances, operators will be liable to the mandatory civil penalty equivalent to €100 (S113) for each allowance that they fail to surrender. Operators reporting to other EU States have until 30 March 2019 to report their 2018 emissions and 30 April 2019 to surrender allowances.
For the 2019 compliance year, which started in January, there would likely be no role for the UK authorities under a no-deal scenario and reassigned operators would report all 2019 emissions to their new EU administering State.
However, the government says it intends to maintain monitoring, reporting and verification (MRV) arrangements “to ensure continuing transparency over greenhouse gas emissions.”
It adds: “UK operators of stationary installation will continue to report on their emissions. Aircraft operators who will be registered in the UK after exit day will continue to report their emissions on the same flights as required on exit day. There is no immediate action for aircraft operators who will be registered outside the UK after exit day, even if they are currently administered by the UK, as the UK government will not initially place MRV requirements on these operators in a no-deal scenario.”
The UK is considering a number of options post-Brexit, which include a carbon tax, staying in the EU ETS until the end of the current trading period (Phase 3) in 2020 if a withdrawal agreement with a transition period is reached and/or coming up with its own national greenhouse gas trading system that would be aligned with the EU ETS. A similar linking arrangement has been negotiated between the EU and Switzerland.
In the event of no deal being reached, the government said last October it would introduce a Carbon Emissions Tax of £16 ($20) for fixed installations that would be applied to each tonne of CO2 emitted over and above an installation’s emissions allowance, which would be based on its free allowance allocation under the EU ETS. The aviation sector will not be subject to the tax, although operators will still be obliged to comply with GHG MRV requirements.
“The government is continuing to develop options for long-term carbon pricing,” it says. “We will consult on our future approach in due course.”
Meanwhile, ICAO’s preliminary list of CORSIA aeroplane operators – unlike the EU ETS, CORSIA does not cover helicopter flights, only fixed-wing civilian aircraft, hence the term “aeroplane” – is based on information reported by 50 States by 30 November 2018, and is dated 21 December. The list contains over 230 airlines and business aircraft operators. The first edition of the document is expected to be published by the end of May.
Major airlines currently administered under the EU ETS by the UK and their reassigned EU State in the event of a no-deal Brexit: