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UK decision to push back emissions reporting deadline leaves aviation EU ETS implementation in confusion

UK decision to push back emissions reporting deadline leaves aviation EU ETS implementation in confusion | ETS
Mon 13 July 2009 – The UK has blamed Brussels for its failure transpose the EU directive on the aviation ETS into national legislation in time to comply with the August 31 deadline by which operators were required to submit emissions monitoring and benchmarking plans. A government statement said there first needed to be a “firm and agreed” list of operators to be regulated by each EU member state. As this list was not now expected to be published by the Commission until later this month, the UK government says it is legally unable to lay the first stage of regulations transposing the directive. Operators will now be required to submit their plans within 11 weeks after the regulations are laid before Parliament, which could move the deadline to late October. Other EU States have no plans, so far, to follow the UK’s decision but few appear able to transpose the directive before the end of August.
 
The statement, issued by Defra, the environment ministry, and the Department for Transport said it was “vital that every aircraft operator covered by the EU ETS is aware of their obligations under the System.” However, there appears to be different interpretations by EU states on whether it was necessary to transpose the directive into national law in order to comply with the original August 31 deadline and the significance of the European Commission’s list of aircraft operators.
 
The Commission has already published an ‘information note’ on the legal status of the list. It concluded that “aircraft operators performing an aviation activity listed in Annex I of the Directive are covered by the EU ETS whether or not they are on the list of operators at the time of the activity.”
 
A second question the note looked at was whether the list determined which administering Member State is responsible for an aircraft operator. It said that Article 18a(3)(a) of the directive required the Commission “based on best available information, to publish a list of aircraft operators which performed an aviation activity on or after 1 January 2006 specifying the administering Member State for each operator ...”.
 
The list, says the note, ensures that each operator knows which Member State it will be regulated by and that Member States are clear which operators they need to regulate. “These aims can only be achieved by the single preparation of a single list at Community level. Legally, the consequence of this is that Member States and operators can rely on the determination of the administering Member State made in the list,” it concludes.
 
Sebastian Gallehr of German consultancy Gallehr+Partner said that although it could be argued that the Commission had already published its list of operators, this list was not legally binding. “It is each operator’s own responsibility to identify whether it is affected by the EU ETS or not,” he warned.
 
The UK says it is currently finalizing the first stage regulations transposing the directive and aims to publish them very shortly, “for information only”, which is intended to provide operators early sight of their obligations. Shortly after the Commission publishes its list of aircraft operators, which could still be further delayed until early August, the first-stage regulations will be laid before the UK Parliament before coming into force 21 days thereafter. Aircraft operators will then have up to eight weeks to submit emissions monitoring plans to the UK regulator, the Environment Agency.
 
A UK consultation on draft second-stage regulations is due to start soon, which will replace the first stage regulations and will complete the UK’s transposition of the aviation EU ETS directive.
 
Other EU states have yet to indicate whether they will follow the UK’s decision to postpone the crucial August 31 deadline in which aircraft operators are mandated to submit emissions monitoring plans and also submit benchmarking plans that entitle operators to claim free allowances up to 2020. According to the initial list drawn up by the European Commission and based on Eurocontrol data, the UK will be responsible for administering over a quarter of the 2,700-plus operators identified. It would appear unlikely the Commission could support a two-speed process whereby the Member State with the largest number of operators to administer could have a later closing date than other States.
 
The postponement could also have a serious knock-on effect as monitoring plans have to be processed and approved or rejected by the regulators by December 31, with the start of the first monitoring period for annual emissions and benchmark data following the next day on January 1, 2010. The UK Environment Agency could be left with little more than two months to carry out the processing of over 700 emissions monitoring and benchmarking plans. In its statement, the UK government says it “remains committed to including aviation in the EU ETS from 2012.”
 
Julien Dufour, CEO of French consultancy SustainAvia, understands the French aviation ETS administrator will not postpone the August 31 deadline because of the high number of monitoring plans that require processing by a limited number of staff before the end of the year.
 
He said Italy is even further behind on implementing the directive and a decision has yet to be taken on who will approve the monitoring plans, and the aircraft operators they are responsible for have yet to be contacted.
 
Philippe Langumier, responsible for the aviation ETS within the French  civil aviation authority the DGCA, told GreenAir Online that of the 500 operators on its list, only half had replied to a first letter sent out in April, although a second sent earlier this month had elicited some further response. He said the problems are mainly with non-commercial overseas operators. However, he sees the deadline as the main challenge.
 
“The final version of the templates for the monitoring plans was only out in June. We organized a workshop in mid-June on the filing of the plans but this leaves very little time for operators to understand the regulation, organize themselves and comply with the deadline.”
 
The workshop was attended by around 70 delegates from about 30 operators.
 
Dufour said the French DGCA had modified the monitoring plan templates slightly and were currently under translation into French by the EC. The French CAA will accept monitoring plans submitted in French or in English. He said the DGCA expects that most of the small emitters will not submit a tonne-kilometre plan, which will limit the workload created by the need to check and approve the monitoring plans.
 
The UK proposes fines of up to £50,000 ($80,000) for operators who do not submit emissions monitoring plans by the deadline. However, France has no such plans. “Contrary to the UK, we have no policy to fine late submission of emissions monitoring plans this year because we have no possibility of passing the necessary regulation in time,” said Langumier. “We intend to introduce such a sanction regime for next year.” He does not foresee the legislation being passed until later this year.
 
Sebastian Gallehr said the German authority, the German Emissions Trading Authority (DEHSt) appeared well-prepared for the aviation EU ETS and had recently set up a website – in English as well as German since nearly half the 288 operators it will handle are from outside Germany – explaining the guidelines and requirements. However, Gallehr pointed out that all communications from the DEHSt are in German, which would possibly disadvantage overseas operators.
 
“A second key issue is one of general legal uncertainty,” he said. “Many topics and processes are not defined in the EU directive and the monitoring guidelines, which means that the DEHSt – which is part of the environment ministry and is not experienced in aviation matters – is drafting preliminary procedures and guidance. The Germans, typically, are not comfortable with this, whereas the French CA is much more pragmatic.”
 
Gallehr was not aware of the German government proposing financial penalties on operators not complying with the emissions monitoring plan submission date but details of the regulations transposing the directive had not yet been released and may not be passed until later in the year.
 
Understandably, airline representative organizations are far from happy with the situation. The International Air Transport Association (IATA) said three-quarters –169 out of 230 – of its member airlines were caught by the EU ETS and its Monitoring, Reporting and Verification (MRV) requirements.
 
“All governments should have contacted airlines that they are administering by now but the EC still hasn't produced its final list of which airlines are administered by which Member State,” an IATA spokesman told GreenAir.  “We are now expecting the list by the end of July. Some non-EU airlines are therefore in limbo as they do not know which government is administering them.  
 
“According to the EC legislation, airlines must submit their monitoring plans by August 31. This is going to be very difficult for some airlines as the instructions about what to do have been late, some airlines still don't know their administering Member State and the deadline is very tight. Airlines have worked hard to achieve the August target but unfortunately some will undoubtedly miss the deadline so we are asking governments to be flexible and give a bit of leeway as airlines struggle to comply.  
 
“Different governments are now taking different approaches.IATA has held workshops on MRV to assist its members with complying and has been providing advice over the past months. But it is a complete mess.”
 
Simon McNamara from the European Regions Airline Association (ERA) said: “The August 31 deadline was always going to be very tight. There remain many questions on interpretation of the MRV guidelines in certain areas that are yet to be resolved. There is also the ongoing problem of the list of administering authorities that is not yet been finalized.”
 
Andrew Pozniak, CEO of consultancy Green Aviation International (GAI), which held the Airline ETS Masterclass event early last month, said airlines had been given only six months to prepare since the February list of operators had been published by the Commission. “By any normal standards this is simply too short be able to fully assess and document new procedures and systems to comply with the regulations,” he said. “The EU is waving the big stick of offering 85% free allowances to the industry but only to those airlines that submit their plans by August 31. 
 
“It would have been far better if aviation were given an extra year to prepare, and to join the ETS at the start of the ETS third trading period in 2013 rather than 2012. Alternatively, the EU could easily have decided to take Eurocontrol data on flight movements and made some assumptions based on actual airline data concerning fuel burn for the various aircraft types.
 
“With that, Eurocontrol could have produced ETS information for the airlines very simply and cheaply – after all, Eurocontrol already does this for air navigation charges. Even if it was not the final solution at least it would been a good first step, workable and quickly implementable without troubling the airlines to this extent.” 
 
The European Commission is due to announce in early August the industry’s emission cap for the aviation EU ETS, which will be based on the average emissions of the years 2004-2006. It is understood that around 10 million flights per year during the period have been analysed to calculate the cap.
 
ICF International has estimated that the UK alone will earn around €200 million ($280m) from the auctioning of allowances to the aviation sector in 2012, rising to over €400 million ($560m) per year by 2020.
 
 
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