UK Government publishes draft Aviation EU ETS regulations and extends benchmarking deadline to year end
Wed 5 Aug 2009 – To provide early sight of the requirements of aircraft operators under UK administration covered by the EU Emissions Trading Scheme (EU ETS), the UK’s Department of Energy & Climate Change (DECC) has published the final draft of its first stage regulations. However, at this stage the regulations remain “for information only” as the UK says it is unable to lay them before Parliament until the European Commission publishes its revised list of aircraft operators who will be expected to join the scheme along with their administering state. Meanwhile, Germany has followed the UK’s lead in postponing the August 31 deadline for operators to submit their monitoring plan, although other EU states say they will continue to respect the original date.
DECC has told the operators that it expects to regulate that the Commission was due to publish the operators list towards the end of July although it is believed that publication is still a week or so away. The regulations will be laid before Parliament shortly after publication of the list in the Official Journal of the European Union (OJEU) and will come into force no fewer than 21 days after being laid before Parliament.
Operators will be required to apply to their regulator (there are separate regulators for England and Wales, Scotland and Northern Ireland) for an emissions plan no later than eight weeks after the first stage regulations – a second stage is to follow – come into force. This means the deadline for submission of an application for an emissions plan will be approximately 11 weeks from the date of the OJEU publication, or around the end of October. The regulators, in turn, must issue an approved plan, or refuse to issue a plan, within four months of receiving an application for a plan.
Given the new timeframe, there remains the potential problem that operators, who must commence monitoring their emissions from 1 January 2010, may not have received approval, or refusal, for their plan by the start date.
In an important concession to operators, the deadline for submitting an application for a Tonne-Kilometre (TK) benchmarking plan in connection with an application for a free allocation of allowances has been extended to 31 December 2009. The regulator has the discretion to submit reports of TK data where late applications for benchmarking plans are received.
The UK Government says it has listened to operator concerns principally concerning the rapid timeframe and its plans to levy civil penalties on operators not complying with the regulations. In its response to the public consultation on the proposed regulations, the Government conceded there were strong views from the majority of respondents on the introduction of penalties.
“Government has reviewed the level of penalties and believes the Regulations as amended now provide for a penalties regime which is proportionate for the different types of offences concerned whilst being effective and dissuasive in order to support compliance,” it says. Failure to submit or resubmit an application for an emissions plan will, up to 1 January 2012, carry a civil penalty of £500 ($850) plus £50 per day up to a maximum of £4,500. The penalty will increase from 1 January 2012 to £1,500 plus £150 per day up to a maximum of £13,500. There are heavier penalties for failure to monitor or report aviation emissions.
There was considerable disquiet from operators with regard to detention and sale of aircraft for unpaid civil penalties, which many believed was disproportionate and carried various legal implications. The regulations have therefore been amended to ensure that the regulators can only apply their powers to detain and sell aircraft for unpaid penalties for breaches committed after 1January 2012.
Meanwhile, Germany’s Federal Environment Agency has announced that its deadline for the submission of monitoring plans will now be six weeks after the list of operators it is to regulate has been published in the German Federal Bulletin, which will not occur until after the European Commission’s OJEU publication of the full list.
At present, Germany and the UK remain the only two EU states to announce a postponement of the emissions plan submission deadline. According to Julien Dufour of Aviation ETS consultancy Sustainavia, other states are proceeding on the basis of the original August 31 deadline as it is laid down in the EU Directive, although some, for example Austria, are aware of the problems posed and are prepared to take “pragmatic solutions” concerning those operators who are unable to comply in time.
Ireland’s Environmental Protection Agency also has no plans to extend the deadline and has pre-empted the European Commission by already publishing the list of operators it believes it is to regulate. Portugal too has published a list of its aircraft operators on the Portuguese Environment Agency website.
At the other end of the scale, reports Dufour, Italy has yet to appoint a regulator. Although it is likely to be the Ministry of Environment, a system for administering aircraft operators is far from being finalized and it might be some months before the legal formalities are cleared. In the meantime, Aviation EU ETS inquiries are being handled by the Italian CAA. Dufour says that apart from national carrier Alitalia, very few Italian airlines are even aware of the EU ETS requirements.
In its August bulletin published today, industry consultancy RDC Aviation says that despite the confusion over the deadline, failure to submit an emissions monitoring plan could result in stiff penalties for operators. It also warns of steep financial consequences for failing to a TK monitoring plan as it would preclude an operator from applying for the free permits. RDC estimates that for a relatively small carrier emitting 50kt/CO2 per annum, this would equate to an annual cost of €650,000 ($935,000). At the top end, for a major flag carrier, free allowances are likely to be worth over €100 million ($144m) per year at current prices.
While it is estimated that over 2,700 aircraft operators will be included in the EU ETS, over 60% of CO2 is emitted by only 40 carriers (source: RDC Aviation)