Aviation activities and the EU Emissions Trading Scheme (EU ETS)

Directive 2008/101/EC of the European Parliament and of the Council was published on 13th January 2009. Directive 2008/101/EC amends Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community. In a nutshell: aviation will be included in the EU Emissions Trading Scheme (EU ETS).

The aim of the EU ETS scheme is to reduce emissions in a cost effective manner. It allows airlines to trade emission allowances and determine how and where they reduce emissions. Each allowance unit represents one tonne of carbon dioxide gas emissions.

The emissions trading scheme will be applied to all flights departing from and arriving at EU airports, unless they are excluded from the scope of the ETS according to Annex I of the Directive. The first emissions trading period starts 1st January 2012. During the year 2012 the total amount of emissions allowances granted to aircraft operators will be 97 percent of the average of emissions emitted during years 2004-2006. The amount of allowances will be diminished for the second emissions trading period starting in 2013, so that the total amount will be 95 percent of the average of emissions emitted during years 2004-2006 for each emissions trading year.

Three percent of the emission allowances will be granted from a special reserve to new aircraft operators and to aircraft operators whose traffic has grown significantly. Of the remaining emission allowances 85 percent will be granted free of charge to aircraft operators on the basis of an EU-level comparison. When allocating free emission allowances the determinant will be the tonne kilometres flown by the aircraft. The remaining 15 percent of aviation emission allowances will be auctioned.

Each year no later than 30th of April, aircraft operators are required to surrender emission allowances that are equivalent to the amount of emissions they emitted during the previous calendar year. Annual emissions must be also reported to the competent authority. Participants in the ETS scheme, who emit more than the emission allowances they have received, can buy allowances from other participating aircraft operators or from operators of stationary installations that also fall within the scope of the EU ETS. Purchasing allowances will ensure that sufficient allowances are surrendered by the 30th of April each year. If participants emit less than the emission allowances granted to them, the surplus of emissions can be sold.

Monitoring annual emissions

All aircraft operators falling under the scope of the EU ETS must monitor and report their carbon dioxide emissions from 2010 onwards. For this purpose a monitoring plan must be drawn in advance. The monitoring plans of the aircraft operators must be approved by the competent authority, which in Finland is the Finnish Civil Aviation Authority. By using the templates which are found on this web site, the emissions monitoring plan must outline how the aircraft operator obtains, processes, records and monitors its carbon dioxide emissions. It must also contain information on quality assurance for the entire system. The deadline for submitting the monitoring plan on annual emissions is 31st August 2009. The monitoring plan submitted to the Finnish Civil Aviation Authority does not yet need to be approved by a verifier.

Reporting annual emissions

An aircraft operator is required to submit an annual emissions report to the competent authority. The report must be verified by an independent and accredited verifier prior to submission. In the pre-trading period (2010-2011) the first verified emissions reports must be submitted by 31st of March 2011 and 2012. The aircraft operators are however not required to surrender allowances equivalent to the reported emissions for the years 2010 and 2011. The first actual emissions trading period starts from 1st January 2012. Starting from April 2013 aircraft operators will be required to surrender each year emission allowances that cover the verified reported data for the previous year.

Review of the monitoring plan for annual emissions

The aircraft operators must submit a revised monitoring plan for annual emissions before the start of each emissions trading period. The first necessary review will take place before 1st January 2013. The purpose of the review is to assess whether the monitoring methodologies could be improved so as to be able to get even more high quality data on the emissions. The revised monitoring plan for annual emissions must be approved also by the competent authority.

Application for free allowances

The aircraft operators may apply for free allocation of allowances for the first (2012) and the second (2013-2020) emissions trading period. The free allowances available to the entire sector will be distributed amongst operators via a benchmarking procedure, where the individual allocation of each operator is proportional to the reported and verified tonne kilometres that were flown over the course of the year 2010. From the year 2012 onwards the European Commission and the competent authorities will issue the number of allowances allocated to each individual aircraft operator.

From this link
the timetable for applying free allowances can be seen. The deadline for submitting the application to the competent authority is 31st March 2011. Part of this application must be a tonne kilometre report verified by an independent accredited verifier, in which tonne kilometres flown over the year 2010 are reported in a standardised form.
In order to draft a tonne kilometre report the aircraft operator must first devise a monitoring plan, in which it should be outlined how the tonne kilometre data are obtained, processed, registered and monitored. The structure of the monitoring plan should be corresponding to the templates which can be found on this web site. The monitoring plan on tonne kilometres must be submitted to the competent authority (in Finland to the Finnish Civil Aviation Authority) by 31st August 2009, if the aircraft operator wants to apply for free allowances. The monitoring plan submitted to the Finnish Civil Aviation Authority does not yet need to be approved by a verifier.

Verification

The verifier has to verify the emissions report and tonne kilometre report according to instructions by the MRG and the Finnish Civil Aviation Authority. At the end of verification the verifier comes to a verification opinion, which states whether the report is satisfactory. The verification opinion shall include all the necessary elements of verification. The reports can be considered satisfactory, if they are drafted according to the set requirements and if the total amount of annual emissions or tonne kilometres reported is not essentially wrong. By the 31st March 2011 the aircraft operators must submit the emissions report and tonne kilometre report together with the corresponding verification reports to the competent authority.

It is the aircraft operators’ responsibility to make sure that their reports on annual emissions and tonne kilometres are verified by an accredited verifier.

Contact information of the Finnish Civil Aviation Authority

The plans and applications which need to be submitted to the Finnish Civil Aviation Authority shall be sent to the following address:
The Finnish Civil Aviation Authority
P.O. Box 186
01531 Vantaa
FINLAND

e-mail: kirjaamo@ilmailuhallinto.fi

tel.: +358 9 4250 11

The first deadline is 31st August 2009 when the monitoring plans on annual emissions and tonne kilometres need to be submitted. Additional information will be given by the Air Transport Policy unit of the Finnish Civil Aviation Authority.

The role of the Energy Market Authority

In Finland the Energy Market Authority is responsible for registering the yearly aviation allowances on the air operator’s allowances accounts, for cancelling surrendered allowances, emission reduction units and certified emission reductions as well as for transferring the units to Finland’s holding account. In addition, the Energy Market Authority will arrange the auctions and transfer the incomes to the state.