On February 3 2017 the European Commission announced its proposal to amend the EU Emissions Trading Scheme (ETS), with the aim of contributing to EU climate objectives regarding the reduction of carbon dioxide emissions.

International flights will remain exempt from the ETS, as was originally provided in 2013, following complaints from EU airlines.

The commission's proposal of continuing to cover only flights within the European Economic Area has a direct link to the pending implementation of the International Civil Aviation Organisation's (ICAO's) new scheme, agreed in October 2016, commonly known as the 'global market-based measures'. The ICAO draft scheme was immediately seen by airlines as an innovative agreement to limit aviation sector emissions at a global level and was not limited to the European Union. During the term of the ICAO agreement, aviation sector emissions will still be uncapped. There is no limit on quantity emission for airlines, but carriers must offset their emissions with carbon credits.

Although the emission and compensation criteria have not yet been clearly defined, according to this new scheme, there will be three main phases to implement the measures set out by the ICAO. From the beginning, 65 countries decided to join the agreement, which runs from 2021 until 2025. During the first stage, the criteria will be defined with regard to aviation sector growth as a whole, while at the second stage they will be defined considering individual carrier growth.

These rules should be finalised during 2017 and ratified by the ICAO in 2018. However, the ICAO scheme will not become mandatory until 2027. The European Commission has already said that:

  • once there is a full and clear picture regarding the global market-based measure implementation, a further assessment may be presented; and
  • the commission will present further proposals to make the scheme operational.

The commission's plan is expected to be finalised by the end of 2017 and followed by a review from the European Parliament and the European Council.

For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713) or email (l.pierallini@pierallini.it). The Studio Legale Pierallini e Associati website can be accessed at www.studiopierallini.it.

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