On 18 October 2017, the Council of the European Union reached a provisional agreement on a regulation to extend existing provisions covering aviation activities in the EU emissions trading system (ETS) regulation beyond 2016.

The ETS was launched in 2005 to promote the reduction of greenhouse gas emissions, including those produced by the aviation sector, at EU level. At the same time but on a global scale, the International Civil Aviation Organisation (ICAO) managed to reach an agreement on a “global market-based measure” aimed at slowing the growth of greenhouse gas emissions in the aviation sector. However, the global market-base measure will become compulsory for major aviation countries in 2027, a voluntary ‘pilot’ phase will be launched in 2021. To facilitate an agreement within the ICAO and the application of the agreed measure at a global level, in 2014 the EU decided to reduce the scope of the ETS scheme to apply only to flights inside the European Economic Area (EEA). A decision was taken that the derogation for non-intra EEA flights would apply only until the end of 2016.

The new regulation proposal agreed by European Parliament representatives is aimed at extending existing provisions covering aviation activities in the EU emissions trading system regulation beyond 2016 and to prepare for the implementation of the global market-based measure as of 2021. With the provisional agreement the parties decided to:

  • maintain current limitations within the scope of the EU ETS, particularly by prolonging the derogation for non-intra European Economic Area (EEA) flights until 31 December 2023, when the ‘first’ phase of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) will begin;
  • establish provisions for a review aimed at implementing the global market-based measure within the EU, particularly in the ETS directive, once all ICAO decisions have been taken;
  • foresee the application of the Linear Reduction Factor, subject to the above review, as set out in the ETS directive, to the aviation sector from 2021 onwards.

The provisional agreement must now be approved by EU ambassadors; after that approval, the Parliament and the Council will be called on to adopt the new regulation at first reading. Thereafter, it will enter into force on the day of its publication in the official journal. The swift adoption of this new regulation before the end of the year is an indispensable requirement to avoid any legal gap as regards compliance with the current ETS regulation in 2017. The dates for reporting and surrendering allowances from emissions in 2017 would be 31 March and 30 April 2018 respectively.