The EU Emission Trading Scheme (EU ETS) originally covered flights to and from the European Economic Area (EEA) – which covers all 27 EU member states, Norway, Liechtenstein and Iceland. Since January 2020, the EU ETS and the Swiss are linked and flights between the EEA and Switzerland covered by these schemes.
To allow the continuation of developing a global approach to limiting emissions from international aviation through ICAO, the EU “stopped the clock” in April 2013, limiting EU ETS coverage to flights taking off and landing within the EEA (European Parliament and Council, 2013). The EU later extended this suspension to the end of 2023 (European Parliament and the Council of the European Union, 2017).
As part of the ‘ Fit for 55’ package, the Commission proposed a revision of the EU ETS, the implementation of a kerosene tax, and quota for the use of SAF follows (European Commission, 2021a, 2021c, 2021d, 2021b).
Key elements of the legislative proposal for revision of the EU ETS are as (European Commission, 2021c, 2021b):
- The EU ETS will continue to cover flights within the EEA and flights to Switzerland and the United Kingdom continue to be covered;
- The EU ETS will cover flights between the EU’s outermost regions, and between the EEA and outermost regions;
- To ensure equal treatment on routes, flights to and from countries that are not implementing CORSIA would be exempt from EU ETS or CORSIA obligations. To incentivise the full implementation of CORSIA, starting in 2027, this exemption applies until 31 December 2026.
- The number of free allowances to aircraft operators will be gradually phased out to reach full auctioning by 2027; and
- The EU ETS’s cap will be reduced.
In addition, the Commission proposes to apply CORSIA on flights between the EEA and countries that participate in CORSIA. Eligible offset credits need to originate from countries that participate in the Paris Agreement and CORSIA and double counting must be avoided.
Further, the Commission proposes implementing a tax on kerosene used on intra-EU private and commercial flights, which will be gradually implemented at a rate of zero EUR/GJ in 2023 to reach the minimum rate of 10.75 EUR/GJ in 2033 (European Commission, 2021a).
Finally, the Commission proposed requiring fuel suppliers and aircraft operators to blend a minimum rate of sustainable aviation fuel with kerosene, starting at 2% in 2025 to 20% in 2035 and 63% in 2050. By 2050, at least 28% of the SAF must be synthetic aviation fuels (European Commission, 2021e).
The United Kingdom included emissions from international aviation and shipping in its sixth carbon budget for the period 2033-2037 (BEIS, 2021). While the 2019 Climate Change Act does not specifically mention emissions from international bunkers, the UK Government stated that these emissions are included in the net zero target for 2050, which was set on an economy-wide basis (BEIS, 2021).
In the United Kingdom, the aviation industry committed to net zero CO2 emissions by 2050, in line with the UK Government targets (Sustainable Aviation, 2019). The UK industry expects that CO2 emissions will amount to approximately 25 Mt by 2050, compared to 33 Mt in 2050. These residual emissions will be balanced through carbon offsets and removal investments (Sustainable Aviation, 2019).
The European aviation industry has drafted a pathway to net zero CO2 emissions from aviation by 2050 (NLR - Royal Netherlands Aerospace Centre and SEO Amsterdam Economics, 2021). It foresees a major role for sustainable aviation fuels and hydrogen (by 2050, these two technologies would reduce BAU emissions by 54%) and a small role for economic measures ( a contribution of 8% below BAU by 2050) (NLR - Royal Netherlands Aerospace Centre and SEO Amsterdam Economics, 2021).