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European Commission sets the rules for allocation of free emissions allowances to airlines

27-Sep-2011 8:41 AM

European Commission published (26-Sep-2011) the benchmark values which will be used to allocate greenhouse gas emission allowances for aircraft operators under the inclusion of aviation in the EU's Emissions Trading System (EU ETS) from 2012. Aviation has been included in the EU ETS by adding an additional amount of aviation allowances to the existing cap for stationary sources. This additional cap for aviation is based on the average emissions from the aviation sector over 2004, 2005 and 2006. In 2012, the aviation emissions cap will be set at 97% of the 2004-06 average aviation emissions and in the period from 2013 to 2020 the cap will be reduced to 95%. In 2012 an airline will receive 0.6797 allowances per 1000 tonne-kilometres, while in 2013 to 2020 it will receive 0.6422 allowances. In the 2012 trading period, 85% of the aviation allowances will be allocated free of charge to aircraft operators. In the 2013 to 2020 period, this will drop to 82%. Fifteen percent of the remaining allowances in each period will be auctioned and in 2013-2020 3% will be set aside in a special reserve for new entrants and fast growing airlines.

The benchmark for each period was calculated by dividing the total annual amount of free allowances applicable to the 2012 and 2013-2020 trading periods by the sum of tonne-kilometre data included in applications by aircraft operators submitted to the Commission. The submissions by aircraft operators are based on independently verified tonne-kilometre activity data recorded throughout the 2010 calendar year. The formal allocation of free allowances to each aircraft operator will be carried out by Member States, who will multiply the benchmark by the 2010 tonne-kilometre data of each aircraft operator. Member States have an obligation to determine individual allocations within three months of the publication of the benchmark decision. The inclusion of aviation in the EU ETS is expected to have a limited impact on ticket prices. Based on current carbon prices, the actual costs per ticket of a transatlantic flight would increase by less than EUR2, assuming the value of the free allowances would not be passed to the passenger. If it were to be passed through, the ticketed price could increase by around EUR12. [more - original PR] [more -FAQ]

European Commission: "With the benchmark values, airlines now have certainty how many allowances they will receive for free each year up to 2020. At current market prices these free allowances represent more than EU20 billion over the decade. With these potential revenues, airlines could invest in modernising their fleets, improving fuel efficiency and using non-fossil aviation fuel. As much as the EU prefers global action, we can't defend that the aviation sector is exempted from contributing because they can't agree internationally. This is why the EU decided to take this step forward in 2008 while we will continue to fight for [the] global regulation of aviation like at the next UN climate negotiations in Durban," Connie Hedegaard, Climate Action Commissioner. Source: European Commission, 26-Sep-2011.