Objectives of Aviation EU Emission Trading Scheme (EU ETS)

Following the Kyoto protocol, the European Union set the objective to reduce temperature increases to 2°C compared to pre-industrial level. For that matter it has committed to reduce its GHG (greenhouse gases) emissions by 20% in 2020 compared to 1990.

EU Greenhouse Gas Emissions

In 2005, it set-up the EU ETS (Emission Tradeing Scheme), a cap-and-trade mechanism to forgo this objective, making it the world's largest carbon market in the world.
It did not cover aviation, despite its increasing impact.

On 13 January 2009, Directive 2008/101/EC extended EU ETS to the aviation sector, with effect starting in 2012 and first measures to be implemented in 2009.

Aviation EU ETS applies to all flights arriving or departing from one of the EU's member states.

Principles of Aviation EU Emission Trading Scheme (EU ETS)

The principles of EU ETS are to limit aviation GHG emissions to 95% of their level of 2004 and to compensate for above-limit emissions by airlines surrendering CO2 allowances.

CO2 emissions of all flights arriving or departing to an EU member state are taken into account up to the previous/next landing point. CO2 emissions are computed based on the total aircraft fuel consumption, including APU usage at the station.

At the end of each reporting period, airlines will need to surrender CO2 allowances to cover their actual emissions.

Airlines will be given free allowances to cover 85% of the cap level (The free allowances will be distributed based on each airline's "marketshare" computed as their proportion of transported tonne-kilometers within the industry). The rest of their CO2 allowances will need to be auctioned, bought from the marketplace or from projects that produce ERUs or CERs.

Aviation EU Emission Trading Scheme (EU ETS) in practice

To comply with EU ETS, airlines need to:

The EU has given detailed specification on how fuel consumption, CO2 emissions and tonne-kilometers should be computed.

OpenAirlines has implemented these rules very carefully in its SkyBreathe EU ETS MRV solution.