Europaudvalget 2017
KOM (2017) 0054
Offentligt
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EUROPEAN
COMMISSION
Brussels, 3.2.2017
SWD(2017) 31 final
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT
Accompanying the document
PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF
THE COUNCIL
amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission
allowance trading within the Community in view of the implementation of a single
global market-based measure to international aviation emissions
{COM(2017) 54 final}
{SWD(2017) 30 final}
EN
EN
kom (2017) 0054 - Ingen titel
Table of Contents
1.
2.
3.
4.
5.
6.
7.
W
HAT IS THE PROBLEM AND WHY IS IT A PROBLEM
? ........................................................... 3
W
HY SHOULD THE
EU
ACT
?.............................................................................................. 10
W
HAT SHOULD BE ACHIEVED
? .......................................................................................... 12
W
HAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES
? .................................... 16
W
HAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE
AFFECTED
? ................................................................................................................................ 23
H
OW DO THE OPTIONS COMPARE
? ..................................................................................... 48
H
OW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED
?................................... 56
A
NNEX
1: P
ROCEDURAL INFORMATION
..................................................................................... 58
A
NNEX
2: S
TAKEHOLDER CONSULTATION
................................................................................ 60
A
NNEX
3: W
HO IS AFFECTED BY THE INITIATIVE AND HOW
....................................................... 73
A
NNEX
4: A
NALYTICAL MODELS USED IN PREPARING THE IMPACT ASSESSMENT
. ..................... 75
A
NNEX
5: S
TRONG
G
ROWTH OF
G
REENHOUSE
G
AS
E
MISSIONS IN THE
A
VIATION
S
ECTOR
. ..... 77
A
NNEX
6: 2016 ICAO R
ESOLUTION
A39-3
ON A
G
LOBAL
M
ARKET
-B
ASED
M
EASURE
S
HEME
80
A
NNEX
7: D
EVELOPMENTS IN THE RUN UP TO THE
2016 ICAO A
SSEMBLY
. ............................. 87
A
NNEX
8: I
NTEGRATION OF
A
VIATION IN THE
EU'
S
E
MISSIONS
T
RADING
S
YSTEM
…………...88
A
NNEX
9: F
EATURES OF THE
EU ETS………………………………………………………...90
2
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List of Acronyms
CAEP
CDM
CNG2020
CO
2
CO
2
eq.
CORSIA
EAG
EEA
EU
ETS
EUA
EUAA
EUC
Extra-EEA
GHG
GMBM
GMTF
HLG
IATA
ICAO
Intra-EEA
LDC
LLDC
MBM
MRV
MT
RTK
SARPs
SIDS
UNFCCC
Committee on Aviation Environmental Protection
Clean Development Mechanism
Carbon Neutral Growth from 2020
Carbon Dioxide
Carbon Dioxide equivalent
Carbon Offset and Reduction Scheme for International Aviation
Environment Advisory Group
European Economic Area
European Union
Emission Trading System
European Allowance
European Aviation Allowance
Emissions Unit Criteria
Flights between aerdromes within the European Economic Area and
aerodromes in a third countries
Greenhouse Gas
Global Market-Based Measure
Global Market Based Measure Technical Task Force
High Level Group
International Air Transport Association
International Civil Aviation Organization
Flights between aerodromes within the European Economic Area
Least Developing Country
Land-locked Developing Country
Market-Based Measure
Monitoring, Reporting and Verification
Million Tonnes
Revenue Tonne-Kilometre
Standards and Recommended Practices
Small Island Developing State
United Nations Framework Convention on Climate Change
3
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4
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1. W
HAT IS THE PROBLEM AND WHY IS IT A PROBLEM
?
1.1. C
ONTEXT
1.1.1. T
HE
NEED FOR MARKET
-
BASED MEASURES TO ADDRESS GREENHOUSE GAS
EMISSIONS IN THE AVIATION SECTOR
Greenhouse gas (GHG) emissions from aviation activities are increasing exponentially. In the
absence of further measures, carbon dioxide (CO
2
) emissions from international aviation are
estimated to almost quadruple by 2050 compared to 2010 (see Annex 5 for more details). The
strong growth in GHG emissions from the aviation sector risks undermining the goal under
the Paris Agreement of keeping global warming well below 2 degrees Celsius above pre-
industrial levels and pursue efforts to limit temperature increase to 1.5 degrees Celsius (see
section 3.1 for more details) .
The International Civil Aviation Organisation (ICAO) has set the objective, supported by the
aviation industry
1
, of maintaining global net CO
2
emissions at 2020 levels through 'carbon
neutral growth' (CNG 2020)
2
, i.e. compensating emission growth above 2020 levels.
However, as noted by Cames et al. (2015)
3
, the CNG2020 objective is insufficient to meet the
Paris temperature goals. According to them, following an assessment of the remaining
carbon budget derived from IPCC’s representative carbon pathway (RCP) 2.6, international
aviation emissions should start declining not later than 2030. Furthermore, they remind
that if aviation’s non-CO
2
impacts were taken into account, efforts would need to be
higher. It is also important to remind that the aviation industry has set itself the additional,
more ambitious, goal to halve aviation emissions by 2050 below 2005 levels, but this has not
been adopted by ICAO.
As the potential for emissions reduction from new technologies and operational practices is
limited and more costly in the aviation sector (see Annex IV of the 2013 Impact Assessment
4
for more details on technological and operational measures), ICAO States
5
and the aviation
industry
6
agree that the use of market-based measures (MBMs) are necessary for air transport
to contribute to emission reductions. The use of MBMs allows the sector to offset its strong
emission growth from increased activity through acquiring emission units from other sectors
at lower abatement costs.
Given the intrinsically transnational nature of aviation activities, effective ways of addressing
GHG emissions from international aviation are through multilaterally agreed measures at
The International Air Transport Association (IATA) at its 69
th
Annual General Meeting on 3 June 2013
endorsed a Resolution on the Implementation of the Aviation "CNG2020" Strategy, available at:
http://www.iata.org/pressroom/pr/Documents/agm69-resolution-cng2020.pdf
2
2010 ICAO Assembly Resolution A37-19, available at:
http://www.icao.int/publications/Documents/9958_en.pdf
3
Cames, Martin; Graichen, Jakob, Siemons, Anne; Cook, Vanessa 2015: Emission Reduction Targets for
International Aviation and Shipping. Berlin.
http://www.europarl.europa.eu/RegData/etudes/STUD/2015/569964/IPOL_STU(2015)569964_EN.pdf
4
SWD(2013) 430 final
5
2013 ICAO Assembly Resolution A38-18, available at:
http://www.icao.int/environmental-
protection/Documents/A38-17_A38-18.pdf
6
IATA's Resolution on the Implementation of the Aviation "CNG2020" Strategy, available at:
http://www.iata.org/pressroom/pr/Documents/agm69-resolution-cng2020.pdf
1
5
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global and regional level. The International Civil Aviation Organisation (ICAO) is widely
considered to be the most appropriate forum for the development of an international market
based measure for aviation. The EU has therefore continuously advocated for the promotion
of ambitious, global action in ICAO to complement measures taken at national and regional
level.
Technical and operational measures in the aviation sector
Technological and/or operational measures (e.g. improved air traffic management and more
efficient operation of the aircraft in the air and on the ground) could achieve 10% emissions
reduction in the coming years in the aviation sector compare to a business as usual scenario.
The use of sustainable biofuels could be a further source for emission reductions; however
considerable uncertainty exists over their availability and sustainability and their economic
viability has not yet been proven. As a result, and as substantiated by data generated by the
EU ETS, their present use by aircraft operators remains extremely small to date. All in all,
and compared with the estimated traffic growth, the emission gap remains to be addressed by
other means, which is presently being done by the EU ETS.
In 2016, ICAO's Committee on Aviation Environmental Protection (CAEP) agreed on a CO2
standard for aircraft, which should guide their development towards greater fuel and
environmental efficiency. For large new aircraft, the standard will apply as of 2020. Existing
aircrafts will have to apply the new standard by 2028 the latest.
The reductions achieved through these developments are expected to be outpaced by the
larger growth in demand of aviation services. Even under the most optimistic scenario about
the effectiveness of non-market-based measures, aviation CO2 emissions in 2050 are still
expected to be 3.8 times higher than 2010 emissions due to the forecasted strong increase in
aviation activities. Therefore, technological and operational measures, although important,
are on their own insufficient to achieve ICAO's self-declared target of CNG from 2020.
CAEP therefore concluded that the only way to enable the agreed climate objective was
through the Global Market Based Measure.
1.1.2. I
NTEGRATION OF
A
VIATION
E
MISSIONS IN THE
EU'
S
E
MISSIONS
T
RADING
S
YSTEM
The EU led the way in implementing a MBM for aviation by including flights between
aerodromes within the European Economic Area (hereafter "intra-EEA flights"), as well as
flights between aerdromes in the European Economic Area (EEA) and aerodromes in third
countries (hereafter "extra-EEA flights") in the EU's Emissions Trading System (EU ETS)
7
in
2008 (see Annex 8). As originally designed, the EU ETS covers 35% of global emissions
from domestic and international flights and 50% of all international flights.
According to Directive 2003/87/EC all aircraft operators carrying out aviation activities
covered by the EU ETS have to report annually their emissions corresponding to the previous
year. Then, they have an obligation to surrender as many allowances as emissions have been
7
EU ETS Directive 2003/87/EC
6
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reported. Every year, a number of allowances are issued to aircraft operators. The total
amount is defined by the "cap", which is 95% of the average 2004-2006 emissions. Contrary
to the cap for stationary installations, the cap for the aviation sector is constant until 2020.
82% of this amount is issued to operators free of charge, 15% is auctioned and 3% is set aside
in a "special reserve" to cover the free allocation to new entrants and fast growers. Annex 9
provides more information on the EU ETS for aviation.
When the ICAO Council in 2012 decided that ICAO would begin developing guidance for
the implementation of a single, global market based measure (GMBM) covering international
aviation emissions, the EU legislators temporarily limited the scope of the EU ETS to give
airlines a choice as to the scope applied to their flights (intra-EEA or all flights) in 2012.
Following the 2013 ICAO Assembly decision to develop a global market-based measure
(GMBM) to address international aviation emissions, the EU limited the scope of the EU
ETS to intra-EEA flights during the period 2013-2016 to drive forward the ICAO process in
relation to international emissions from aviation.
Annex 8 sets out the chronological development of the EU ETS.
1.1.3. T
HE
ADOPTION OF A GLOBAL MARKET BASED MEASURE FOR INTERNATIONAL
AVIATION
(GMBM)
ICAO, after several years of intensive negotiations (see Annex 7) at its 39
th
General
Assembly in September/October 2016, reached – for the first time – an agreement on an
ICAO Resolution for the implementation of a global market based measure (GMBM) to
address the growth in international aviation emissions globally from 2021 through an
offsetting system aimed at stabilising them at 2020 levels (see Annex 6)
8
.
In its first phase from 2021 to 2026, participation of states in the GMBM will be voluntary,
with the possibility to opt-in or out from the system; all countries should then participate in
its second phase starting in 2027, except least developed countries, land-locked developing
countries, small island developing states and states with a small share of international
aviation activity (revenue tonne kilometre (RTK) of below 0.5% individually or below 10%
in cumulative terms). As ICAO has no competence for domestic aviation
9
, the GMBM is not
designed to cover domestic flights. Sixty-six countries, including all member states of the
European Civil Aviation Conference
10
, Australia, Canada, China, Indonesia, Japan, Mexico,
New Zealand, Qatar, Singapore, United Arab Emirates and the United States of America had
declared in October 2016 that they will apply the GMBM during its voluntary phase. A
complete list of states that have expressed their intention to participate in the voluntary phase
is available on the ICAO website
11
.
By itself, the GMBM does not aim at reducing aviation emissions. The GMBM is an
offsetting mechanism, which enables the aviation sector to continue to grow after 2020 in as
far as emissions above a certain threshold are compensated for through international offset
credits (generated in non-aviation sectors mainly). The baseline for the GMBM is set at the
8
2016 ICAO Assembly Resolution A39-3, available at:
http://www.icao.int/environmental-
protection/Documents/Resolution_A39_3.pdf
9
See statement at
http://www.icao.int/environmental-protection/Documents/STATEMENTS/cop4.PDF
10
ECAC is composed of 44 member states, including all EU member states. A complete list of its members is
available on:
https://www.ecac-ceac.org/member-states
11
http://www.icao.int/environmental-protection/Pages/market-based-measures.aspx
7
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global net CO
2
emissions from international aviation in 2020 so as to achieve the aspirational
target of CNG 2020 (although for technical reasons the average 2019-2020 emissions will be
used). However, as said before, given the current level of participation in the initial phases
and the exemptions for routes to and from certain countries, it is estimated that around 20%
of emissions growth above 2020 levels will not be offset, leaving a 20 % gap to achieve the
objective of carbon neutrality from 2020.
While this resolution on the development of a GMBM is a breakthrough in ICAO's efforts to
address the growth of international aviation emissions, a number of important features of the
GMBM still need to be developed and agreed in ICAO before the GMBM can be
implemented in 2021. They relate to monitoring, reporting and verification (MRV). i.e the
transparency rules, and eligibility of offset units, as well as ways to avoid double counting,
registry and governance/compliance set-up. Any delays in agreeing on those elements risk
delaying the operationalization of the GMBM. These remaining features are key elements for
the effectiveness and environmental integrity of the scheme from a climate standpoint. It
should also be reminded that the GMBM is enshrined in a resolution adopted in ICAO and
thus not a binding international agreement. However, detailed rules to implement the GMBM
are to be adopted in the form of ICAO Standards and Recommended Practices, the former
being binding on ICAO member states not filing differences to them. In addition, the actual
implementation of the GMBM will depend on domestic legislation to be developed, adopted
and implemented by countries and regions participating in the scheme
12
.
At its 39
th
Assembly, ICAO also adopted a resolution on climate action other than through
the GMBM
13
. This resolution includes an annex listing the key principles applicable to
MBMs addressing international aviation emissions, which may also apply to other market
measures different from the GMBM.
Comparing the GMBM and the EU ETS
Both the GMBM and the EU ETS are market-based measures to address GHG emissions.
However, there are important differences between them.
The first important difference is the nature of the measure: the EU ETS is a legally-binding
cap and trade system setting a limit on the total GHG emissions so as to reduce them,
whereas the GMBM is a carbon offsetting scheme, which allows emissions from the aviation
sector to continue increasing above the CNG 2020 threshold provided they are compensated
for with international emission reduction credits.
Another difference is the level of ambition in terms of emission reductions or limitations to
be achieved. In contrast to the CNG2020 target under the GMBM (which will only be met at
80% due the various flexibilities and exemptions), the cap in the EU ETS for aviation
activities is set as 95% of the average 2004-2006 emissions from aviation and is expected to
decrease annually by 2.2% starting in 2021. This shows that the GMBM is less ambitious
than the EU ETS when comparing GHG emission reductions achieved in a given
geographical scope.
12
See legal study on "Possible legal arrangements to implement a global market based measure for international
aviation emissions":
http://ec.europa.eu/clima/policies/transport/aviation/docs/gmbm_legal_study_en.pdf
13
2016 ICAO Assembly Resolution A39-2, available at:
http://www.icao.int/environmental-
protection/Documents/Resolution_A39_2.pdf
8
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Thirdly, the GMBM is relying on international offsets. The quality of international offsets is
harder to control and raises concerns over additionality and the applicable accounting rules.
In addition, it should be recalled that the EU 2030 climate objective under UNFCCC should
be met through domestic reduction efforts
14
, i.e. without the use of international credits. This
was agreed at the European Council conclusions from October 2014
15
and accordingly
communicated by the EU under the Paris Agreement.
Under the EU ETS, EU general allowances or EU aviation allowances must be surrendered
for each tonne of emitted CO
2
emissions by flights covered by the EU ETS. Up to 2020,
certain types of international credits are allowed for surrendering but limited to 1.5% of
emissions. In line with the EU contribution to the Paris Agreement, no international credits
should be used after 2020 in the EU ETS to ensure that emissions reductions are taking place
within the EU.
Finally, the geographic scope is obviously different: the GMBM is applied to international
flights globally (although routes to and from a number of countries are exempt), whereas the
EU ETS applies to EEA-related flights, including domestic aviation emissions.
More information on the EU ETS features on Annex 9. The main features of the GMBM can
be found on the ICAO Resolution 39-3, in Annex 6.
1.2. T
HE
P
ROBLEMS
Regulation (EU) No 421/2014 introduced Article 28a in the EU ETS Directive 2003/87/EC,
which requires the Commission to report back to the Council and the European Parliament on
the outcome of the 2016 ICAO Assembly. When doing so, the Commission shall consider
and, if appropriate, include proposals in reaction to the ICAO developments on the
appropriate scope for coverage of emissions from extra EEA-flights from 2017 onwards.
Should the EU decide not to amend the EU ETS in response to the outcome at the 2016
ICAO Assembly, the EU ETS will – by default – apply in its full scope from 2017 onwards.
This would mean that aircraft operators will be responsible for GHG emissions from all
flights departing from or arriving at aerodromes situated in the EEA.
In its review, the EU should recognise the landmark agreement reached by the 39
th
ICAO
Assembly. With the GMBM, international aviation emissions would be adressed – for the
first time – at global level. Although it is unlikely to result in a significant in-sector reduction
of GHG emissions in the period up to 2035, which is insufficient under the Paris Agreement,
which calls “to
reach global peaking of greenhouse gas emissions as soon as possible […]
and to undertake rapid reductions thereafter”
16
the GMBM will take the aviation sector
one step closer to achieving CNG2020. Based on current levels of participation during the
voluntary phase, it is estimated that around 80% of emissions necessary to achieve carbon
neutrality from international aviation from 2020 will be offset, leaving a 20% emission gap
compared to what would be needed to meet the CNG 2020 goal.
14
15
http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf
EUCO 169/14
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/145397.pdf
16
Paris
Agreement
(2015),
article
4(1),
available
at:
http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf
9
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In light of what has been agreed so far in ICAO, a return to the EU ETS full scope, even on a
transitional basis until the GMBM is operationalised, may give rise to controversies with
third countries and be interpreted as a signal that the EU does not intend to implement the
GMBM. It could therefore negatively affect the prospects for finding agreement on the
outstanding features of the GMBM (i.e. transparency, accounting and offsetting rules,
registry and governance) and the ensuing implementation of the GMBM from 2021 by others.
At the same time, the international climate policy context has also significantly changed after
the latest review of the EU ETS for aviation. The Paris agreement goals and the EU
commitment to contribute to them with an at least minus 40% domestic target by 2030,
compared to 1990 GHG emissions levels, require a fair mitigation effort from all sectors and
must be taken into account in the review. Section 3.1 provides further details on the EU’s
domestic and international climate commitments, while Annex 5, section 3 highlights the
need for early and significant action to reduce global GHG emissions to meet the well below
2 degrees Celsius objective under the Paris Agreement.
In this context, the review of the EU ETS for aviation should ensure that the development and
implementation of the GMBM are not put at risk whilst aviation fairly contributes to the EU’s
climate targets in the period 2017-2020, but also after 2020.
While relevant rules for the implementation of the GMBM still have to be developed, the
main parameters determining its impacts (environmental ambition / baseline, geographic
scope, exemptions, type of units, etc.) are already known. This allows, as requested by the
EU ETS Directive, for a first assessment of the outcome of the ICAO Assembly, which needs
to look into the post-2020 period, when the GMBM will start to apply. Importantly, this also
allows for a longer term vision of impacts of EU policies, including on reaching the 2030
climate targets. It must be noted that this is a first assessment carried out on the basis of the
core features of the GMBM agreed in the 39
th
ICAO Assembly (climate objective/level of
ambition, offsetting nature…). The adoption of additional rules applicable to the GMBM
through Standards and Recommended Practices and the actual implementation of the GMBM
by states in the coming years will provide further details on how this scheme will operate, its
actual impacts and the extent to which it will deliver on carbon neutrality from 2020 while
avoiding distortions of competition. This may require further analysis in the future.
10
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1.2.1. P
ROBLEM
1: T
HE
S
COPE OF THE
EU ETS
IN THE
2020)
TO EFFECTIVELY ADDRESS AVIATION EMISSIONS
TRANSITIONAL PERIOD
(2017-
The period between January 2017 and December 2020 must be considered as a transitional
period during which efforts will focus on the operationalization of the GMBM, and in
particular on finding agreement on the outstanding features of the GMBM (i.e. transparency,
accounting and offsetting rules, registry) to ensure that the system will be fit for start from
2021. Therefore, and as required by present legislation, it must be carefully considered
whether the scope of the EU ETS for aviation should be amended to take account of the
positive outcome of the 2016 ICAO Assembly. Any amendments to the EU ETS for aviation
should be fully consistent with EU 2020 climate targets by ensuring that aviation emissions in
the EU/EEA are addressed effectively as planned, while further incentivizing the transition to
and implementation of the GMBM from 2021 to maximize the global mitigation impact.
1.2.2. P
ROBLEM
2: P
OST
2020
IMPLEMENTATION OF THE
GMBM
AND
EU A
CTION
With the expectation that the GMBM will start in 2021, the preparations for its
implementation through national legislation need to start soon to provide legal certainty to the
aviation industry and national authorities. Besides, and considering the EU's commitment
under the Paris Agreement and the implementation of the 2030 climate and energy
framework, the contribution by the aviation sector to the EU's emission reduction targets
needs to be determined. A higher or lower contribution from the aviation sector will have an
impact on the efforts by other sectors to ensure that collectively the 2030 target of an at least
40% reduction compared to 2005 will be met. In view of the future implementation of the
GMBM, it is essential to assess the environmental, economic (including on competitiveness),
and social impacts of the different possible interactions between the GMBM and the EU
measure for aviation in the period post-2020. The implications this may have on the
relationship with ICAO and international partners must thereby also be taken into
consideration, along with EU commitments under the Paris Agreement.
1.3. R
ETROSPECTIVE EVALUATION
/
FITNESS CHECK
In the context of the review of the EU ETS for phase 4 (2021-2030) an evaluation of the
existing ETS Directive was part of the impact assessment work and has fed into the
assessment of the policy options
17
. A specific retrospective evaluation for the EU ETS for
aviation is not considered necessary at this juncture, since the EU ETS for aviation has never
been applied in its full scope as initially designed: amendments to the scope of the EU ETS
for aviation were done on the basis of extensive assessments to address the concerns and
opposition raised in relation to the measure as initially designed. The 2013 Impact
Assessment
18
accompanying the proposal for Regulation (EU) No 421/2014 most notably
assessed the political acceptability, as well as environmental effectiveness of the EU ETS for
aviation under different options for geographical scope, and the impact of introducing
minimum thresholds on evironmental effectiveness and administrative burden.
17
18
SWD(2015) 135 final, Annex 4
SWD(2013) 430 final
11
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In addition, the European Commission – on an annual basis – conducts indepth analysis of
the functioning of the European carbon market and reports its findings to the European
Parliament and the Council. Previous Carbon Market Reports
19
have confirmed the
effectiveness of, as well as the very high level of compliance with the EU ETS for aviation:
airlines responsible for more than 99% of emissions from intra-EEA flights complied with
the legislation, including more than 100 commercial aircraft operators based outside the EU
but operating flights within the EEA
20
.
Moreover, analyses in the EU’s ICAO Action Plans have shown that, over 2013-2016, with
the inclusion of only intra-European flights in the EU ETS, the EU ETS has contributed to
achieve around 16 million tonnes of emission reductions annually, or almost 65 million over
2013-2016, partly within the sector (airlines reduce their emissions to avoid paying for
additional units) or in other sectors (airlines purchase units from other sectors, which would
have to reduce their emissions consistently). While some reductions are likely to have
occurred within the aviation sector, encouraged by the EU ETS’s economic incentive for
limiting emissions or use of aviation biofuels, the majority of reductions are expected to have
taken place in other sectors.
In parallel to providing a carbon price which incentivises emission reductions, the EU ETS
also supports the reduction of GHG emissions through €2.1 billion funding for the
deployment of innovative renewables and carbon capture and storage. This funding has been
raised from the sale of 300 million emission allowances from the New Entrants’ Reserve of
the third phase of the EU ETS. This includes over €900 million for supporting bioenergy
projects, including advanced biofuels, which are relevant for the decarbonisation of the
aviation sector. In addition, through Member States’ use of EU ETS auction revenue in 2013,
over €3 billion has been reported by them as being used to address climate change
21
.
The extensive assessments above, as well as this Impact Assessment, which has been called
for under Regulation (EU) No 421/2014, are effectively evaluating and assessing the
effectiveness and functioning of the EU ETS Directive for aviation, which is considered
adequate in terms of retrospective evaluation report and fitness check of the EU ETS
Directive for aviation.
19
Carbon Market Report 2015, available at:
http://ec.europa.eu/clima/policies/strategies/progress/docs/com_2015_576_annex_1_cover_en.pdf
20
See
http://ec.europa.eu/clima/news/articles/news_2016052001_en.htm
21
See ICAO Action Plans, for example at:
http://www.trafi.fi/filebank/a/1435659226/1f1aad3a6c5babd175c5c5629634ab1a/17994-
1_2015__State_Action_Plan_of_Finland.pdf
12
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2. W
HY SHOULD THE
EU
ACT
?
As can be seen from Annex 5, aviation CO
2
emissions are growing sharply. Meaningful
mitigation measures are required for the sector to contribute to effectively addressing global
warming. The EU should continue doing so while facilitating global action, notably through
ICAO, as well as through domestic action. Thereby, the EU should not only take into account
the recent political agreement on the GMBM it supported in ICAO, but also its climate
commitments, both at European and at international level. As recalled in the previous section
and set out in detail in section 3.1, the EU has committed to reduce its GHG emissions
through domestic efforts by at least 40% compared to 1990 levels by 2030. This is the basis
of the EU´s and its Member States’ National Determined Contribution in the context of the
landmark Paris Agreement, where the EU reiterated its, at least, minus 40% economy-wide
target. All sectors, including aviation, must fairly contribute to decarbonise the European
economy to meet this target.
The current EU ETS legislation calls upon the Commission to consider the appropriate scope
of the EU ETS for aviation emissions from activities to and from aerodromes located in
countries outside the EEA following the outcome of the 2016 ICAO Assembly. Through the
review of the EU ETS for aviation the EU should ensure that the development and
implementation of the GMBM is not put at risk, in order to maximize global climate
mitigation efforts, whilst safeguarding that aviation continues to fairly contribute to the EU
climate targets.
2.1. S
UBSIDIARITY
In line with the 2004 ICAO Assembly’s decision not to develop a GMBM but to favour
inclusion of aviation into open regional systems, the EU chose to integrate the aviation sector
in the EU ETS by amending the EU ETS Directive 2003/87/EC through Directive
2008/101/EC.
Acting at EU level is more efficient than acting at the Member State level, due to the largely
transnational nature of aviation, with almost 90% of GHG emissions from aviation in the EU
coming from international aviation
22
. Indeed, the single market in aviation is a key goal for
the EU. Using emissions information as a proxy, it can be said that in relation to intra-EEA,
on average, ~74% of aviation activity corresponds to flights departing from an EEA
aerodrome flying to an aerodrome situated in another EEA Member State. Furthermore,
acting at the EU level prevents the distortion of competition in the internal market by
ensuring that the environmental constraints imposed on intra and extra EEA flights are
harmonised at the EU level.
This harmonized approach will also ensure that the regulation is compatible with meeting the
EU's 2030 domestic climate targets. Lastly, from an aviation industry perspective, the
existence of the EU ETS helps justify argumentation against action at national level by
Member States. Without an effective system in place, the likelihood of such action would
significantly increase.
2.2. L
EGAL BASIS
22
SWD(2016) 244 final
13
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The legal basis for the EU ETS Directive 2003/87/EC, as well as all subsequent legislation
amending it or other legislation regulating GHG emissions, is the environmental legal basis
enshrined in Article 192 of the Treaty on the Functioning of the European Union. This should
also remain the legal basis for the new Regulation, as the principal objective of the measure is
the protection of the environment through the reduction of GHGs.
14
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3. W
HAT SHOULD BE ACHIEVED
?
Regulation (EU) No 421/2014 introduced Article 28a in the EU ETS Directive 2003/87/EC,
which requires the Commission to report back to the Council and the European Parliament on
the outcome of the 2016 ICAO Assembly. When doing so, the Commission shall consider
and, if appropriate, include proposals in reaction to the ICAO developments on the
appropriate scope for coverage of emissions from extra EEA-flights from 2017 onwards. Any
amendments to the scope of the EU ETS for aviation should guarantee that the EU achieves
its climate targets. In this regard the EU ETS should maintain a high level of environmental
ambition within the EU, while further incentivizing the transition to and implementation of
the GMBM to maximize the global mitigation impact. Should the EU decide not to amend the
EU ETS in response to the outcome at the 2016 ICAO Assembly, the EU ETS will – by
default – apply in its full scope from 2017 onwards. This would mean that aircraft operators
will be responsible for GHG emissions from all flights departing from or arriving at
aerodromes situated in the EEA.
3.1. T
HE
EU’
S DOMESTIC AND INTERNATIONAL CLIMATE TARGETS
The EU is bound to achieve its domestic and international climate commitments. It is evident
from the different projections outlined in Annex 5 that all sectors of the economy, including
aviation, must contribute already prior to 2020, to reduce global GHG emissions to achieve
these targets. The need for all sectors of the economy to contribute to emissions reductions
has been confirmed by the European Council on a number of occassions
23
, as well as being
restated in the EU and its Member States’ Nationally Determined Contribution under the
Union’s instrument of ratification for the Paris Agreement
24
.
3.1.1. EU
CLIMATE TARGETS
Pursuant to the Commission's 2011 low-carbon economy roadmap
25
, the EU should by 2050
cut its emissions to 80% below 1990 levels through emission cuts in all sectors. In relation to
the this general commitment, the 2011 White Paper on Transport
26
sets a specific target for
the transport sector, including aviation, to reduce GHG emissions by 60% by 2050 compared
to 1990 and by around 20% by 2030 compared to 2008. Projections of the European
Environmental Agency suggest that the transport target will not be met, unless additional
measures are put in place
27
. The recently adopted Commission Aviation Strategy also
pointed at the relevance and effectiveness of the EU ETS as key tool to reduce the carbon
footprint of the aviation sector in the EU
28
.
In October 2014, EU leaders agreed on the climate and energy framework for 2030
29
,
including a binding domestic target to reduce domestic GHG emissions by at least 40%
below 1990 levels by 2030. The European Council of October 2014 concluded that the target
23
24
EUCO 169/14
http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf
25
COM(2011) 112 final
26
COM(2011) 144 final
27
European Environmental Agency, "Evaluating 15 Years of Transport and Environmental Policy" (2015), page
10; available at:
http://www.eea.europa.eu/publications/term-report-2015
28
SWD(2015) 261 final, page 72
29
EUCO 169/14
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/145397.pdf
15
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be met in the most cost-effective way possible, by reducing emissions domestically in the
non-ETS sectors by 30% compared to 2005 and in the ETS sectors by 43% compared to
2005. To the latter end, the linear reduction factor in the EU ETS sectors would be increased
from 1.74% to 2.2% after 2020. For these calculations the aviation sector, including all intra-
EU flights, was considered as an EU ETS sector. The 2030 framework will succeed the 2020
climate and energy framework
30
which contains the target of reducing GHG emission by 20%
below 1990 levels by 2020. Legally binding legislation establishes the measures to meet the
targets under the 2020 package (in force) and 2030 domestic climate framework (currently
under discussion by the co-legislators).
3.1.2. I
NTERNATIONAL COMMITMENT UNDER THE
P
ARIS
A
GREEMENT
The EU is strongly devoted to achieve the climate objective of limiting global average
temperature increase to well below 2 degrees Celsius above pre-industrial levels and to
pursue efforts to limit global temperature increase to 1.5 degrees Celsius, as committed to
under Article 2 of the Paris Agreement. Under the Paris Agreement, "Parties
aim to reach
global peaking of greenhouse gas emissions as soon as possible […] and to undertake rapid
reductions thereafter […], so as to achieve a balance between anthropogenic emissions by
sources and removals by sinks of greenhouse gases in the second half of this century"
(Article
4.1). The Paris Agreement states that “developed
country Parties should continue taking the
lead by undertaking economy-wide absolute emission reduction targets",
while “developing
country Parties should continue enhancing their mitigation efforts, and are encouraged to
move over time towards economy-wide emission reduction or limitation targets”
(Article
4.4)
31
. The Paris Agreement is a legally binding international treaty. It entered into force on
the 4
th
of November 2016, following its ratification by the EU.
Consistent with the climate and energy framework referred to above, in the EU and its
Member States’ Nationally Determined Contribution under the Union’s instrument of
ratification for the Paris Agreement, the EU and its Member States are committed to a
binding economy-wide target of an at least 40% reduction in emissions compared to 1990
levels by 2030, with no contribution from international credits
32
. As an economy-wide
objective, all sectors of the economy are due to contribute to emissions reductions.
The EU is also commited to meeting at least the global aspirational goal for international
aviation that was agreed by the 2010 ICAO Assembly and reaffirmed by the 2013 and 2016
ICAO Assemblies, namely maintaining global net CO
2
emissions from international aviation
at 2020 levels through carbon neutral growth
33
.
In its recent resolution on the implementation of the Paris Agreement, the European
Parliament states that “any
amendment of the existing legislation on including aviation in the
EU ETS can only be considered if the GMBM is ambitious, and that, in any case, intra-
European flights will continue to be covered by the EU ETS”
34
.
30
31
EUCO 17215/08
Paris Agreement (2015), available at:
http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf
32
http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf
33
2010 ICAO Assembly Resolution A37-19, available at:
http://www.icao.int/publications/Documents/9958_en.pdf
34
European Parliament resolution of 6 October 2016 on the implementation of the Paris Agreement and the
2016 UN Climate Change Conference in Marrakech, Morocco (COP22) (2016/2814(RSP)), paragraph 29
16
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3.2. P
OLICY OBJECTIVES
3.2.1. G
ENERAL POLICY OBJECTIVE
The general environmental policy objective of the amendments to the EU ETS for aviation
following the 2016 ICAO Assembly remain unchanged since the integration of aviation into
the EU ETS through Directive 2008/101/EC, namely to ensure the aviation sector's sufficient
contribution to reducing the impacts of climate change.
In reviewing the scope for the 2017-2020 period, the EU must ensure that the current level of
environmental ambition under the EU ETS for emissions from the aviation sector is at least
maintained to meet the EU's domestic 2020 target, while supporting the implementation of
the GMBM in relation to international flights.
For the period post-2020, when the GMBM is expected to be operational, the changes to the
system must guarantee that the global mitigation impact of aviation emissions is maximised
through the implementation of the GMBM, whilst securing the aviation sector's adequate
contribution to achieving the EU's domestic 2030 climate target and international
commitments under the Paris Agreement.
In addition to the general environmental objective, it must be ensured that both in the period
up to 2020 and post-2020, the action has no negative economic impact on the EU, and in
paricular its aviation sector, and that it does not harm the relationship with ICAO.
3.2.2. S
PECIFIC POLICY OBJECTIVES
The specific objectives for the 2017-2020 period are:
Environmental objective:
Address emissions from aviation activities, pending the implementation of a GMBM
in 2021, to achieve the EU's 2020 climate targets.
Maintain the competitiveness level in the aviation sector and the level playing field in
the internal market for aviation, including by providing legal certainty to operators
and keeping the administrative costs associated with the measure low.
Enable the development, transition and readiness for the implementation of the
GMBM from 2021.
Political/international acceptability of the EU.
Economic objective:
Relationship to ICAO:
The specific objectives for the period post-2020 are:
Environmental objective:
Ensure that aviation emissions from flights to, from or within the EEA continue to be
addressed effectively post 2020, so as to at least maintain the EU's current, domestic
level of environmental ambition and relevant aviation contribution, in line with the
EU's domestic 2030 climate commitment.
17
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Facilitate the implementation of the GMBM from 2021 to maximize the global
mitigation impact to meet the at least 2 degrees Celsius target and to pursue efforts to
limit global temperature increase to 1.5 degrees Celsius under the Paris Agreement
and ICAO's target of CNG 2020.
Maintain the competitiveness level in the aviation sector and the level playing field in
the internal market for aviation, including by providing legal certainty to operators
and keeping the administrative costs associated with the measures low and avoiding
any duplication of regulation.
Implementation of the GMBM by the EU and third countries.
Political/international acceptability of the EU measure.
Economic objective:
Relationship with ICAO:
18
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4. W
HAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES
?
Pursuant to Regulation 421/2014, the Commission is to report on the outcome of the 2016
ICAO Assembly to the European Parliament and to the Council and consider and, if
approprite, include proposals in reaction to the ICAO developments on the appropriate scope
for coverage of emissions of extra-EEA flights from 1 January 2017 onwards.
The options described below were developed to take account of the positive outcome of the
2016 ICAO Assembly, namely the adoption of a resolution on the GMBM, including a
roadmap for the completion of its key design elements, and to provide continued positive
momentum to the ICAO process. They build on the expectation that the GMBM will become
operational in 2021. Therefore, the policy options are divided into options available for the
2017-2020 period and options available for the period post 2020 when the GMBM is
expected to be operational.The considered policy options up to 2020 and post-2020 are
illustrated in
Figure 4-1
below.
Figure 4-1: Overview of considered policy options
4.1. 2017-2020 O
PTIONS
All of the options for the 2017-2020 period maintain the EU ETS to regulate aviation
emissions, but with various geographical scopes. They rank from a "do-nothing" scenario
(automatic return to full-scope), over a scenario where all flights departing from (but not
arriving at) an aerodrome situated in the EEA are covered, keeping the current intra-EEA
scope.
19
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4.1.1. O
PTION
0: "D
O NOTHING
" (
RETURN TO FULL SCOPE
EU ETS)
According to the existing guidelines for impact assessments, the option of "changing
nothing" must be considered as the "baseline". The “baseline scenario” should always be
developed and used as the benchmark against which the alternative options should be
compared.
The EU policy aims at covering emissions from EU-related flights though market-based
measures. In the absence of any international developments in this regard the EU ETS would
continue covering flights to and from third countries. From a legal perspective, should the EU
decide not to amend the EU ETS in response to the outcome at the 2016 ICAO Assembly, the
EU ETS will – by default – apply in its full scope from 2017 onwards. This means that if no
action is taken aircraft operators will be responsible for GHG emissions from all flights
departing from or arriving at aerodromes situated in the EEA unless exemptions take place.
This option, despite having been controversial in the past with third countries, has been
favoured by some stakeholders due to its high envoronmental impact.
This option is the baseline against which the other policy options will be assessed. The key
features of the full scope application, as specified in Directive 2003/87/EC as amended by
Directive 2008/101/EC and Regulation (EU) No 421/2014, are summarised in
Annex 9.
4.1.2. O
PTION
1: I
NTRA
-EEA
SCOPE
Option 1 would extend the approach taken under Regulation (EU) No 421/2014 beyond 2016.
Regulation (EU) No 421/2014 limited the effective coverage of the EU ETS for the 2013-
2016 period to intra-EEA flights. The enforcement of compliance obligations up to 2020
would be waived for all flights to and from non-EEA destinations. The amount of allowances
to be auctioned and the amount of free allowances to be allocated would have to be adjusted
in proportion to the emissions coverage. This option is supported by some stakeholders,
notably from the aviation industry and from Member States public authorities.
4.1.3. O
PTION
2: D
EPARTING
F
LIGHTS
Under option 2, all emissions from intra-EEA flights and from all departing flights to third
countries would be covered, while emissions from incoming flights from third countries
would be excluded. The total cap for emissions from aviation activities as well as the quantity
of the free allowances and the allowances to be auctioned for aviation activities would have
to be adjusted in proportion to the aviation emissions coverage.
4.2. O
PTIONS
P
OST
2020
All post-2020 options, except the baseline option, consider that the GMBM will be
implemented from 2021 onwards, and it is assumed that it will, at least, cover emissions
between airports in EEA and in third countries. Different options, however, are assessed with
regards to intra-EEA flights. As referred before, this allows a preliminary analysis of the
impacts that different potential scenarios on the basis of the already agreed features of the
GMBM.
4.2.1. O
PTION
0: B
ASELINE
As for the period before 2020, the "do nothing" scenario would be, by default, applying the
EU ETS to all flights arriving to or departing from the EEA. As also said before, despite this
option being controversial at international level it is supported by some stakeholders, notably
individuals and environmental NGOs, due to its high envoronmental impact.
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Under this option, the full scope application of the EU ETS for aviation continues post 2020.
Contrary to the full scope option under the 2017-2020 scenario, where a limited use of
international credits for compliance is provided for, only EU allowances (general and
aviation allowances) are eligible for compliance. Moreover, the ETS cap for aviation
emissions of 95% of the 2004-2006 average will be reduced in accordance with the annual
linear reduction factor that has been proposed to apply to other EU ETS sector of 2.2%. It
must be noted that the implementation of the EU ETS for the post 2020 period must start
some years before 2020. For example, in the absence of any amendments, allocation
procedures, including a complete (full-scope) tonne-kilometre collection exercise, must be
undertaken from 2018.
Table 4-1: Key features of option 0 (2021-2030)
Feature
Regional scopes
Aviation cap
Intra-EEA and Extra-EEA
EU ETS aviation cap of 95% of the 2004-2006 average aviation emissions.
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to
other EU ETS sector will apply to the aviation cap.
Free allocation (85%)
All emissions
EU allowances (general and aviation allowances)
Assumptions
Allocation
Surrendering
requirements
Eligibility of units
4.2.2. O
PTION
1
The EU ETS would continue to apply to intra-EEA flights. Consistent with the general
review of the EU ETS for the period 2020-2030 and the analyses carried out to adopt the
2030 domestic climate target, the annual linear reduction factor of 2.2% that has been
proposed to apply to other EU ETS sectors would also apply to aviation cap from 2021
onwards. In addition, only EU allowances (general and aviation allowances) will be eligible
for compliance. In a complementary manner, emissions from extra-EEA flights would be
subject to the GMBM. To avoid any duplication of regulation, the GMBM would only be
applied to emissions from extra-EEA flights but not from intra-EEA flights.
Some stakeholders, notably from the civil society, have stressed that in the light of the
expected features of the GMBM the EU should at least keep intra-EEA covered by the EU
ETS after 2020.
21
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Table 4-2: Key features of option 1 (2021-2030)
Feature
Regional scopes
Aviation cap
Intra-EEA
EU ETS aviation cap of 95% of the 2004-2006 average aviation emissions.
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to
other EU ETS sector will apply to the aviation cap.
Free allocation (85%)
All emissions
EU allowances (general and aviation allowances)
GMBM would apply to extra-EEA flights, including GMBM CNG2020 target
and the eligibility of international credits for offsetting.
Assumptions
Allocation
Surrendering
requirements
Eligibility of units
Notes
4.2.3. O
PTION
2
This option should align the EU ETS for intra-EEA flights closer to the GMBM for extra-
EEA flights by taking several of its design elements. Different manners of achieving this are
conceivable. As under option 1, extra-EEA flights will be covered, in any case, by the
GMBM.
The most straightforward option (option 2) would change the design of the EU ETS for intra-
EEA flights to operate like the GMBM as an offsetting mechanism, while maintaining a
similar ambition level as option 1. Allowances for aviation activities would not anymore be
issued. Instead, aircraft operators would have to surrender general ETS allowances for their
emissions above certain levels.The design of the EU ETS would continue to maintain a high
climate ambition through the following features:
i.
The baseline above which offsetting would take place would be the same as the cap
for aviation emissions under option 1: 95% of the average 2004-2006 aviation
emissions - and application of the EU ETS's linear reduction factor for stationary
installations of 2.2% from 2021 onwards to the aviation cap.
Airlines surrender only general EU ETS allowances for emissions above the cap for
aviation.
ii.
This option also takes into account the opinion by some stakeholders to keep the EU action
on intra-EEA flights after 2020.
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Table 4-3: Key features of option 2 (2021-2030)
Feature
Regional scopes
Baseline
Intra-EEA
EU ETS aviation cap of 95% of the 2004-2006 average aviation emissions.
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to
other EU ETS sectors will apply to the aviation cap.
No issuance of aviation allowances (i.e no free allocation, no auctioning).
Allowances will be purchased from other EU ETS sectors.
Only above aviation cap
EU general allowances
GMBM would apply to extra-EEA flights, including GMBM CNG2020 target
and international credits for offsetting.
Assumptions
Allocation
Surrendering
requirements
Eligibility of
units
Notes
Another alternative (option 2.1) could consist of combining the implementation of both the
EU ETS and the GMBM on intra-EEA flights. The GMBM would be used to offset emissions
above 2020 levels, while the EU ETS would address the gap in ambition between the EU
ETS cap for aviation and the GMBM CNG2020 baseline.
In this scenario, technical details concerning the interaction between the GMBM and the EU
ETS need to be clarified because of a number of differences between the key features of the
two systems. Issues that would need to be addressed are outlined in Table 4-4.
23
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Table 4-4: Difference in key features of the GMBM and the EU ETS
Feature
Aviation Cap/Baseline
EU ETS
Emissions
capped
for
aviation at 95% of the 2004-
2006
average
aviation
emissions.
From
2021
onwards, the annual linear
reduction factor of 2.2% that
applies to other EU ETS
sectors will apply to the
aviation cap.
Free allocation (85%)
GMBM
Carbon Neutral Growth from
2020 (baseline calculated as
2019-2020
average
emissions)
Allocation
Surrendering requirements
No free allocation
Yearly.
Obligation
for Annual
calculation
of
operators is based on an offsetting obligations but
individual approach.
three-year compliance cycle.
Obligation for operators is
based on global sectoral
growth rates.
Domestic
flights
and
international flights (between
EU Member States under the
intra EEA scope; to and from
third countries under the full-
scope).
All
international
flights
between
countries
participating in the scheme
(except on routes to and from
exempt countries).
credits
to be
Coverage
Eligibility of units
EU general allowances and International
EU aviation allowances.
(eligibility criteria
determined)
While the differences in key features and the need to clarify the details of the GMBM in the
next years make it challenging at this stage to define the precise parameters to model the
impacts of option 2.1, notably as regards the administrative effort required, an initial overall
assessment of its effects is provided in section 5.
4.2.4. O
PTION
3
All intra-EEA and extra-EEA flights would be covered by the GMBM. Intra-EEA domestic
flights in respect of which ICAO has no jurisdiction
35
would have to be opted into the
GMBM to safeguard a level-playing field within the EEA market. This option would reduce
the EU's level of climate ambition. The EU would move from its existing level of ambition to
accept that aviation emissions are stabilized at 2020 levels. Furthermore, increases above this
level would not be compensated with domestic emission reductions, but by using
international offsets, representing reductions achieved in third countries and not coming from
35
See statement at
http://www.icao.int/environmental-protection/Documents/STATEMENTS/cop4.PDF
24
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a cap-and-trade system with possibly less environmental integrity (e.g. emission reductions
are not counted compared to a fixed cap but to projected "business-as-usual" emission
growth; thus, in case of a too generous "business-as-usual" projection, emissions that would
effectively have never occurred may be counted as "reductions"). As explained before,
international credits cannot be accounted towards the at least -40% domestic climate target.
This option is supported by some stakeholders, notably from the aviation industry.
Table 4-6: Key features of option 3 (2021-2030)
Feature
Regional scopes
Baseline
Allocation
Surrendering
requirements
Eligibility of units
Notes
Assumptions
Application of GMBM to international intra-EEA and extra-EEA flights.
Domestic flights to be opted-in.
CNG 2020
No issuance of allowances
Only above target
International credits
GMBM would be applied. The legal base for the EU ETS would be
maintained but intra-EEA and extra-EEA flights exempted.
4.3. D
ISCARDED OPTIONS
The options of covering all intra-EEA flights and 50% of departing and arriving flights for
extra-EEA flights (50-50 option), as well as an airspace approach whereby intra-EEA flights
would be fully covered but emissions from extra-EEA flights cut back in proportion to the
distance travelled within the EEA, were discarded. The 50-50 option has not been further
assessed, as it is expected to deliver similar results as the departing flights option
36
. An
option based on "airspace" was not considered, as it was proposed by the Commission in
2013 but not adopted by the co-legislators in this form due notably to claims that it would
hinder progress in ICAO and concerns linked to complexity
37
.
Some options mentioned by certain stakeholders, such taxation-related ones, have been
discarded given the difficulties to impose fuel taxes for international flights due to legally
binding commitments made in Air Service Agreements with third countries. It should also be
noted that one of the advantages of market-based measures is that they allow meting climate
targets at the lowest cost, achieving reductions where it is cheaper and improving cost-
efficiency. This is also why the majority of stakeholders support the use of MBMs, as
opposed to taxes. Furthermore, now that ICAO has adopted a global markets-based measure
for international aviation emissions it would not be appropriate for Europe to move away
from carbon markets to taxation on CO
2
emissions, all the more since strategic partners such
as China and South Korea are also addressing aviation through domestic emission trading
schemes.
36
37
SWD(2013) 430 final
COM(2013) 722 final
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4.4. C
ROSS
-
CUTTING SIMPLIFICATIONS
The EU ETS Directive foresees in Article 30 (4) that the Commission shall review the
functioning of the Directive and give consideration to on-going improvements and
refinements.
In view of the 300 largest aircraft operators being responsible for 99% of annual emissions,
important simplifications have been made in the past in relation to small emitters. Small
emitters are defined as aircraft operators operating fewer than 243 flights per period for three
consecutive four-month periods and aircraft operators operating flights with total annual
emissions lower than 25000 tonnes CO
2
per year. While commercial aircraft operators (i.e.
airlines offering scheduled flights) benefit from an exemption from the EU ETS in case that
they emit less than 10000 tonnes CO
2
per year, small, non-commercial aircraft operators were
initially covered by the EU ETS.
The Commission launched in early 2013 a study by PWC et al. to investigate the costs and
benefits of the inclusion of small emitters in the EU ETS. It revealed amongst others that the
obligations with regard to MRV generate relatively higher administrative costs for small than
large operators. Compared to the level of EU ETS revenues raised from a small emitter, the
administrative cost can be up to 4 times higher
38
.
Consequently, Regulation (EU) No 421/2014 introduced a number of simplifications for
small emitters. The emissions of aircraft operators with total annual emissions lower than 25
000 tonnes CO
2
are consided as verified emissions if they were determined by using the small
emitters tool approved under Regulation (EU) No 606/2010 and populated by Eurocontrol
with data from its ETS support facility
39
. Moreover, Member States may implement
simplified procedures for non-commercial aircraft operators as long as such procedures
provide no less accuracy than the small emiters tool provides
40
.
In addition, Regulation (EU) No 421/2014 introduced in Annex I (k) of the EU ETS Directive
a de-minimis threshold until 31 December 2020 to remove any obligations for small, non-
commercial aircraft operator operating flights with total annual emissions lower than 1000
tonnes per year.
While the MRV simplications for small emitters are permanent, the exemption of small, non-
commerical aircraft operators ends at the end of 2020. The extension of the de-minimis
threshold post-2020 should therefore be considered.
38
SWD(2013) 430 final, section 2.6, PWC et al. on ETS Aviation small emitters, available at:
http://ec.europa.eu/clima/policies/transport/aviation/docs/report_ets_avaiation_small_en.pdf
39
EU ETS Directive 2003/87/EC, article 28a (6)
40
EU ETS Directive 2003/87/EC, article 28a (6)
26
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5. W
HAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE
AFFECTED
?
This section will assess the environmental, economic and social impacts of the different
policy options. The impacts will be assessed separately for the 2017-2020 options and the
post-2020 options.
The quantitative assessment of the impacts of the different policy options is based on the
AERO Modelling System (AERO-MS)
41
, a modelling tool which is specialised in the
aviation sector. It evaluates the environmental and economic consequences for all relevant
actors (airlines, consumers, governments and manufactures) of responses to emission-related
measures in the aviation sector.
The AERO-MS model was selected as providing a mechanism for modelling the economic
and environmental impacts of policies without the need for assumptions (for example,
regarding the impact of changes in airline costs on demand or technology development).
AERO-MS was also used for the analyses of policies at ICAO and has been performed as part
of the previous study in 2013
42
. Since that time, the tool has been updated and now uses a
base year of 2010 and it includes forecast years of 2020, 2030 and 2040. A key aspect of the
AERO-MS method is that it models the effects of policies on supply-side costs and, as they
are passed through, on demand for air travel, in a feedback approach. As a result, it generates
the effects of polices on the economics and the environmental impact on aviation. The
methodology is explained in more detail in Annex 4.
An important element is that AERO-MS applies growth rates as derived from ICAO's
Committee on Aviation Environmental Protection forecasts. While this data is commonly
used for studies in the aviation sector, it expects a continued strong growth in aviation
emissions, also related to EU emissions. For instance growth in emissions related to departing
flights (both intra and extra EU) in the period 2010-2020 is estimated at 36%, with growth
even increasing after 2020 to reach an 86% increase in 2030 compared to 2010, overall
resulting in average emissions in the period 2021-2030 being 63% above 2010.
In contrast, the increase in aviation emissions experienced in the last few years is markedly
lower (e.g., the UNFCCC inventory for the EU report for aviation fuel – domestic and
international bunkers fuels, based on fuel sold - show almost no increase in the period 2010-
2014). Therefore also a sensitivity scenario is applied using aviation emission projections
from the PRIMES models. PRIMES sees significantly less growth, with emissions of aviation
fuels sold in the EU increasing in the latest reference projections by only 18% on average
over the period 2021-2030 compared to 2010 in the EU. This is referred to as the low aviation
emission growth sensitivity.
PRIMES energy model is not aviation specific. It derives its growth rates on the basis of
aviation fuels sold in the EU and simulates the European energy system and markets on a
country-by-country basis and across Europe for the entire energy system. The model provides
amongst others projections of CO
2
emission over the 2015-2050 period in 5-years intervals.
The data is based on Eurostat statistics for the years 2000-2010. PRIMES has been used as a
model for the revision of the EU ETS and for establishing binding reduction targets for EU
Member States for non-ETS sectors under the Effort Sharing Regulation for the 2021-2030
period.
41
42
EASA (2010) Research Project EASA.2009/OP15 Study on Aviation and Economic modelling (SAVE)
Technical assessment of possible amendments of the EU ETS Directive for aviation – Final Report (Ricardo-
AEA/R/ED58833, 2013) and SWD(2013) 430 final
27
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The main differences between PRIMES and AERO-MS are due to different growth rates (and
different rates of energy efficiency improvement). While a continued strong growth in global
aviation activities is likely, in particular due to significant growth of aviation activities related
to developing countries, it was deemed appropriate to develop a more conservative sensitivity
scenario using PRIMES growth projections, in particular for aviation activities related to the
EU. In the PRIMES Reference scenario increase by ~80% between 2005-2030 (63% intra-
EU and 89% international extra-EU), but the resulting energy demand increases far less.
(15% total, 6% intra-EU and 20% international extra-EU), showing the impact of energy
efficiency. These are due to stock replacement of older aircraft, better logistics including
more passengers per flight, as well as policy measures such as the Single European Sky.
5.1. E
NVIRONMENTAL
I
MPACTS
In terms of environmental impacts, not only the direct impacts of the policy options on the
overall (EEA-related/global) aviation emissions must be considered. The indirect impacts of
the policy options through the purchase and surrendering of EU allowances from other EU
ETS sectors and offsets through international credits are at least equally important. With the
aviation sector contributing to the EU's 2020 and 2030 climate targets, its inability to achieve
absolute emission reductions implies that it will be required to purchase allowances from
other EU ETS sectors. These purchases of EU allowances from other sectors and the use of
international credits up to 1.5% of emissions represent additional emission savings which
would occur in other sectors.
5.1.1. I
MPACTS ON
A
VIATION
E
MISSIONS
Compared to a ‘business-as-usual’ scenario with no MBM in place to address aviation
emissions, all policy options are expected to reduce overall aviation emissions, both in the
2017-2020 and the post-2020 period. However, neither the 2017-2020 options, nor the post-
2020 options can prevent an increase in aviation emissions in absolute terms from 2010 to
2020 and from 2020 to 2030 respectively.
5.1.1.1.
2017-2020 O
PTIONS
With regards to the 2017-2020 policy options, the results in terms of annual CO
2
emissions of
intra-EEA and extra-EEA aviation activities depend on the geographical scope of the option.
Variation between options in terms of total EEA-related (flights to or from EEA airports)
emissions is small, lower than 1%. None of the options is foreseen to have an impact on the
aviation emissions that are unrelated to EEA flights.
Option 0 covers 35% of global aviation emissions and is projected to result in 306.72 Mt CO
2
emissions from EEA-related aviation activities per year. 8% of global aviation emissions fall
within the scope of option 1. This option is expected to lead to 308.98 Mt CO
2
emissions
from intra-EEA and extra-EEA aviation activities per year. Option 2 covers 22% of global
aviation emissions and its annual EEA-related aviation emissions are estimated to amount to
307.84 Mt CO
2
emissions.
28
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Table 5-1. Annual emissions 2017-2020 options
Geographic scope
Total EEA - related
Total world
Covered
5.1.1.2.
CO
2
emissions (Mt per annum)
% change from Option 0
Option 0
Option 1 Option 2
Option 1
Option 2
306.72
308.98
307.84
0.74%
0.37%
945.38
947.65
946.53
0.24%
0.12%
327.84
80.08
199.36
-75.57%
-39.19%
P
OST
-2020 O
PTIONS
In relation to the post-2020 policy options, the overall emissions relate to the degree of
interrelationship of the EU measure with the GMBM. The forecasted emissions under option
0 are based on the assumption that the GMBM is not operational in the post-2020 period.
Variations between options are not significant (between 393.26 Mt and 403.86 Mt per year).
Option 0 is projected to result in 393.26 Mt CO
2
annual EEA-related emissions in 2030. Over
the period 2021-2030 this option is projected to result in 11,573.57 Mt CO
2
emissions from
global aviation activities.
Option 1 will result in 1,333.24 Mt CO
2
annual emissions from global aviation activities in
2030 out of which 400.45 Mt CO
2
come from EEA-related flights. This corresponds to
11,617.58 Mt CO
2
emissions over the period 2021-2030.
Option 2 results in 1,333.62 Mt CO
2
annual emissions (400.82 Mt CO
2
from EEA-related
flights) in 2030, which correspond to 11,620.58 Mt CO
2
emissions from global aviation
activities over the period.
Under option 3, annual emissions amount to 1,336.66 MT CO
2
annual emissions in 2030
(403.86 Mt CO
2
from EEA-related flights), corresponding to 11,640.46 Mt CO
2
emissions
over the period.
Although emissions for sub-option 2.1 were not modelled in detail, they are estimated to be
in between those for options 2 and 3, closer to the latter when looking at 2030 figures, as the
growth above 2020 levels becomes more significant.
These results would be significantly lower in case of the sensitivity scenario with low growth
of emissions in aviation, which leads to only 289 Mt CO
2
EU-related emissions on average in
the period 2021-2030
5.1.2. I
MPACTS ON
E
MISSIONS FROM OTHER
S
ECTORS
This sub-section analyses how under the different options aviation contributes to achieve
emission reductions in other sectors by acquiring and surrendering emission units, either EU
allowances under the EU ETS or international credits. Divergences between different options
are more significant in this case compared to subsection 5.1.1.
Before 2020, the aviation sector contributes to the EU's 2020 climate target of reducing
emissions by 20% compared to 1990 levels. Sectors under the EU ETS are expected to reduce
emissions by 21% compared to 2005 levels. For the 2017-2020 options, an EU ETS
emissions cap for aviation emissions has been calculated based on the historical aviation
emissions for each of the policy options. EU aviation allowances are surrendered for CO
2
29
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emissions up to the aviation cap
43
. Above the aviation cap, emissions must be offset through
the purchase and surrender EU allowances from other ETS sectors (or, in a limited manner,
international credits issued under the Kyoto Protocol mechanisms
44
.
Also post-2020 the aviation sector will continue to contribute to the EU's climate target of
reducing emissions by 2030 by at least 40% below 1990 levels. Sectors under EU ETS are to
reduce emissions by 43% below 2005 levels, whereas emissions falling under the proposed
Effort Sharing Regulation are to decrease by 30%. As the 2030 target is domestic,
international credits cannot be used to achieve it. Similarly to the 2017-2020 options,
thresholds have been set for the post-2020 options above which emissions must be offset. For
option 3, this would be ICAO's target of CNG2020, whereas for the other options it would be
established in accordance with the EU ETS aviation cap: 95% of the average 2004-2006
historical aviation emissions, and application of the EU ETS's linear reduction factor for
other EU ETS sectors of 2.2% from 2021 onwards to the aviation cap.
5.1.2.1.
2017-2020 O
PTIONS
Under none of the policy options will the aviation sector achieve absolute emission
reductions in the pre-2020 period. Since none of the policy options prevent an increase in
aviation emissions between 2010 and 2020, there will be a demand from the aviation sector
for emission allowances from other ETS sectors and for international credits, thus favouring
reductions in them. The larger is the scope, the more significant is that demand.
It is expected that under option 0, 117.37 Mt of CO2 emissions (112.45 through EU
allowances) will have to be offset annually (in 2020) through EU allowances and
international credits. Under option 1, this amounts to 25.10 Mt of CO2 emissions (23.90
through EU allowances). Under option 2, the figure is 71.67Mt of CO2 emissions (71.67
through EU allowances).
5.1.2.2.
P
OST
-2020 O
PTIONS
Under all post-2020 policy options, it is assumed that aviation emissions will increase further
between 2020 and 2030. Aviation emissions covered by the EU ETS or GMBM are expected
to increase by at least 81% under option 0 and up to 91% under option 3 by 2030 compared
to 2010. Therefore, under all options demand will be generated for emission units and
reductions would be fostered in other sectors. Apart from option 0, main divergences between
options are related to the environmental ambition of the measure: the EU ETS cap or the
GMBM baseline (CNG 2020). Depending on whether emissions are covered by one or the
other emissions reductions will be favoured within EU ETS sectors or in other sectors in third
countries.
Under option 0 it is expected that 2,062.35 Mt of CO
2
emissions reductions will fostered in
other sectors covered by the EU ETS over the period 2021-2030 (206.2 annually on average).
This would be markedly lower in the sensitivity with low aviation emission growth, with only
832.35 Mt of CO
2
emissions to be offset over the period 2021-2030 at the EU level, 83.2 Mt
per year.
43
85% of these allowances are allocated to operators for free; another 15% of allowances are available via
auction
44
International credits can be used for up to 1.5% of total aviation emissions
30
kom (2017) 0054 - Ingen titel
Options 1 and 2 show very similar results. Under option 1, 1,703.65 Mt of CO
2
emissions
would be offset over the period, including through the EU ETS and the GMBM. From this,
493 Mt CO
2
would correspond to intra-EEA activity covered by the EU ETS, thus fostering
reductions in other ETS sectors. Under option 2, the global impact is of around 1,705.7 Mt
CO
2
over the period, from which 495Mt corresponds to intra-EEA activity – resulting in
reductions in EU ETS sectors. For both options 1 and 2 this would be markedly lower in the
sensitivity with low aviation emission growth, with a demand of only 23 Mt of CO
2
per
annum at the EU level for other ETS sectors.
Similar figures can be estimated for sub-option 2.1. However, as only around 26 Mt per year
would be covered with allowances under the high growth scenario (whilst for the rest of the
obligation international credits would be used) the contribution to domestic reductions in the
EU would be smaller and proportionally decreasing over time.
Under option 3, 1,354.99 Mt of CO
2
emissions would be offset under the GMBM over the
2021-2030 period, from which 144.42 would correspond to intra-EEA flights. These
emissions would be entirely offset with international credits. This means that there will be no
contribution from aviation to domestic reductions in the EU, while all other sectors would be
required to step up their efforts after 2020 to compensate for that. This shortfall in ambition
by intra-EEA aviation could put at risk the economy-wide -40% reduction to which the EU
committed in the Paris Agreement.
5.1.2.3.
I
MPACTS ON THE
EU ETS
The potential impacts of the various options on other ETS sectors will be proportional to the
scale of the net demand for allowances from the aviation sector. Table 5-3 shows the volume
of additional annual demand between 2021 and 2030, for a range of modelling outcomes. As
can be seen from the table, the scale of this impact depends primarily on the scope of the
coverage of emissions based on the option chosen and the expected growth in aviation
emissions. To reflect the uncertainty concerning the growth in aviation emissions, numbers
are shown for both an estimate based on detailed AERO-MS emission projections as well as
for emissions projections from the PRIMES model. The subsequent impact of additional net
demand on the carbon price is the result of the interplay between the supply and demand for
allowances.
31
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Table 5-3: Estimated average annual demand for general EU allowances from the
aviation sector in 2021-2030, in absolute terms (Mt CO2)
Average annual demand for general EU
allowances (= emissions aviation over cap for
aviation) in the period 2021-2030
Low estimate
High estimate
(based on PRIMES
(based on AERO-MS
emission projections,
emission projections),
EUCO30 projection), EU
EEA scope
scope
206
83
Option 0
Departing flights scenario (for
135
49*
comparison purposes)
Options 1 and 2
49.5
23
Option 3
0
0
* The impact assessment supporting the 2030 Climate Change and Energy Framework
(SWD(2014) 15final), which included all outgoing aviation in its projections, as covered
by the PRIMES model, estimated for the scenario GHG40 an average annual demand
for general EU allowances from the aviation of 49 million.
As the EU ETS cap sets a binding limit for emissions from stationary installations, additional
demand for allowances from aviation would not lead to additional emissions but would have
to be matched by additional reductions in other ETS sectors. Therefore, a net increase in
demand could be reflected through a limited impact on the carbon price signal for other ETS
sectors as well as through increased revenues from the auctioning of allowances by Member
States, leading to higher revenues from auctioning being available for climate and energy
measures.
Increased demand for allowances will have a different impact on the power sector and on
energy intensive industry which both fall under the ETS. Installations in the power sector
have to buy all allowances needed for compliance on the carbon market, and an increase in
demand would impact the carbon price for these installations. Any such impact will depend
on the volume of allowances and the interaction with the Market Stability Reserve. By
contrast, a smaller impact on industry is expected, since the proposal for revision of the EU
ETS foresees the continuation of free allocation to industry. Any potential price impact would
therefore affect mainly those allowances which are purchased on the market while at the
same time being offset by a higher value of free allocation.
The impact due to changes in the carbon price is expected to be proportional to the overall
increase in the demand for allowances. The overall cap or limit on the number of allowances
for stationary installations in the ETS is some 15.5 billion allowances in 2021-2030. The
different options are expected to have a limited economic impact on other sectors covered by
the EU ETS, due to the small size of the net demand from the aviation sector when compared
to overall emissions figures. Aviation demand is relatively modest compared to the total
GHG emissions covered by the EU ETS. Overall emissions covered by the system in the
period 2021-2030 is forecasted to be between 1887 Mt of CO2 eq in 2020 and 1558.8 Mt of
32
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CO2 eq in 2030
45
. When these figures are compared with the expected demand from the
aviation sector it can be noted that, with the exception of the baseline option, the proportion
remains between 1% and 3%. For the baseline option due to the larger scope the proportion
ranges from 5-12%, depending on the assumed growth in emissions. This means that while
the net demand for allowances from aviation would result in an increase in the demand for
ETS allowances this is limited in scale when compared to the overall number of allowances
on the market.
Furthermore, from 2019 on the Market Stability Reserve
46
will lead to adjustment of the
number of allowances to be auctioned depending on the number of allowances in circulation.
In general, scenarios with a higher net demand from aviation could lead to a swifter reduction
in the surplus. However, because the number of allowances to be placed in the reserve
reflects the number of allowances in circulation, at the same time a faster increase in the net
demand for ETS allowances will be partially offset by a lower amount of allowances being
placed in the reserve. The MSR will therefore mitigate the impacts of an increase in demand
on the overall balance between supply and demand for allowances in the EU ETS, and thus
the impact on the carbon price.
Under option 0, 206.2 Mt of CO2 emissions must be covered through ETS allowances
annually (over the period 2021 - 2030), or translating to in total a demand of over 2 billion
allowances in the ETS over 10 years. This number would be reduced to as much as 83 Mt of
CO2 emissions that need to be covered by ETS allowances annually over the 10 year period
in case of the sensitivity with low aviation emission growth.
It is clear that options 1 and 2 would have an impact on the ETS in terms of the net demand
for ETS allowances from the aviation sector, although the extent of this impact depends
strongly on the growth of emissions in aviation in intra-European flights, as flights to and
from third countries would be covered by the GMBM. Under options 1 and 2, the need to
cover emissions through ETS allowances would be reduced to around 49.5 Mt of CO2
emissions per annum, or around half a billion over the 10 year period. This number would be
reduced further to as little as 23 Mt of CO2 emissions per year (230 Mt over 2021-2030) in
case of the sensitivity with low aviation emission growth.
Under options 1 and 2, impacts on the ETS are thus probably more limited. It should be noted
that for instance the Impact Assessment accompanying the proposal for a 2030 Climate and
Energy Framework
47
simulated a net demand from aviation towards the other ETS sectors,
based on all outgoing flights equal to around 488 Mt of CO2 emissions over the period 2020-
2030, or the need to cover emissions through allowances from the ETS at around 49 Mt of
CO2 emissions per year.
Under option 3, there would be no need at all to cover emissions via allowances from the
ETS, as also intra-European emissions would be addressed through the GMBM, where
international credits are allowed. Under this scenario, fewer emissions reductions would need
45
EU Reference Scenario 2016. Energy, transport and GHG emissions. Trends to 2050.
https://ec.europa.eu/energy/sites/ener/files/documents/ref2016_report_final-web.pdf
46
Under the MSR, each year 12% of the surplus of allowances is transferred in the MSR provided the surplus is
higher than 833 million allowances. If the surplus in the ETS would drop below 400 million allowances, then
the MSR would start releasing allowances to the ETS market. (See: Decision EU) 2015/1814 concerning the
establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme
and amending Directive 2003/87/EC )
47
SWD(2014) 15 Final
33
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to take place in other ETS sectors to meet the binding cap on emissions from stationary
installations compared to a situation in which aviation would still remain part of the ETS.
5.2. C
OMPETITIVENESS AND
E
CONOMIC
I
MPACTS
With regards to the economic impacts, it is important to assess the policy options'
implications on operating costs, prices and demand, as well as auction revenues. It will also
be necessary to contemplate whether there is a potential of the policy options to distort
competition, in particular in relation to direct-city pair routes, one-stop services and tourist
destinations. The administrative effort resulting from the different options is also be
evaluated.
Competitiveness relates directly to improvements in productivity. Assessing impacts of
policies on productivity is difficult, not least because there are multiple ways in which to
measure productivity. In the widest sense, an increase in productivity refers to an
improvement in the ratio of inputs to outputs. An increase in fuel prices should lead to the
reduction of fuel as an input per unit of output (RTK), for example by incentivising high
occupancy rates of aircraft, as well as investment into more efficient aircraft. At the same
time, it may lead to a decrease in the average productivity of capital, as existing aircraft are
used less intensively (e.g. only when high occupancy rates can be guaranteed). A conclusive
assessment of overall productivity impacts in this wider sense is therefore not easily
modelled. The present assessment, instead, looks at what is defined as cost/price
competitiveness: the estimated impact of the policy options on costs and prices in the sector.
In addition, we look at how the changes in price affect demand and the impact this has on the
level playing field. Since the administrative costs associated with the measure can also have
an impact on the level playing field, they must also be considered
5.2.1. I
MPACTS ON
O
PERATING
C
OSTS
, P
RICES AND
D
EMAND
All policy scenarios up to 2020 and post-2020 imply minimal additional operating costs
compared to a business-as-usual scenario without any market-based-measures in place to
regulate aviation emissions. The differences in operating costs have a minimal impact on the
average price per RTK and thus on demand.
Indeed, empirical evidence on ticket prices for consumers confirms the minor economic
impact the EU ETS for aviation has had up to date: based on a sample of EU and US airlines,
the EU ETS seems to lead to price increases between 0.43 % and 0.94 % for passenger tickets
(excluding taxes and charges). Ryanair has been one of the most transparent airlines by
publishing figures of the cost to passengers of climate change measures. These have been
cited as being €0.25 for passengers flying from continental Europe, and £0.25 for passengers
buying tickets in the UK. Concerning transatlantic flights, US airlines have included fees
around $3 to cover for EU ETS costs in their ticket prices. This price top-up due to the EU
ETS is much lower than most airport taxes and charges (e.g. US charges of $16 for
passengers to arrive and to depart)
48
.
48
SWD(2013)430
34
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5.2.1.1.
2017-2020 O
PTIONS
For the 2017-2020 policy options, the expected additional operating costs rise with an
increase of the geographical scope of the option. Total operating costs are summarized in the
table below, showing very little variation compared to the baseline option.
Table 5-4: Summary of total operating costs and change over baseline on flights with
origin or/and destination within the EEA in 2020
Total operating
costs (in € million)
Intra-EEA/EEA domestic
Option 0
Option 1
Option 2
Extra – EEA
Option 0
Option 1
Option 2
Change over
baseline
Change in
operating costs
per RTK over
baseline
-
-0.26%
-0.11%
-
-0.71%
-0.34%
93,699
93,711
93,720
281,816
281,406
281,631
-
0.01%
0.02%
-
-0.15%
-0.07%
The slight differences in operating costs result in an almost identical average price per RTK
for the three options. The results are presented in the table below. The price reductions
achieved under options 1 and 2 compared to option 0 are for all options around 0.7% for
flights to and from third countries, and 1.11% under the three options, for intra-EEA flights.
Differences are thus negligible.
Table 5-5. Summary of price per revenue tonne kilometre (RTK) and overall RTK on
flights with origin or/and destination within the EEA in 2020
Calculated price (€) per
RTK
Intra-EEA/EEA domestic
Option 0
Option 1
Option 2
Extra-EEA
Option 0
Option 1
Option 2
1.11
1.11
1.11
0.71
0.70
0.70
Total RTK (millions)
89,765
90,008
89,886
411,554
413,888
412,700
The slight difference in price is also reflected in a very limited variation in demand expressed
as overall RTK of intra-EEA and extra-EEA flights. Option 0 results in an overall RTK of
501,319 million, option 1 in an overall RTK of 503,896 million and option 2 in an overall
RTK of 502,586 million.
5.2.1.2.
P
OST
-2020 O
PTIONS
35
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In relation to the post-2020 options, the projected operating costs depend on the degree to
which international credits are used for compliance within an option. This is due to the fact
that the average price of an international credit is estimated to be lower than the average price
of an EU allowance in the 2020-2030 period.
49
Operating costs in 2030 are summarised in the
table below. This shows how the variations linked to the different options are very limited
compared to those related to other operating costs (i.e., variations in fuel cost). Differences
between the options are also very small, not reaching 0.5%.
Table 5-6 Summary of total operating costs and change over baseline on flights with
origin or/and destination within the EEA in 2030
Total operating
costs (in € million)
Intra-EEA/EEA domestic
Option 0
Option 1
Option 2
Option 3
Extra-EEA
Option 0
Option 1
Option 2
Option 3
Change over
baseline
Change in
operating costs
per RTK over
baseline
-
-0.33%
-0.59%
-2.61%
-
-2.08%
-2.13%
-2.53%
134,230
134,304
134,329
134,541
429,921
427,955
427,979
428,182
-
0.06%
0.07%
0.23%
-
-0.46%
-0.45%
-0.40%
For the same reason the operating costs slightly vary, the average price per RTK does not
differ much between the options. As shown in the table below variations on prices per RTK
only amount few € cents.
Table 5-7 Summary of price per revenue tonne kilometre (RTK) and overall RTK on
flights with origin or/and destination within the EEA in 2030
Calculated price (€) per
RTK
Intra-EEA/EEA domestic
Option 0
Option 1
Option 2
Option 3
Extra-EEA
Option 0
Option 1
Option 2
49
Total RTK (millions)
127,276
127,773
128,130
130,997
631,988
642,439
642,810
1.13
1.13
1.13
1.10
0.70
0.69
0.69
International credits which meet the standards of the EU ETS for use up to 2020 are currently priced at around
€0.40, less than one-tenth of the value of EU ETS allowances.
36
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Option 3
Calculated price (€) per
RTK
0.68
Total RTK (millions)
645,796
As regards sub-option 2.1, impacts were not modelled, but are estimated to be between those
for options 2 and 3, as part of the obligations are met with allowances and part with
international offsets.
In line with the difference in price per RTK, total demand in RTK of intra-EEA and extra-
EEA flights also varies moderately between the options. Option 0 results in an overall RTK
of 759,264 million, option 1 in an overall RTK of 772,791 million, option 2 in an overall
RTK of 770,928 million and option 3 in an overall RTK of 776,793 million.
All these impacts would be even lower with the sensitivity that foresees moderate aviation
emissions growth, where the amount of emissions to be offset on flights within the EEA is
expected to be lower.
5.2.2. I
MPACTS ON
L
EVEL
P
LAYING
F
IELD
Under all policy options, the EU ETS, and the GMBM when applicable from 2021, are
applied uniformly to all operators irrespective of their nationality or any other characteristics.
Thus, they do not present a direct distortion of competition. However, under certain
circumstances a potential risk of indirect distortion of competition could arise due a
preference for alternative flights, which would not be covered by any of the policy options.
It should be noted that distortions have not been identified during the 5 years where the EU
ETS has been applied to aviation, and it is expected that this should be even less the case
where other routes will be covered, after 2020, by a new market instrument such as the
GMBM.
It must be stressed that the possibility of distortions could increase with higher operational
costs associated to the different measures. Nevertheless, as section 5.2.1 demonstrates, this
will not be the case in the period up to 2030, where impacts on costs or prices per RTK
remain very limited.
Finally, it is important to highlight that under Option 3 the GMBM would apply to all intra-
EEA flights, including those operated by carriers based in third countries. Therefore, if the
GMBM was not adequately implemented by some third countries a risk of competitive
distortions arises even within the EEA. It must be recalled that the GMBM obligations are
enshrined in an Assembly Resolution, which is not, in itself, legally binding. States can
reserve to it and not apply the GMBM to their operators flying on European routes. Even if
technical rules are developed and adopted as standards, it remains to be decided what level of
detail those standards will have, and what is left to "recommended practices" or guidance
documents, increasing the risk of a heterogeneous implementation that could hinder a level
playing-field. There is also a risk that countries with lower capacities are not ready to
implement it by 2021, and that could equally affect flights within the internal market. For
those reasons, it must be pointed out that under Option 3, risks of competitive distortions
could even affect direct competition on routes within the EEA, as the decision to apply the
GMBM obligation on intra-EEA routes, for some operators, would be in the hands of third
countries' administrations.
37
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5.2.2.1.
C
OMPETITION BETWEEN
D
IRECT
C
ITY
-P
AIR
R
OUTES
Under all
2017-2020 options,
intra-EEA flights are covered by the EU ETS, whereas flights
outside the EEA are exempt. Consequently, distortions in border regions are theoretically
conceivable, as traffic might shift from within the EEA towards nearby airports outside the
EEA in response to an increase in relative prices for intra-EEA traffic.
Under the
post-2020
options, the potential for competitive distortions on city-pair routes near
EEA region borders would no longer exist under the full convergence Option 3, where
GMBM applies to all flights, both within and outside the EEA (with the exception of the
foreseen exemptions from GMBM for small states and domestic flights). As said above,
Option 3 encompasses a more relevant risk of distortion if it is not properly implemented and
enforced by third countries responsible for the administration of their airlines, as highlighted
above. In theory, the potential of distortions remain under the other options, although given
the limited economic impact (price per RTK, as explained in section 5.2.1) it is considered to
be highly unlikely that companies modify their established routes due to this.
5.2.2.2.
C
OMPETITION BETWEEN
O
NE
S
TOP
S
ERVICES
The 2006 Impact assessment
50
already explored the risk of route change to use extra-EU hubs
under the full-scope EU ETS, but found that the likelihood of such a distortion would only
become positive at a carbon price of €75 per tonne CO
2
. It is not expected that allowances
prices will reach those levels in the period up to 2030.
Under a reversion to the full ETS scope (Option 0), the option with the highest costs per
RTK, allowance costs in 2020 would be a mere 0.3% of total operational costs for flights
between the EEA and third countries, thus adding only €1 to the cost of a flight with an
operating cost of €300 per passenger. The magnitude of distortions under the other options
would be even lower due to their lower operating costs.
As all 2017-2020 policy options fully cover intra-EEA flights, possible competition
distortions are avoided for intra-European travel. However, as the policy options - depending
on different geographical scopes - may not cover non-stop services in the same way as one-
stop services, there could be some hypothetical potential for distortion through the use of
hubs outside the EEA in order to limit the quantity of emissions covered by the EU ETS.
Similarly to the pre-2021 options, there is some potential for theoretical competitive
distortions in all post-2021 options. In options 1 and 2 this would relate to the implementation
of the EU ETS to intra-EEA routes, while the GMBM applies to routes out of the EEA. In
any case, in the light of the much reduced cost impacts, this risk can be considered as
negligible. Under Option 3 this type of risk disappears, but, as explained above, there is a
more relevant risk of competitive distortions (including on intra-EEA flights) if the system is
not properly implemented by third countries on their operators.
Again, given the limited economic impact (price per RTK) it is considered to be highly
unlikely that companies modify their established routes due to this. In case of flights covered
by the GMBM under all options 1, 2, and 3, the risk will depend on which routes are finally
covered by the ICAO measure, but this is out of the remit of this assessment.
50
SEC(2006) 1684
38
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1719390_0039.png
5.2.2.3.
C
OMPETITION BETWEEN
T
OURIST
D
ESTINATIONS
In theory, distortions between tourist destinations are conceivable as illustrated in table 5-8
for the 2017-2020 period and in table 5-9 for the post-2020 period:
Table 5-8: potential distortion of competition between tourist destinations in the period
2017-2020
Tourist located within EEA
Option 0
No distortion between tourist
destinations within the EEA and
outside the EEA, as all flights
departing and arriving in the EEA
are covered.
Potential preference for travelling
to
tourist
destinations
in
outermost regions or outside of
the EEA, as all other flights to and
from tourist destinations within
the EEA are covered.
Tourist located outside of EEA
Potential preference for not travelling
to tourist destinations within the
EEA, as flights to and from those
destinations are covered.
No distortion for travelling to tourist
destinations in the EEA, as flights
between the EEA and third countries
are not covered.
Option 1
Option 2
Potential preference for travelling Potential preference for not travelling
to tourist destinations outside of to tourist destinations within the
the EEA as only one way is EEA, as the return flight is covered.
covered, as opposed to both ways
for destinations in the EEA.
39
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1719390_0040.png
Table 5-9: potential distortion of competition between tourist destinations in the period
2017-2020
Tourist located within EEA
Option 0 No distortion between tourist
destinations within the EEA
and outside the EEA, as all
flights departing and arriving in
the EEA are covered.
Option 1 Potential
preference
for
travelling to tourist destinations
outside the EEA, as flights are
covered by GMBM (if at all) as
opposed to the EU measure.
Tourist located outside of EEA
Potential preference for not travelling
to tourist destinations within the
EEA, as flights to and from those
destinations are covered.
No distortion for travelling to tourist
destinations in the EEA and
international destinations in countries
not exempted from the GMBM, as
GMBM applies to those international
flights. Potential preference for
domestic destinations or destinations
in countries to which the GMBM
does not apply.
No distortion for travelling to tourist
destinations in the EEA and
international destinations in countries
not exempted from the GMBM, as
GMBM applies to those international
flights. Potential preference for
domestic destinations or destinations
in countries to which the GMBM
does not apply.
No distortion of competition between
international destinations in countries
not exempted from the GMBM, if
GMBM is applied to those
international
flights.
Potential
preference for domestic destinations
or destinations in countries to which
the GMBM does not apply, as
domestic flights are not covered.
Option 2 Potential
preference
for
travelling to tourist destinations
outside the EEA, as flights are
only covered by GMBM (if at
all) as opposed to the EU
measure.
Option 3 No distortion of competition
between
international
destinations in countries not
exempted from the GMBM, if
GMBM is applied to those
international flights. Potential
preference
for
domestic
destinations or destinations in
countries to which the GMBM
does not apply, as domestic
flights are not covered.
The impact of different ETS policy options on tourist destinations was analysed in detail
within a separate annex in the previous impact assessment in 2013. The overall finding was
that wherever impacts could be expected due to competitive distortions between different
40
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1719390_0041.png
destinations or the general rise in fuel costs, these would be negligible due to the low
allowance costs
51
.
A review of the current options confirms that this is still the case. For example, when
presuming a 2020 ETS price of €15/tonne CO
252
, on the popular tourist route London
Gatwick to Crete, the allowance costs per RTK are estimated at around 0.6 cents(€). Over the
2,700km flight route, this means a cost of around €17 per revenue tonne, or ~€1.70 per
passenger, which is unlikely to distort competition to non-EEA Mediterranean tourist
destinations, such as nearby Turkey (e.g. Antalya) under Options 1 or 2, under which no
allowance costs, or only allowance costs for the departing flights would respectively arise for
flights to Turkey. Equally, the insignificant amounts by which overall flight costs increase are
not expected to have an impact on overall tourism receipts, e.g. by reducing the number of
tourist flights, or tourists spending less on accommodation and leisure activities at their
destination, in order to compensate for higher flight costs.
The forecast allowance prices for the year 2030 result in an increase of around €67 per
revenue tonne on the 2,700km flight route from London Gatwick to Crete under the baseline
option 0, around €6.70 per passenger. Because the same rules apply for intra-EEA and extra-
EEA flights under option 0, no negative impacts would occur (on the contrary, the 2,900km
London Gatwick to Antalya flight route would result in slightly higher prices due to the
additional 200km).
Option 1 applies more stringent rules to intra-EEA flights (EU ETS), whilst extra-EEA flights
only face GMBM international credits prices, which are expected to be lower. Despite this
difference, the London Gatwick to Crete route would only create extra costs of around €100
per revenue tonne, or €10 per passenger, whereas the London Gatwick to Antalya flight route
would only face GMBM allowance prices of €16 per revenue tonne, or about €1.60 per
passenger. Thus, the difference between the most extreme options would be a net decrease in
emissions-related charges of just over €8 per passenger compared to Crete. It is unlikely that
such a small difference in flight costs would have a tangible distorting impact on tourism in
Crete. Under all other options, the gap in allowance costs is even lower.
5.2.3. I
MPACT ON
M
EMBER
S
TATES
' B
UDGETS
(A
UCTION
R
EVENUES
)
Impacts on Member States' budgets are associated to proceeds from the auctions of
allowances under the EU ETS. All options that foresee allocation of allowances encompass
some sort of revenue generation for Member States.
5.2.3.1.
2017-2020 O
PTIONS
All 2017-2020 policy options generate auction revenues for public authorities. Since the
number of auctioned allowances depends on the geographical scope of the ETS for aviation,
the auction revenues in 2020 vary between the policy options as shown below.
Table 5-10: Auctioning amounts and revenues for EU Member States in 2020
Auctioned allowances (Mio. EUAAs)
EUAA price (EUR/EUAA)
Auctioning revenues (Mio. EUR)
51
52
Option 0
31.6
15
474
Option 1
8.2
15
124
Option 2
19.8
15
298
SWD(2013) 430 final, Annex VII
Presumption is derived from long term price projections
41
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1719390_0042.png
5.2.3.2.
P
OST
-2020 O
PTIONS
As opposed to the pre-2021 policy options, not all of the post-2020 options will generate
auction revenues for public authorities. Under option 0, the auction revenue in 2030 would
amount to €1,034.2 million and under option 1 to €302.3 million.
Options 2 and 3 would not generate any auctioning revenues, as option 2 does not foresee
allocation through auctions and the GMBM does not have any revenue generation
mechanism.
Table 5-11: Auctioning amounts and revenues for EU Member States in 2030
Option 0
Auctioned allowances (Mio.
EUAAs)
EUAA price (EUR/EUAA)
Auctioning revenues (Mio.
EUR)
5.2.4. A
DMINISTRATIVE
E
FFORT
The administrative effort to implement the various policy options under consideration takes
into account the key administrative tasks under the EU ETS and the GMBM that must be
performed by the aircraft operators and the competent Member States authorities. These are
mostly related to MRV obligations by aircraft operators and compliance activities by
competent authorities.
The key administrative tasks associated with the 2017-2020 options are outlined in
Table 5-
12
below.
24.6
42
1,034
Option 1
7.2
42
302
Option 2
0.0
-
-
Option 3
0.0
-
-
42
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1719390_0043.png
Table 5-12:
Entity
Key administrative tasks under the EU ETS
Tasks
submission of monitoring plan
notifying changes to monitoring plan
setting up monitoring and report systems
collect, and archive data
prepare annual emission report
ensure that annual emission reports are verified by accredited
independent verifiers
submit annual emissions report to competent authority
purchase and surrender allowances
approval of monitoring plan for each aircraft operator and subsequent
updates to the monitoring plan
approval of annual emissions reports as verified by accredited verifiers;
administer registry
calculate the allocation of free allowances
guidance, training, helpdesk for airline operators
accrediting verifiers
monitoring compliance and enforcing in case of non-compliance
prepare legislation and guidance documents
administer the EUTL registry
approves allocations of free allowances
updates aviation operator list
Operators
European
Commission
Competent
Member
States
authority
43
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1719390_0044.png
The tasks will generate costs, which can be distinguished between one-off costs or on-going
costs.
Table 5-13
illustrates the type of cost created by the individual tasks.
Table 5-13: Type of costs incurred under the key administrative tasks
One-off Costs
initial preparation (i.e; interpreting
legislation, training employees)
setting up of a system to comply
with legislation
elaborate monitoring plan
provision of data for free allocation
initial preparation (i.e. legislation,
guidance documents)
setting up of a system to comply
with legislation
approval of monitoring plans
allocation of allowances/defining
individual share
On-going Costs
monitoring and reporting of
emissions
verification (fees for third
party verifiers)
effort of purchasing
allowances
help desk
checking emission report
and verification statement
updating EU ETL for
aviation sector
compliance
Aircraft operators
Government
administrators
As assessed under the impact assessment
53
accompanying Commission Regulation 600/2012
(on verification and accreditation under the EU ETS) and 601/2012 (on the monitoring and
reporting of GHG under the EU ETS) the aim of minimising costs for Competent Authorities
and operators has always been one of the main elements of the EU ETS MRV.
Several measures have been taken to reduce costs associated to monitoring, reporting and
verifying emissions, both by aircraft operators and by the Commission and national
competent authorities. These include the development of IT systems supporting data delivery
(e.g. reporting in web-based application), review of data (e.g. through automated checks) and
data management (easier updating of documents, storage and tracking of data). Large aircraft
operators have well-developed data management systems. This is not always the case for
smaller ones. However, operators emitting less than 25.000 CO2 tonnes per year can benefit,
since 2014, from using Eurocontrol's "Small Emitters Tool" that facilitates reporting
obligations, not requiring additional verification of data (see Section 4.4). In 2015, 268
aircraft operators used this tool to report their emissions, avoiding incurring in additional
monitoring and verification costs.
Larger companies must verify emission reports. Generally, under the EU ETS, verification
costs are estimated to be on average in the order of € 800 and € 1000. Around 200
Verification Bodies are estimated to be active in the EU ETS system with a total number of
verifiers estimated in the order of 1200 individuals.
On the side of competent authorities, access to Eurocontrol's "ETS Support Facility" reduces
the cost of checking emission reports and track compliance. Furthermore, coordination
amongst competent authorities helps to share best practices and reduce costs. The
Compliance Forum, established in 2008, meets every year to carry out these coordination
activities. It is composed of all the major national and local ETS Competent Authorities,
including aviation ones, and the Commission.
53
SWD (2012) 177.
http://ec.europa.eu/clima/policies/ets/monitoring/docs/swd_impact_assesment_en.pdf
44
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5.2.4.1.
2017-2020
OPTIONS
Due to the similarity with the system up to 2016, option 0 and option 1 are not expected to
generate significant additional one-off costs. As the departing flight scope under Option 2 is
new, it is likely to result in higher one-off costs, especially as regards the initial preparation
and the help desk.
When considering the on-going costs, the administrative effort will become more important
with an increase in geographical scope because of the higher volume of flights covered,
which significantly raises the efforts related to MRV. Thus, lowest costs correspond to option
1, followed by option 2 and option 0.
5.2.4.2.
P
OST
-2020 O
PTIONS
In terms of administration, the GMBM will not be significantly different from the EU ETS.
The same key administrative tasks will have to be carried out. Even though ICAO has still to
develop the implementation guidance and standards, the GMBM will also be based on route-
based monitoring, reporting, and verification (MRV) of emissions. Also with regard to
transaction costs of buying allowances or international credits, no differences are to be
expected compared to the current EU ETS. The administrative costs for operators and
national authorities are therefore not expected to be significantly different under the two
systems.
However, the implementation of the GMBM will require an additional effort and result in
one-off costs. These costs should be minimal for operators and national administrators in the
EU ETS as it can be expected that the existing MRV infrastructure and processes can equally
be used for the GMBM. No major changes are to be expected in this respect. As the
surrendering obligations will be calculated differently under the GMBM than the EU ETS,
there will be one-off costs to establish the implementing regulation and develop guidance for
the implementation.
In this light, option 0 would result in insignificant one-off costs for intra-EEA and extra-EEA
flights. With regard to extra-EEA flights, all other options entail the same one-off costs for
the introduction of the GMBM. In relation to intra-EEA flights, option 1, similarly to option
0, only implies insignificant one off costs, whereas options 2 and sub-option 2.1 – that take
over more elements from the GMBM – and 3 would entail more changes and thus result in
higher one-off costs.
With regard to on-going administrative costs, the MRV costs should not differ significantly
because all options require that emission data is reported, monitored, and verified at the level
of routes. It is expected that the current MRV requirements under the EU ETS will be to a
large extent used for the implementation of the GMBM in the EU. Alternatively, it could also
be considered that the MRV rules for the EU ETS are adjusted to be in line with ICAO's
MRV rules. In either case, as the same or very similar MRV rules will apply under GMBM
and the EU ETS, the on-going MRV costs should therefore be essentially equal across
options.
With regard to other administrative tasks and their costs for operators and national
administrators, options 0 and 3 will have lower costs because intra- and extra-EEA flights
will be treated equally. With options 1 and 2, the GMBM rules will apply to extra-EEA
flights and the EU ETS rules will apply to intra-EEA flights. While there are differences
between GMBM and EU ETS rules (e.g. related to the type of allowances or credits to be
surrendered, the calculation of the surrender obligation), these differences should not
45
kom (2017) 0054 - Ingen titel
generate significant additional administrative costs for operators and national administrators
once IT and administrative processes are established. It is important to note that an operator
will only deal with one national administrator ("one-stop shop") even if rules differ for extra-
and intra-EEA flights.
Sub-option 2.1. leads to the highest administrative complexity because EU ETS and GMBM
rules are applied simultaneously applied to intra-EEA flights. This will complicate also the
calculation of the surrender obligation. This is particularly due to the fact that under the
GMBM operators' obligations are calculated on the basis of the global growth of the sector
compared to 2020 levels while under the EU ETS aircrafts operators' obligations are based on
their overall individual emissions compared to a base year.
In the implementation of options 1 and 2, special attention needs to be given to operators
from non-EEA countries that operate intra-EEA flights and do not benefit from the small-
emitter exemption. These non-EEA operators should in principle be administered by their
home country for all international flights (including intra-EEA flights) under the GMBM. To
avoid double regulation, adjustments might be needed in the implementation of the EU ETS
and the GMBM to avoid that emissions are reported and offset twice. The development of
outstanding MRV rules in ICAO, notably on transparency, will be relevant in this regard;
equally, the eventual adaptation of the EU ETS MRV in the coming years can play an
important role. Avoidance of duplication would require specific administrative checks to
ensure that carriers are complying with their obligations under the systems. This would help
to ensure a level-playing field between all operators – irrespective of their nationality – on
intra-EEA routes.
The administrative burden is expected to be, in principle, greater for small airline operators,
since large airline operators are likely to be able to build upon their existing IT systems and
even incorporate national variations if necessary. However the review of the EU ETS in 2014
already introduced simplified MRV requirements for small emitters that extremely reduce
this burden under the EU ETS.
In any case, the costs of implementing the GMBM would be higher in case this is not done in
a harmonised manner within the EU. Using common rules for the implementation of the
GMBM – based on the provisions of the current EU ETS Directive – will contain the
administrative costs for operators and national administrators.
5.3. S
OCIAL
I
MPACTS
The social impacts of a policy are the impacts on people, their employment prospects, and
rights, access to services, quality of life, income, health and safety. Social impacts also focus
on distributional impacts of a policy option i.e. across and within different social and
economic groups, identifying ‘winners’ and ‘losers’ and assessing whether the policy is likely
to improve or aggravate existing inequalities. For this assessment, the main areas of interest
are the potential impacts of the policy options on lower income social groups by potentially
reducing access to air travel, and on employment if jobs are lost or created as a result of the
policy options.
5.3.1. I
MPACT ON
L
OWER
I
NCOME
G
ROUPS
The minor impact on prices and overall passenger demand both under the 2017-2020 and the
post-2020 policy options has already been alluded to above. As the ticket prices will remain
stable for intra-EEA flights and even decrease for extra-EEA flights with reduced ETS
46
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1719390_0047.png
coverage, low income groups will not be negatively impacted and there will not be a risk to
increase inequalities in Europe.
5.3.2. I
MPACT ON
E
MPLOYMENT
Employment impacts may occur from a rise or fall in airlines’ activity as a result of the policy
options for the period up to 2020 and post-2020. Employment impacts are roughly
proportional to overall activity.
In the timeframe between 2017 and 2020, option 1 is expected to generate a 0.4% and option
2 a 0.2% higher EU aviation sector employment in 2020 than the baseline option (option 0).
For the post-2020 options, EU aviation sector employment in 2030 is expected to be 1.5%
higher under option 1, 1.39% under option 2 and 2.74% under option 3 in comparison to the
baseline option 0.
However, in comparison to the baseline option 0, the policy options up to 2020 and post 2020
reduce government revenues from the emissions trading, thus reducing public sector budgets
and employment, or requiring tax increases in other sectors to compensate for the shortfall in
revenue - consequently reducing employment in the affected sectors. The impact on total net
employment (across the whole economy) is not clear, although it is expected to be even
smaller than in the aviation sector.
5.4. I
MPACT ON
O
UTERMOST
R
EGIONS
Under all pre and post-2020 options economic impacts for outermost regions are almost
insignificant.
5.4.1. 2017-2020 O
PTIONS
Under the 2017-2020 options, option 0 covers flights between EEA mainland and the
outermost regions. Such flights are exempted under option 1. However, domestic flights
within a given outermost region are covered under the ETS
54
. Under Option 2, outermost
regions are treated as ‘third countries’, except that domestic flights within them are subject to
the requirements of the EU ETS. This means that flights from mainland EEA countries to
outmost regions and flights within outermost regions are covered. All other flights are not.
Thus, option 0 followed by option 2 cover the largest share of flights related to the outermost
regions and option 1 the lowest.
The difference in coverage has an impact on aviation
emissions
from EEA related flights
within, to and from outermost regions. Option 0 results in 10.21 Mt CO
2
emissions per
annum in 2020, option 1 in 10.37 Mt CO
2
emissions per annum in 2020 and option 2 in 10.28
Mt CO
2
emissions per annum in 2020.
Due to the difference in coverage,
ETS allowance costs
of flights to/from the outermost
regions for 2020 will also vary between the three options. However, the impacts are expected
to be very limited in all cases, always below €0.1 per RTK and in most cases even below
€0.02
54
Except for flights performed in the framework of public service obligations, which have been exempted under
the aviation ETS Directive
47
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1719390_0048.png
Table 5-14: RTK of flights within EU ETS/GMBM scope to/from the outermost regions
in 2020
RTK (millions)
Canary islands
Azores
Madeira
Saint Martin
Guadeloupe
Martinique
Mayotte
Réunion
French Guiana
Op. 0
Op. 1
Op. 2
9,668.7
95.3 4,619.2
408.0
9.8
126.7
605.5
0.0
282.9
6.7
-
3.4
797.8
1.2
381.2
811.1
-
394.5
49.0
-
21.8
1,445.1
-
621.8
346.5
-
191.7
Allowance cost per
RTK (€)
Op. 0 Op. 1 Op. 2
0.01
0.02
0.01
0.01
0.02
0.01
0.01
0.04
0.01
0.02
-
0.02
0.01
0.07
0.01
0.01
-
0.01
0.01
-
0.00
0.01
-
0.01
0.01
-
0.00
5.4.2. P
OST
-2020 O
PTIONS
Under all 2030 options, flights between EEA mainland and outermost regions, as well as
within outermost regions are treated as intra-EEA flights.
Nevertheless, CO
2
emissions
from EEA-outermost regions aviation activities vary between
the options. Under options 0 and 1, they would result in 13.16 Mt CO
2
emissions in the year
2030; 13.8 Mt CO
2
emissions in 2030 would be the consequence of option 3 and 13.23 of
option 2.
The tables below summarise the impacts modelled or the different options for the year 2030.
Allowance costs per RTK
generally range from €0.02 and €0.03 for options 0 to 2; option 3
has with even lower costs.
These values suggest that overall impacts on flight cost and therefore structure, frequency or
accessibility in the regions, as well as impact on the price of goods to be imported/exported
are so low that they can be considered as negligible.
48
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Table 5-15: RTK of flights within EU ETS/GMBM scope to/from the outermost regions
in 2030
Op. 0
13,612.20
575.02
854.95
11.14
1,189.61
1,218.45
79.65
2,197.13
554.39
RTK (Millions)
Op. 1
Op. 2
13,638.71 13,315.33
582.19
479.90
856.87
830.17
11.15
11.15
1,192.25
1,163.37
1,220.11
1,195.85
79.87
75.62
2,202.92
1,948.24
555.55
548.40
Op. 3
14,185.79
588.01
883.75
11.40
1,231.30
1,261.82
80.59
2,248.59
565.62
Canary islands
Azores
Madeira
Saint Martin
Guadeloupe
Martinique
Mayotte
Réunion
French Guiana
Table 5-16: Allowance costs per RTK of flights within EU ETS/GMBM scope to/from
the outermost regions in 2030
Allowance cost per RTK (€)
Op. 0
Op. 1
Op. 2
0.02
0.02
0.02
Canary islands
0.02
0.02
0.02
Azores
0.02
0.02
0.02
Madeira
0.06
0.06
0.06
Saint Martin
0.02
0.02
0.02
Guadeloupe
0.02
0.02
0.02
Martinique
0.03
0.03
0.03
Mayotte
0.02
0.02
0.02
Réunion
0.02
0.02
0.02
French Guiana
5.5. C
ROSS
-
CUTTING
I
SSUES
5.5.1. S
MALL
E
MITTERS
In relation to the aviation sector, practically all small and medium sized enterprises (SMEs)
covered by the system are small emitters. Therefore this assessment will focus on small
emitters as regards the impact on SMEs.
As explained in previous sections, Regulation 421/2014 amending the EU ETS Directive
introduced permanent simplifications for small emitters in relation to MRV as a result of a
study by PWC et al at the request of the Commission.
The study by PWC et al. revealed that the EU ETS covers about 300 "large" aircraft operators
– with annual emissions higher than 25,000 tons CO2 – who are responsible for about 99 %
of emissions and around 2600 non-commercial small emitters (e.g. business jets) who are
responsible for only 1 % of emissions. The study also showed that the MRV obligations
49
Op. 3
0.00
0.00
0.00
0.01
0.00
0.00
0.01
0.00
0.00
kom (2017) 0054 - Ingen titel
1719390_0050.png
generate relatively higher administrative costs for small than large operators. Compared to
the level of EU ETS revenues raised from a small emitter, the administrative cost can be up to
4 times higher.
The simplifications for operators with emissions below 25 000 tons introduced by the
Regulation are estimated to drastically reduce costs for operators emitting less than 25 000
tonnes CO
2
. In particular, these operators can report emissions to competent authorities using
Eurocontrol's "Small Emitters Tool".
On the other hand, Regulation 421/2014 also introduced an exemption for small (below 1 000
tons CO
2
emissions per year) non-commercial operators. Whereas commercial aircraft
operators (i.e. airlines offering scheduled flights) benefit from a permanent exemption from
the EU ETS in case that they emit less than 10 000 tonnes CO
2
per year, small, non-
commercial aircraft operators emitting less than 1 000 tonnes CO
2
per year are only exempted
until 2020.
Please see the 2013 Impact Assessment, section 2.6 and the 2013 PWC et al. study on ETS
aviation small emitters for further details.
55
5.5.2. L
EGAL
C
ONSIDERATIONS AND
R
ELATIONSHIP WITH
ICAO
By contrast with the EU ETS for intra-EEA flights which is functioning well and is being
fully complied with – by EU and non-EU operators alike -the implementation of the EU ETS
on flights to and from third countries (extra-EEA flights) has been subject to controversy in
the past. Legal and political issues related to the different options should thus be considered.
It is also important to look into the GMBM legal form and the consequences it may have in
relation with the different options.
Legal and political aspects in the light of the experience with the implementation of the EU
ETS
The EU´s competence to address both domestic and international aviation emissions,
including from flights to and from third countries, was recognized by the European Court of
Justice on its Judgment of 21 December 2011
56
, also considered to be consistent with the
Chicago Convention. Therefore, there are no legal competence issues that prevent the
development and implementation of any of the options that have been assessed both for the
period 2017-2020 and post-2020.
Risks can be identified where the EU regulates flights to or from third countries (option 0 and
2 for the period 2017-2020, option 0 for the post-2020 period). A number of countries
opposed the full-scope EU ETS alleging that the EU would have no competence to oblige
their operators to participate in the EU ETS. This demonstrates that any of those options
could be opposed by third countries and by airlines, using the additional argument that now
ICAO has adopted a resolution on a GMBM for international aviation emissions, which is
expected to be the global measure to be applied to international flights, as defined by the
Chicago Convention, between third countries and the EU. Political opposition may generate
retaliation measures from third countries or create compliance problems.
55
SWD(2013) 430 final, section 2.6, PWC et al. on ETS Aviation small emitters, available at:
http://ec.europa.eu/clima/policies/transport/aviation/docs/report_ets_avaiation_small_en.pdf
56
Case C-366/10
50
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1719390_0051.png
Under those options there is a risk that third country aircraft operators
57
seek not to comply
with the EU ETS obligations. In fact, in the past, the United States adopted the 'EU ETS
Prohibition Act' which would have allowed its authorities to seek to forbid airlines based in
the United States to comply with the EU ETS. While this risk cannot be avoided, non-
compliance cases can always be enforced by member states’ competent authorities, and fines
can be imposed according to the EU ETS Directive. In the past, two airlines have paid fines
of more than €1 million each for non-compliance with the EU ETS for intra-EEA flights, and
those airlines have now come into compliance under the current intra-EEA scope.
Risks associated with third countries opposition and non-compliance are less significant
under options limiting the scope of the EU action to intra-EEA flights (option 1 pre 2020 and
options 1 and 2 post-2020). The experience in the period 2013-2016 shows that the intra-EEA
scope has not raised political opposition, and aircraft operators, including from third
countries, have largely complied with the EU ETS obligations. Compliance rates are above
99% of emissions covered, including more than 100 commercial operators that are based in
third countries.
The outcome of the 39
th
ICAO Assembly and its consequences
While not an ICAO member (the EU is only an observer in ICAO), the EU, through its
Member States, made its opposition clear during the negotiations over the GMBM being
qualified as the "exclusive" market-based measure. The language in the Resolution would
permit co-existence between the GMBM and other regional or domestic market measures -
which is relevant for the EU, but also for other States implementing similar measures, such as
South Korea or China from next year. Of course, this must be read in conjunction with the
preambular language pointing at the need to make sure that the same international emissions
should not be accounted and paid twice and that any overlap and duplication should be
avoided, thereby also suggesting the possible co-existence between the GMBM and other
national or regional measures. This is further reinforced by the Annex on general principles
for MBMs added during the Assembly to the second climate-related resolution
58
. The
Assembly also adopted another resolution acknowledging the growing existence of regional
cooperation and recognised the establishment of regional aviation systems, such as exist in
the EU. It supported the need to better integrate them in an ICAO context, which should
provide good basis for the removal of current obstacles posed by ICAO’s State-based
approach, not well enough adapted to how the EU and its Member States operate. Finally,
ICAO practice, when adopting standards for instance, also allows States to develop or
maintain more ambitious levels domestically, should they so wish. The EU has notably done
so in the field of safety for instance.
In any case, it must be noted that rules on MRV and eligibility of emission units are still
pending adoption by ICAO. Depending on the content of these rules and how the EU later
adapts its MRV rules duplication between the GMBM and the EU ETS could be minimised
or even avoided, and consistency ensured, thereby allowing for an harmonious relationship
between the GMBM and the EU ETS.
The GMBM legal form and its risks
57
For information on the commercial airlines based outside the EEA with the highest numbers of flights within
the EEA, see the Commission's additional analysis of the 2013 Impact Assessment at
http://data.consilium.europa.eu/doc/document/ST-16247-2013-INIT/en/pdf,
Annex III
58
ICAO Resolution A 39-2
51
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1719390_0052.png
A risk that has to be taken into account under post-2020 options (1, 2 and 3) is related to the
weakness of the legal form under which the GMBM has been adopted. The GMBM’s main
features are enshrined in an ICAO Assembly Resolution, which, despite its political
importance, is not legally binding. The study on “Possible legal arrangements to implement a
global market based measure for international aviation emissions” (by Pablo Mendes de
Leon, Vincent Correia, Uwe Erling and Thomas Leclerc for the Directorate General Climate
Action
59
) shows that from a legal perspective the best solutions to guarantee that the GMBM
is implemented as a binding measure would be an amendment of the Chicago Convention,
supplemented with the establishment of Standards (yet to be developed and agreed), or a new
treaty to which technical annexes would be attached. However, such processes would take
many years to complete as they involve ratification by the States party to the treaty, with the
risk of non-achievement in the end. The combination of a resolution with ICAO Standards
(yet to be developed and agreed), which is how the GMBM is expected to be regulated, is
considered a more pragmatic approach, but it is recognized that its potential to effectively
deliver an effective regulatory framework depends significantly on the political support of
countries to adopt national legislation and implement the system. Once national rules to
implement ICAO Standards are adopted, these become binding, not needing any ratification.
Therefore, a risk exists under options 1, 2 and 3 that the GMBM is not duly implemented by
certain countries, or that the adoption of the corresponding domestic legislation is delayed.
Airlines from third countries could not fulfil their obligations under the GMBM in the
absence of domestic legislation and enforcement measures. Such situation could undermine a
homogeneous implementation of the GMBM, leading to competitive distortions.
Furthermore, there is a certain risk that the implementation of the GMBM will be delayed or
not materialise because a number of important features of the GMBM – notably relating to
the transparency, accounting and offsetting rules, registry, compliance and governance – still
need to be developed and agreed in ICAO before the GMBM can be effectively implemented.
These legal risks could affect flights to and from third countries under post-2020 options 1, 2
and 3, but also
intra-European flights
under option 3 and sub-option 2.1. To minimize these
risks, the EU legislation has and could further elaborate rules applicable by default, including
under post-2020 options 1 and 2. In all circumstances the Commission maintains the right of
initiative at any stage, should these risks materialise.
Conclusions: the GMBM and its compatibility with the different EU ETS options
- Before 2020 the GMBM will not be operational. No consideration needs to be given to the
interaction of the possible options with the GMBM.
- So far, the implementation of the EU ETS on intra-EEA flights has not faced legal nor
political challenges. Compliance rates are very high. This confirms that past controversies on
the EU ETS were limited to extra-European international flights
- The Assembly Resolution on the GMBM is politically relevant and may have legal
consequences in States, but is not an international treaty. In addition, it does not exclude the
possible co-existence between the GMBM and other schemes.
59
http://ec.europa.eu/clima/policies/transport/aviation/docs/gmbm_legal_study_en.pdf
52
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1719390_0053.png
- The legal weakness of the GMBM could pose risks in terms of implementation of the
measure by third countries, which could entail competitive distortions and affect its climate
objective
- The GMBM Resolution is expected to be completed with standards and recommended
practices (SARPs) whose content still needs to be developed. Standards have legal effects,
requiring domestic legislation to be implemented. Some rules could also be contained in
recommended practices or guidance documents. It must be noted that states can file
differences to SARPs and it is usual practice for states to impose stricter requirements than
those contained in ICAO rules. The development and implementation of SARPs are relevant
steps through which legal and political aspects related to the different post-2020 EU ETS
options could be addressed.
53
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1719390_0054.png
6. H
OW DO THE OPTIONS COMPARE
?
6.1. E
NVIRONMENTAL
I
MPACTS
In general, the most relevant environmental impacts are the consequence of the reductions
achieved in other sectors through the purchase and cancellation of units. In the 2017-2020,
these impacts vary with the scope; after 2020 the divergences are linked to the different
climate ambition between the EU ETS and the GMBM. Importantly, the use of international
credits under the GMBM means that it does not contribute to reduce emissions in the EU, but
in third countries, affecting the ability to reach the domestic 2030 climate target. The direct
impacts in terms of total emissions under each option show lower variations.
6.1.1. 2017-2020 Options
The wider the geographical scope of the policy option, the lower the global annual CO
2
emissions from aviation activities. Consequently, the option with the narrowest geographical
scope (option 1) would result in an additional 0.24% of emissions compared to the option
with the widest geographical scope (option 0). Option 2, would result in 0.12% more
emissions than option 0. However, due to the short period of time during which the policy
options will be applicable, the difference in effects on CO
2
emissions from the aviation sector
between the options is relatively small (2.26 million CO
2
emissions per year).
Similarly, the additional emission reductions that can be achieved by other ETS sectors
through the demand for EU allowances from the aviation sector depend on the geographical
scope of the policy option. In this case, variations are significant: under option 0, demand is 5
times higher and under option 2, demand is three times higher than under option 1.
6.1.2. Post-2020 Options
The emission savings will become lower the more the EU ETS for intra-EEA flights is
converged to the GMBM. Thus option 3 will result in the least emission savings with 0.73%
higher global aviation emissions and 2.81% higher emissions in the EEA per year than option
0. The difference in emission savings between options 1 and 2 compared to option 0 is almost
identical with an increase of 0.47% and 0.5% respectively at global level (2.07 and 2.17% at
EEA level).
The additional emission savings that can be achieved in other sectors through the demand for
EU allowances and international credits from the aviation sector show higher variation. These
are the lowest under option 3 with 135.4 Mt annually on average in the 2021-2030 period.
This is due to the fact that the required reduction in emissions for intra-EEA flights is less
ambitious under the GMBM option compared to the other options with additional EU action.
Option 1 and option 2 show better results: they are likely to result in similar emission
reductions by other sectors with 170.3 MT CO
2
and 170.4 MT CO
2
additional emission
reductions per year (2021-2030) respectively. Moreover, it has to be recalled that intra-EEA
flights under options 1 and 2 would contribute to domestic emissions reductions by other EU
ETS sectors by requiring the purchase of around 49.5 million allowances annually (around 26
million under sub-option 2.1).
Since the price of international credits is expected to be lower than the price of EU
allowances during the 2021-2030 period and not being any limits on the use of international
54
kom (2017) 0054 - Ingen titel
credits for offsetting under option 3, this is the only option where intra-EEA aviation will not
trigger any demand for EU allowances from other sectors. The whole amount of emissions to
be offset, including the part corresponding to intra-EEA activity would be covered with
international credits. This means that there will be no contribution from intra-EEA aviation to
domestic reductions in the EU under option 3, while all other sectors would be required to
step up their efforts after 2020. This shortfall in ambition by intra-EEA aviation under option
3 could put at risk the economy-wide -40% reduction to which the EU committed in the Paris
Agreement.
6.1.3. Impact on the EU's 2030 targets and commitments under the Paris Agreement
The EU and its Member States are committed to a binding target consisting in an economy-
wide objective of an at least 40% reduction in GHG emissions by 2030 compared to 1990.
The European Council of October 2014 concluded that the target be met in the most cost-
effective way possible, by reducing emissions in the non-ETS sectors by 30% compared to
2005 and in the ETS sectors by 43% compared to 2005. To achieve the latter, it has been
proposed to increase the linear reduction factor applicable to the EU ETS sectors from 1.74%
to 2.2% after 2020. For these calculations the aviation sector, including all intra-EU flights,
was considered as an EU ETS sector. This was reflected in the Nationally Determined
Contribution submitted by the EU and its Member States under the Paris Agreement.
Assuming regulation of intra-EEA aviation under the EU ETS (post-2020 options 1 and 2),
demand for allowances would be around 23 million annually between 2021 and 2030 (230
million over the period) as implied by the low emissions growth scenario in PRIMES, and
around 49.5 million annually (495 over the period) in AERO. This would be the sector
contribution to reaching the EU's 2030 climate goals, along with other sectors.
If the aviation sector was not regulated under the EU ETS but exclusively by the GMBM the
demand for allowances from aviation would no longer occur. The regulation under the
GMBM (as under post-2020 option 3) would not foster any domestic emissions reductions in
the EU, as the GMBM is operating on the basis of international offsets. Aviation would thus
not contribute to the EU's climate goals. Therefore, in order to attain the agreed domestic
reduction in the EU, other sectors would need to increase their contributions.
6.2. C
OMPETITIVENESS AND
E
CONOMIC
I
MPACTS
Divergence in impacts on operating costs, price and demand between options are very
limited. Impacts can be considered negligible compared to those associated with other types
of costs, such as fuel costs. This also leads to absence of risk of competitive distortions. The
highest risk, in this regard, can be associated to a possible non-implementation of the GMBM
by certain countries, which could result in competitive distortions. This could affect intra-
EEA flights under option 3 in case a state does not properly implement the GMBM on its
operators flying between EU member states. Finally, with regards to impacts on national
budgets, the larger is the scope of emissions covered by the EU ETS, the higher are the
revenues generated by auctions of allowances.
6.2.1. I
MPACTS ON
O
PERATING
C
OSTS
, P
RICES AND
D
EMAND
6.2.1.1.
2017-2020 O
PTIONS
55
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In general, the differences in impacts on operating costs, price and demand are minimal. The
narrower the geographical scope of the 2017-2020 option, the less significant the additional
operating costs resulting from it. Thus the operating costs are the highest under option 0 and
the lowest under option 1. Compared to option 0, the operating costs are -0.1% lower under
option 1 and -0.04% lower under option 2. The three options result in an almost identical
average price per RTK (difference of less than 1% per RTK) with option 0 having the highest
price per RTK and options 1 and 2 having the same price. The reduction in price per RTK is
reflected in an overall, albeit small, raise in demand for intra-EEA and extra-EEA flights,
which increases with the narrowing of the scope of the option. Compared to the baseline, the
overall RTK increases by 0.5% under option 1 and by 0.25% under option 2.
6.2.1.2.
P
OST
-2020 O
PTIONS
Divergence in impacts on operating costs, price and demand are also very limited in the post-
2020 scenarios, especially on flights to and from third countries. The operating costs and the
average price per RTK are the lowest under option 3 and the highest under the baseline full
scope option (option 0).
All options show a reduction of costs compared to the baseline. Compared to the baseline, the
operating costs in 2030 under option 3 are -2.61% lower for intra-EEA and -2.53% lower for
extra-EEA flights. For intra-EEA flights, the operating costs in 2030 would also be lower
under option 1 (-0.43%) and option 2 (-0.59%) albeit less significant than under option 3. For
extra-EEA flights, the reduction of operating costs under option 1 (-2.56%) would be almost
identical as under option 3 and slightly lower under option 2 (-2.13%).
Similarly, the average price per RTK is highest under the full scope (baseline) option 0 for
intra-EEA and extra-EEA flights. In contrast, it is the lowest under option 3 for intra-EEA
flights with a change in price per RTK of -2.75% for intra-EEA and -2.65% for extra-EEA
flights compared to option 0. For intra-EEA flights, the calculated price is almost identical for
options 1 and 2 and slightly less compared to option 0 (-0.5% and -0.65% respectively). The
calculated price for extra-EEA flights under options 1 and 2 is identical to the price under
option 3, which results in a change in price per RTK of approximately -2.65% for options 1
and 3 and of -2.22% for option 2.
The change in price per RTK compared to the baseline is reflected in an overall raise in
demand for intra-EEA and extra-EEA flights in comparison to option 0. Consequently, the
overall RTK for intra-EEA (+2.92%) and extra-EEA (2.18%) flights would increase the most
significantly under option 3. The raise in demand would be less significant under option 1
(+0.5% for intra-EEA and +2.04 for extra-EEA flights) and option 2 (+0.67% for intra-EEA
and +1.71% for extra-EEA flights).
6.2.2. I
MPACTS ON
L
EVEL
P
LAYING
F
IELD
Although none of the policy options directly distort competition, there is a theoretical risk of
indirect distortion of competition in favour of city-pair routes outside the EEA in border
regions, the use of hubs outside of the EEA in one-stop services and tourist destinations
outside the EEA. However, it must be noted that distortions have not been identified during
the 5 years where the EU ETS has been applied to aviation, and this should be even less the
case where other routes will be covered, after 2020, by a new market instrument such as the
GMBM.
56
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As anticipated, the implementation of the GMBM may represent a risk of competitive
distortions if a state, for political or capacity reasons, does not apply it to its operators. This
would affect extra-EEA flights under options 1 and 2, but also intra-EEA flights under option
3, as there would be airlines flying within Europe being administered by third countries.
6.2.2.1.
2017-2020 O
PTIONS
In relation to the 2017-2020 options, the risk of distortion of competition is highest under
option 0 and lowest under option 1 with regards to city-pair routes and one-stop services with
option 0 having the most important impact on the total operational costs for flights.
Conversely, the risk is inversed in relation to the indirect distortion of competition between
tourist destinations, with the risk being highest under option 1, which exempts extra-EEA
flights from the scope of the EU ETS and lowest under option 0, treating intra-EEA and
extra-EEA flights equally and thus making extra-EEA flights than intra-EEA flights of the
same distance.
The risk of indirect distortion of competition is considered to be theoretical under all three
policy options, mainly due to the low magnitude of the extra allowance costs.
With regards to the city pair routes and the one stop services, the geographical borders
between European and the rest of the world, from which it is mostly separated by sea, as well
as the tariffs, visas and other barrier to the free movement of goods and people that generally
exist between the EEA and other countries render the potential risk even more hypothetical.
6.2.2.2.
P
OST
-2020 O
PTIONS
As with the pre-2020 options, significant distortions in relation to city-pairs and one-stop
services are unlikely to occur in practice, partly due to the low magnitude of the extra
allowance costs relative to total costs, as well as the geographical and political barriers to the
free movement of goods and people that generally exist between the EEA and other
countries. Under the full ETS scope (Option 0), allowance costs in 2030 would on average
account for around 3% of costs for flights between the EEA and third countries, thus adding
around €10 to the cost (and price) of a flight with an operating cost of €300 per passenger.
Cost increases (and therefore potential distortions) are generally significantly lower for all
other options, and variations amongst them not relevant, as the GMBM would in all cases
cover flights to and from third countries – and non-EEA related routes with higher traffic. As
said above, there are specific risks attached to option 3 in case some states do not properly
implement the GMBM on their operators.
For the same reasons mentioned above, also in relation to tourism is the potential risk purely
theoretical.
6.2.3. I
MPACT ON
M
EMBER
S
TATES
' B
UDGETS
(A
UCTION
R
EVENUES
)
All 2017-2020 policy options generate auction revenues for public authorities. The wider the
geographical scope of the policy option, the more important the auction revenue. The auction
revenues generated under option 1 represent 26% of the auctioning revenues generated under
the full scope option; under option 2 these are 63% of full scope ones.
57
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In contrast, only options 0 and 1 under the post-2020 scenario would generate auctioning
revenues. Due to the larger scope, the revenue would be more than three times higher under
option 0.
6.2.4. A
DMINISTRATIVE
E
FFORT
6.2.4.1.
2017-2020
In terms of one-off administrative costs, option 2 would generate the highest administrative
effort, whereas the effort resulting from options 0 and 1 would be almost identical. In relation
to the on-going costs, the administrative effort would be the highest under option 0 and
lowest under option 1. Option 1 is thus, overall, the one with lower costs.
6.2.4.2.
P
OST
-2020
In terms of administration, the GMBM will not be significantly different from the EU ETS.
However, technical rules under ICAO, notably on MRV, still need to be developed and
adopted. Once this is the case, the assessment of administrative efforts could be refined.
In any case, the same key administrative tasks will have to be carried out. The GMBM will
also be based on route-based monitoring, reporting, and verification (MRV) of emissions.
The administrative costs for operators and national authorities are therefore not expected to
be significantly different under the two systems.
However, the implementation of the GMBM will require an additional effort and result in
one-off costs. These costs should be minimal for operators and national administrators in the
EU ETS as it can be expected that the existing MRV infrastructure and processes can equally
be used for the GMBM.
Option 0 followed by option 1 would result in the lowest one-off costs due to their similarity
with the current system. Options 1, 2 and 3 would raise additional one-off costs resulting
from the implementation and operation of the new requirements under the GMBM. They
would be higher under option 3 because of the GMBM's coverage of both, intra EEA and
extra EEA flights and highest under 2.1, as both systems are applied jointly on intra-EEA
flights (plus the GMBM on extra-EEA ones).
With regard to on-going administrative costs, the MRV costs should not differ significantly
because all options require similar compliance (e.g. MRV of emissions at the level of routes).
To keep administrative costs to a minimum and avoid double regulation, the administrative
rules under the EU ETS and the GMBM should be consistent and converge as much as
possible, taking account of the technical guidance still to be developed by ICAO.
Complexities attached to sub-option 2.1 mean that the administrative effort for this
alternative is expected to be higher than under the other options.
6.3. S
OCIAL
I
MPACTS
6.3.1. L
OWER INCOME GROUPS
Due to the predicted stable ticket prices under all policy options up to 2020 and post-2020, no
impact is expected on lower income groups.
58
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6.3.2. E
MPLOYMENT
The impact on total net employment (across the whole economy) is considered to be difficult
to estimate and thus unclear. With regards to employment in the aviation sector, between the
2017-2020 policy options, is assumed to be highest under option 1 and lowest under option 0.
After 2020, employment in the aviation sector is likely to grow under all options compared to
the baseline, more under option 3 and almost identically in relation to options 1 and 2. In any
case, variations are small (less than 1.3% difference compared to baseline between options 1
and 3).
6.4. O
UTERMOST REGIONS
Overall, the allowance costs per RTK remain very low on flight with outermost regions and
are therefore is not expected to significantly affect structure, frequency or accessibility of
flight services or to have any impacts on the price of imported or exported goods.
Under the 2017-2020 policy options, option 0, followed by option 2 result in the lowest
allowance costs per RTK in the outermost regions. Post-2020, option 0 is expected to lead to
the highest allowance costs per RTK. Option 3 followed by option 2 result in the lowest
allowances costs per RTK, being in all cases very small.
The direct emission reductions resulting from the coverage of EEA flights to, from and
within outermost regions in 2020 are the most important under option 0 and the least
significant under option 1. After 2020, they are lowest under options 0 and 1, closely
followed by option 2.
6.5. S
MALL
E
MITTERS
With regards to all of the post-2020 options, extending the de-minimis threshold for non-
commercial aircraft operators beyond 2020 would maintain the environmental effectiveness,
due to the small amount of GHG emissions covered by the exceptions, while containing the
administrative burden and costs for aircraft operators, as well as for national administrations.
Simplified MRV procedures for small emitters are assumed not to change.
6.6. L
EGAL AND
P
OLITICAL
C
ONSIDERATIONS
There are no legal obstacles to any of the options. However, there is a risk that a number of
third countries and airlines oppose the EU measure alleging that the EU would have no
competence to oblige their operators to participate in the EU measure. The risk of such
opposition increases where the EU regulates extra-EEA flights (2017-2020: options 0 and 2;
post-2020: option 0). Options 1 for the period 2017-2020 and 1 and 2 post-2020 only regulate
intra-EEA flights, as in the period 2013-2020, where the EU ETS has been successfully
applied and compliance rates have been very close to 100%. For the post-2020 period, option
3 should not raise any negative reactions from stakeholders in the aviation industry.
Opposition/non-acceptance of an option could lead to a higher risk of non-compliance by
operators, for which the EU ETS contains legally-binding enforcement measures.
A potential risk for all of the options entailing the GMBM post-2020 (all options except for
option 0) is that the GMBM is not duly implemented by certain countries, or that the adoption
of the corresponding domestic legislation is delayed. In particular with option 3, this could
lead to distortions on the internal EU market for aviation if responsible administrations in
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third countries do not properly enforce the compliance of their airlines with the GMBM for
flights operated within the EEA.
6.7. C
ONCLUSIONS
Pre-2020 period
All three options for the period running from 2017 to 2020 show very similar results in terms
of intra-EEA emissions, economic and social impacts. Due to the short period of time during
which the policy options will be applicable, the difference in effect on CO2 emissions from
the aviation sector between the options is relatively small (2.26 million CO2 emissions per
year).
To ensure a smooth transition towards the post-2020 period, including by allowing ICAO to
finalize the remaining work to allow for the start of the GMBM in due time, option 1 is
preferred, i.e. continuation of the EU ETS for intra-EEA flights as in 2013 to 2016. This
option allows maintaining the current level of environmental ambition, results in the lowest
operating costs and price per RTK, and requires the lowest administrative effort. Its impacts
on the level playing field, as well as its social impacts, are, as is also the case for the other
two options, negligible. Finally, the EU ETS for intra-EEA flights has a compliance rate of
above 99% which shows its acceptance with all airlines (including the major US and China
carriers) that operate within the EEA.
Post 2020 period
The assessment shows significant differences between the options with regard to the climate
impact from intra-EEA flights:
Option 3 – the application of the GMBM – the analysis and conclusions will need to be
complemented in the light of further development on the implementation of the GMBM and
the risks identified can be better assessed. While the GMBM is meant to address international
emissions on a global scale, it will not by itself contribute to the EU's 2030 objective of
reducing emissions by at least 40% through domestic efforts, as set out in the EU's
commitment to the Paris Agreement based on its currently agreed basic features and nature..
Options 1 and 2 lead directly to significant emissions savings. The required emission savings
from intra-European aviation will be in line with the efforts of other sectors in the EU
economy. Furthermore, as airlines will surrender EU ETS allowances, the emissions from
intra-EEA flights will be offset by domestic emissions reductions within the EU.
Sub-option 2.1 is a hybrid between options 2 and 3 because airlines would have the same
obligation as under option 2 but could offset their emission growth after 2020 with
international credits instead of EU ETS allowances. This could lead to lower emission
reductions within the EU compared to options 1 and 2, and would mean that the contribution
of intra-EEA aviation would decrease at a time where all other sectors of the EU economy
would be required to intensify their efforts to meet the EU 2030 climate target.
With regard to the relationship to ICAO, option 0 – a return to the full scope of the EU ETS
covering all arriving and departing flights – would revive international tensions and most
likely hinder the introduction of the GMBM at the global level. The option 0 should therefore
be discarded. All other options resolve the main disagreement with international partners, i.e.
the coverage of emissions by the EU ETS outside the European airspace, because extra-EEA
flights will only be covered by the GMBM. As regards intra-EEA flights, options 1, 2, and
sub-option 2.1 are in line with the ICAO Resolution listing principles for market-based
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measures and build on the current EU ETS for intra-EEA flights that has been successfully
implemented. Option 3 – the implementation of the GMBM for intra-EEA flights – would
avoid any risk of criticism but this would come at a high environmental cost (as discussed
above).
The other economic and social impacts do not differ significantly between the post-2020
options.
Finally the analysis provided above will need to be reassessed ahead of the start of the
GMBM to take account of new developments as regards its implementation, including the
development of rules for eligibility of units and transparency. According to the Resolution
adopted at the 39
th
ICAO Assembly, SARPs on eligibility of units and monitoring, reporting
and verification must be adopted by 2018. Following that, states should start taking steps
towards the implementation of the GMBM. Other developments are also needed, such as a
registries system or setting up the relevant bodies for the governance of the GMBM.
Therefore, it can be concluded that for the post-2020 period no final decisions should be
made at this stage. As explained above, in order to facilitate the process towards the
operationalization of the GMBM option 0 should be discarded, so the intra-EEA scope could
become the default option. Once there is more clarity on the rules and actions taken by ICAO
and third countries to implement the GMBM, a report and review under the EU ETS
Directive should be undertaken.
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1719390_0062.png
Table 6-1. Comparison of the 2017-2020 policy options against effectiveness and
efficiency criteria
EFFECTIVENESS
Objectives
Objective 1
Environment
Policy option
Option
Option 1
Option 2
0
++
+
+
+
-
--
-
Objective 2
Economic
Objective 3
ICAO
relationship
Magnitude of impact: ++ strongly positive; + positive; – – strongly negative; – negative; ≈
marginal/neutral; ? uncertain; n.a. not applicable. Cost-effectiveness is assessed by
comparing costs and emisions reductions achieved.
Table 6-2. Comparison of the post-2020 policy options against effectiveness and
efficiency criteria
EFFECTIVENESS
Objectives
Objective 1
Environment
Policy option
Option
Option 1
Option 2
Option 2.1
Option 3
0 ++
+
+
-
60
--
61
-
--
+
++
Objective 2
Economic
Objective 3
ICAO
relationship
Magnitude of impact: ++ strongly positive; + positive; – – strongly negative; – negative; ≈
marginal/neutral; ? uncertain; n.a. not applicable. Cost-effectiveness is assessed by
comparing costs and emisions reductions achieved.
60
61
Can only be fully assessed once all details of the GMBM are known
Can only be fully assessed once all details of the GMBM are known
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1719390_0063.png
7. H
OW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED
?
The policy objectives identified in section 3 should be monitored through operational
objectives as defined in the table below. Operational objectives and respective indicators for
both the periods 2017-2020 and post-2020 can be defined jointly, as the nature of the policy
objectives is similar.
Table 7-1: Operational objectives
Policy
objectives
Objective
1:
Environm
ent
2017-2020
Address
aviation
emissions
to
meet
2020
targets
Post 2020
Address aviation
emissions
to
meet
2030
targets
Operational
objectives
Indicators
Aviation
emissions
Reductions
achieved in other
sectors
Sufficiently
reduce
aviation emissions or
contribute to EU (and
global) efforts with
reductions in other
Maximize global
sectors.
impact through
GMBM
Maintain
competitiveness,
including
reduced
administrative
burden
Contain costs.
Objective
2:
Economic
Maintain
competitiveness
including
reduced
administrative
burden
Units
prices
multiplied
by
Minimise divergence
between current and offset emissions
to
future
technical compared
aviation
implementation rules
operational costs
Adoption of ICAO Concrete
rules,
actual international
implementation
of developments
GMBM.
Compliance rates
No rejection of EU
measures
and
compliance with them.
Objective
3:
ICAO
Development
Implementation
and readiness of GMBM
for GMBM
Acceptance
of
Acceptance of EU measure
EU measure
The Commission will periodically assess the implementation and results of the chosen option.
This will be done on the basis of quantified data as regards objectives related to the
environmental and economic impacts, and from a more qualitative perspective as regards
other objectives, as specified below. The EU ETS implementation provides transparent
information that allow, by large, monitoring the abovementioned objectives; the GMBM is
expected to provide additional information, notably on global international aviation
emissions.
The general policy objective of ensuring the aviation sector's adequate contribution to
reducing the impacts of climate change and meting the corresponding climate targets will be
monitotred on a yearly basis through the information provided by compliance data under the
EU ETS and, once implemented, under the GMBM as well.
Under the EU ETS, every year, aircraft operators will report their emissions and surrender the
corresponding amount of allowances. Compliance actions take place electronically through
the Union Registry, which allows collecting individual and aggregated information. The
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registry also includes data on the allocation issued under the EU ETS. This data will easily
allow the monitoring:
(a) The evolution of aviation emissions covered by the EU ETS: the Union Registry
provides annual emission data, as registered by the aircraft operators.
(b) The contribution of aircraft operators to foster emission reductions in other ETS
sector. Apart from emissions data, the Union Registry also contains allocation data.
This allows calculating the amount of additional units purchased by aircraft operators.
(c) The economic impacts of the system. As explained, the registry data allows
calculating the amount of units companies would have to purchase. Unit prices are
available through trading platforms as well as, in the case of allowances, from the
periodic auctions that take place regularly throughout the year. This information
makes possible estimating the actual economic impact of the system for aircraft
operators.
(d) Compliance data.
Similar mechanisms, including a registry, are expected to be in place for the implementation
of the GMBM, which should provide information on its functioning at global level.
The data mentioned above, available from the Union Registry, will allow under both periods
the evaluation of the extent to which the aviation sector is contributing to meet the EU
climate targets either by reducing emissions or through the purchase of units from other
sectors under the EU ETS cap for stationary installations, as well as the economic impacts it
represents. The Commission will periodically assess those aspects in its reports, including its
annual Carbon Market Report.
The policy objectives of enabling the development of the GMBM (2017-2020) or facilitating
its implementation from 2021 to maximize the global mitigation impact (post-2020), as well
as to ensure the international acceptability of the EU ETS are of a different nature.
Monitoring these objectives will require a qualitative assessment based on factual
information, rather than a quantitative one. This will require the Commission to closely
follow the international developments in the coming years, including the adoption of relevant
Standards and Recommended Practices by ICAO. In this light, it is recommended that the
Commission reports on these developments to the European Parliament and the Council, and
makes proposals, as appropriate, to adapt to them.
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1719390_0065.png
A
NNEX
1
P
ROCEDURAL INFORMATION
1. Organisation and Timing
The Directorate-General (DG) for Climate Action was leading the preparation of this
initiative and the work on the impact assessment in the European Commission.
An inter-service steering group (ISG), chaired by DG Climate Action and the Secretariat-
General was established in February 2016 for preparing this initiative. The ISG met four
times in the period from February 2016 to October 2016. The following Directorates-General
(DGs) participated in the work of the group: Secretariat-General (SG), Legal Service (SJ),
EEAS, DG GROW, DG MOVE, DG ENER, DG ENV, RTD, DG REGIO, DG FISMA and
DG TRADE.
An indicative roadmap was adopted in September 2015.
An online public consultation took place from 7 March to 30 May 2016 (see Annex 2).
2.
Consultation of the Regulatory Scrutiny Board
The Regulatory Scrutiny Board received the draft version of the present impact assessment
report on 27 October 2016 and following the Board meeting on 23 November 2016 issued a
positive opinion on 25 November 2016. The Board made several recommendations. Those
were addressed in the revised IA report as follows:
RSB recommendations
The report should explain why there is a need
to act now for the post-2020 period, given that
several important features of the GMBM are
still unknown. It should also clarify the
timeline of the various decisions to be taken
and the possible need for review clauses in the
various options.
The report should better justify or reconsider its
choice of baseline, which appears unrealistic
and which the report in fact recommends
discarding as a viable option.
The report should more thoroughly explain the
legal compatibility between the envisioned
GMBM and the EU ETS if both are to apply in
parallel.
The report should clarify how each option
would contribute to reaching the 2030 EU
climate objectives and the Paris Agreement,
and how other parallel policies contribute. The
analysis should present the scale of the aviation
Modification of the IA report
Subsection 1.2, on the problem definition,
has been further developed to explain why a
first assessment of the post-2020 scenario has
been carried out. Section 6.7 of the impact
assessment clarifies that no final decision is
made on the post-2020 period. A new review
will have to be carried out before
implementing the GMBM. The timeline is
also further clarified.
The choice of the baseline has been better
justified in section 4, explaining why the
baseline (full-scope) corresponds to a "do-
nothing" scenario.
The structure of Section 5.5.2, on legal issues
and the relationship with ICAO, has been
reviewed to improve clarity and a specific
box addressing the RSB recommendation has
been added.
The EU 2030 climate objectives and the
commitments under the Paris Agreement
have been further explained under sections
1.2 and 1.3, including by clarifying the role
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1719390_0066.png
ETS, and explain what costs the options would
of aviation. A specific subsection 6.1.3 has
impose on other sectors in the ETS system.
been included to clarify how the different
post-2020 options contribute to these goals.
Section 5.1 includes a specific subsection on
the impacts on other ETS sectors where
additional explanations have been introduced
to address the RSB comment.
The report should explain the differences in
cost and benefit estimates that derive from the
two quantitative models used and the
implications of these results for the impacts and
comparison of options.
The report should reflect stakeholders' views in
a comprehensive and balanced way throughout
the report, and the report should explain why it
does not consider some stakeholder favoured
options.
Section 5 and Annex 4 have been completed
with more information on the tools (AERO
and PRIMES) used to model quantitative
impacts and the implications this has.
New content has been added throughout
section 4, explaining which options are
favoured by different stakeholders, and
explain why some have been discarded.
3. Evidence and external expertise used
The underlying econometric modelling and analysis in this study was carried out by Ricardo-
AEA Ltd. The modelling is based on the latest version of the AERO-MS tool, which uses
flight operations for 2010 as its baseline and it includes scenario years of 2020, 2030 and
2040. See Annex 4 for further details on the model used. The results on direct environmental
impacts (i.e. emissions from that aviation sector), the results were checked against data
resulting from EUROCONTROL analysis on emissions forecasts.
As regards GHG emission forecasts/projections referred to in Annex 5, this study used the
United Nations Enironmental Programme’s Emission Gap Report 2015 and the fifth
Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) in relation to
general international emissions forecast. For emissions from intenational aviation
specifically, the study relied on the 2016 ICAO Environmental Report. In relation to overall
EU GHG projections in Annex 5, reports from the European Environmental Agency were
used as a basis.
Any GHG emission projections are always accompanied by uncertainties resulting from
various sources, such as social, economic and technical trends.
Moreover, the study heavily relied on the previous Impact Assessment from 2013, in relation
to the emission reduction potential from technical and operational measures, impact on
tourism, as well as in relation to small emitters.
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1719390_0067.png
A
NNEX
2
S
TAKEHOLDER CONSULTATION
1. Process and quantitative results of the public consultation
The European Commission organized a public online consultation from 7 March to 30 May
2016, i.e. 12 weeks on market-based measures to reduce the climate change impact from
international aviation
62
, which sought input on questions concerning the policy options
currently being developed at the International Civil Aviation Organisation (ICAO) and in
relation to the EU emissions trading system (EU ETS). The public consultation was carried
out using the “General principles and minimum standards for consultation of interested
parties by the Commission”.
While the consultation was open to everyone, it received responses in particular from
individuals/private persons, civil society organisations, private enterprises, professional
organisations, international organisations and public authorities.
The public consultation consisted of a questionnaire in English with eight main questions that
combined multiple choices with space limited to 4 000 characters to explain the choices
made. Respondents were also given the opportunity to provide further comments at the end of
the questionnaire. This report follows the structure of the eight main questions and the
possibility for general comments in the consultation questionnaire. The individual
stakeholder submissions can be downloaded on the consultation website.
2. Stakeholders' participation in the public consultation
The Commission received 108 formal replies from a broad spectrum of stakeholders (see
Figure II-1),
as shown in
Table II-1,
however no responses were received from airports, the
aircraft manufacturing industry or technology suppliers.
Table II-1: Classification of stakeholders responding to the questionnaire
Stakeholder category
Number of responses
% of responses
As an individual / private 31
29%
person
Civil society organisation
22
20%
Private enterprise
16
15%
Professional organisation
15
14%
International organisation
9
8%
Public authority
8
7%
Other
6
6%
Academic/research
1
1%
institution
Grand Total
108
100%
Notes: Other includes: an airline representative, a European industry association, an interest
group (university lecturer and students), a non-governmental organisation - airline trade
association, an organisation representing the outermost regions of the EU and a trade
association.
62
The results of the public consultation are available at
http://ec.europa.eu/clima/consultations/articles/0029_en.htm
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A number of coordinated responses were received, indicating that respondents followed a
template for answers. Four different templates were identified from the analysis of the
sample, as shown in
Figure 0-1.
However, since respondents were free to adapt the answers
to correspond with their own views all responses have been analysed individually in the
following sections.
Figure 0-1: Distribution of the responses by stakeholder group - showing coordinated
responses
As an individual / private person
Civil society organisation
Private enterprise
Professional organisation
International organisation
Public authority
Other
Academic/research institution
0
Unique responses
Coordinated responses 3
5
10
15
20
25
30
35
Coordinated responses 1
Coordinated responses 4
Coordinated responses 2
A total of 24 responses were received from airlines or aviation associations. However, they
identified themselves in a range of stakeholder groups – private enterprise (10), professional
organisations (7), international organisation (6) and other (1). The majority of this report
considers responses by the stakeholder categories that were listed in the survey (as shown in
Figure 0-1),
however, where appropriate, the responses given by the group of airlines and
aviation associations are considered as well.
Responses were received from respondents residing in, or organisations based in, 13 EU
Member States (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany,
Hungary, Italy, Netherlands, Portugal, Spain and the United Kingdom), while responses were
also received from other non-EU locations such as Hong Kong, Kenya, Lebanon, Norway,
Switzerland, United Arab Emirates and the United States. The distribution of responses by
country of residence (for individuals) or by country of establishment (for organisations) is
shown in
Figure 0-2.
In total, 44% of the responses were from Austria or Germany, while a
high proportion of responses (16%) were also received from organisations located in
Belgium. A total of 31 responses were received from individuals; of these, 27 (87%) were
from Austria and Germany.
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Figure 0-2: Distribution of the responses by country of residence/establishment
Austria
Belgium
France
Netherlands
Spain
Finland
Czech Republic
Denmark
0
5
10
15
20
25
30
Unique responses
Coordinated responses 2
Coordinated responses 1
Coordinated responses 3
Notes: Other includes: Hong Kong, Kenya, Lebanon, Norway, Switzerland, United Arab
Emirates and United States
3.
a.
Responses to the individual questions
Mitigation efforts from international aviation
Overall, most stakeholder groups agreed that ambitious targets for emissions reductions in
international aviation should be agreed and that a MBM is one way to reduce emissions from
international aviation. However, there were differences in relation to the desirable level of
ambition and that appropriate mechanisms to reduce emissions. These are summarised in the
following paragraphs.
Public authorities
considered that the ambition level for emissions reductions in
international aviation needs to be raised in order to limit the global temperature rise to below
2 °C. The responses consistently showed support for pursuing action through ICAO and most
mentioned the need for net emissions not to exceed 2020 levels (CNG2020).
Civil society organisations
considered that a more ambitious approach is required and were
strongly in favour of increasingly ambitious targets over time, in line with achieving the 1.5
ºC Paris goal. As aviation emissions are projected to continue to grow, in-sector emissions
reductions were seen to be important. Some organisations were of the opinion that emissions
from flights to or from EU airports should not be offset by reductions in other sectors.
Instead, improvements to technology and operations should be incentivised. Regarding the
GMBM, six of the 22 organisations in the category recommended that aviation should pay for
all external costs, not just those above 2020 levels and ten organisations considered that
ICAO policies must not limit more ambitious policies by states and regions. Some
organisations also felt that state aid and fuel subsidies should be withdrawn, while demand
management (e.g. operating restrictions), Value Added Tax (VAT) and ticket taxes should be
introduced. Additionally, most organisations believed that it is necessary to address the non-
CO
2
impacts from aircraft, such as emissions of NOx and water vapour at high altitudes.
The responses from
individuals
similarly supported an ambitious approach. In particular,
German and Austrian individuals emphasised that a business as usual approach with minor
improvements will not be sufficient. Instead they proposed that a ‘polluter-pays’ principle
should be supervised by EU authorities, with closer monitoring of emissions necessary. Other
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comments included suggestions that offers for cheap flights should not be allowed and that
airlines and fuel should not be subsidised. Individuals from other countries had a similar
vision for international aviation in the future. For example, one individual suggested that
aviation emissions should be included from all flights, that airlines should pay VAT on
tickets and aviation fuel and that airports and airlines should not receive state aid. Meanwhile,
another one individual suggested that the IATA 2050 targets should be converted into a
binding commitment.
Private enterprises, professional organisations and international organisations
responding to the questionnaire mainly included airlines, aviation associations and fuel
manufacturers. These respondents supported the ICAO objective to cap the growth of net
CO
2
emissions from international aviation from 2020, along with the goal to halve net CO
2
emissions by 2050 compared to 2005.
Airlines
commented that efforts to improve efficiency
should be continued, while the potential of biofuels was also highlighted by some of them.
There were calls for governments to reach an agreement on a single GMBM to replace the
EU ETS for aviation. A global measure would limit the administrative complexity and ease
the transition from the EU ETS legislation. However, it was noted that emissions should be
reduced in line with what is economically and technically feasible and that a MBM should
not hinder the growth of the aviation industry, distort competition or put unjustified burdens
on airlines.
Responses from
other types of stakeholders
generally considered that efforts must be made
to achieve emissions reductions in international aviation. An Austrian research institution,
was of the opinion that tax exemptions (particularly with regards to value added and mineral
oil tax) need to be phased out to support decarbonisation efforts. Meanwhile, a university
lecturer and group of students supported ICAO’s plans for a GMBM. However, it was
recognised that ambitious limits and strict penalties must be set to ensure its effectiveness – at
a minimum these limits could be the projected 2020 emissions level.
b.
Elements of a robust GMBM
A number of points were frequently listed by respondents in all stakeholder groups
concerning which elements should emerge from the 2016 ICAO Assembly to provide for the
implementation of a robust GMBM by 2020. These are as follows:
The GMBM should be a global system that does not discriminate between airlines on
the same route to avoid introducing competitive distortion.
It should be based on a robust MRV system that is consistent with United Nations
Framework Convention on Climate Change (UNFCCC) guidelines to avoid double
counting. The MRV system should begin as soon as is practicable.
The GMBM should be clear and environmentally effective. It should also be easy to
implement to reduce the administrative burden.
A review of the additional points raised by each stakeholder group and any differences in
opinion is provided below.
Public authorities
noted that the measure should be regularly reviewed to ensure that the
objectives of the Paris agreement are achieved. Most respondents were of the opinion that for
the measure to have good environmental integrity, the criteria for offsetting units must be
clear and transparent and should only permit units with high environmental quality. Half of
the respondents in this group also stated that the Special Circumstances and Respective
Capabilities (SCRC) principle should be accommodated.
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Civil society organisations
consistently stated that a legally binding agreement with strong
political commitment should come into force. Most civil society organisations were of the
opinion that a substantially more ambitious goal than the CNG2020 target is required,
although others believe CNG2020 is a potential starting point. In relation to the allocation of
emissions allowances, organisations consistently stated that these should be distributed
equitably and that the allocation of free allowances should only occur in special
circumstances. Six of the 22 respondents in this category also emphasised that more must be
done to encourage in-sector emissions reductions, while five organisations suggested that
routes between developed countries should be subject to more ambitious climate policies.
Individuals
generally shared similar views to civil society organisations; this appears to be
largely related to the large number of coordinated responses. In particular, individuals