Business aviation and the environment – Emissions Trading System – “Stop the Clock”
What is the Emissions Trading System (ETS)?
The EU emissions trading system (EU ETS) is designed to combat climate change and cost-effectively reduce greenhouse gas emissions. It is the world’s first – and largest – major carbon market.
The EU ETS works on the ‘cap and trade’ principle. A cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall.
Within the cap, companies receive or buy emission allowances which they can trade with one another as needed. They can also buy a limited amount of international credits from emission-saving projects around the world.
After each year a company must ensure the allowances cover all emissions, otherwise heavy fines are imposed. If a company reduces its emissions, it can keep the spare allowances to cover its future needs, or sell them to another company that is short of allowances.
ETS in Aviation – “Stop the Clock”
Initially the EU ETS included only land based industrial installations. From 1 January 2012 aviation activities of aircraft operators that operate flights arriving at and departing from European aerodromes are also included in the scheme.
In June 2017, the EU member states agreed a common negotiating position ahead of talks with the European Parliament on existing regulations concerning the Aviation EU ETS and its post-2020 future.
The position supports European Commission proposals, including to extend the derogation – known as ‘stop-the-clock’ – for extra-European Economic Area (EEA) flights until the end of the current phase of the EU ETS in 2020.
Therefore, the ETS is postponed until 31 December 2023, when the first phase of the International Civil Aviation Organisation (ICAO) Carbon Reduction and Offsetting Scheme for International Aviation (CORSIA) scheme will kick in.
The European Commission will review the legislation with a view to include the CORSIA scheme in the EU Emission Trading System (ETS), so intra-EU and intercontinental flights are covered by a single system.