Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation

Summary:

In July 2021, the European Commission presented the Fit-for-55 (FF55) legislative package which is designed to implement the enhanced EU climate target of at least a net 55% greenhouse gas emission reduction in 2030, relative to 1990 emission levels. The FF55 package includes four proposals that directly affect the aviation sector:

• the revision of the EU Emission Trading System (EU ETS) for aviation, including the introduction of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) for European aviation;
• the ReFuel EU aviation regulation for a blending mandate of Sustainable Aviation Fuels (SAFs);
• the revision of the Renewable Energy Directive (RED); and
• the recast of the Energy Tax Directive (ETD).

This study relates to the revision of the EU ETS for aviation also taking into account CORSIA. Aviation was brought into the EU ETS in 2012. Originally the EU ETS covered all flights to and from airports in Member States of the European Economic Area (EEA). A number of countries from outside the EEA strongly disagreed that aircraft operators which are not based in the EEA were also subject to the EU ETS for the flights between non-EEA and EEA Member States. In 2013 the scope of flights subject to the EU ETS was temporarily reduced to only flights between and within EEA Member States (referred to as ‘intra EEA flights’). The European Court of Justice stipulating that the EU was in its right to apply the EU ETS to flights outside the European Union.

The reduction of scope was also adopted in order to provide time to ICAO to agree on a global Market Based Measure. During the ICAO Assembly in October 2016 a resolution3 was adopted to implement a global Market Based Measure, called the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which aims to stabilise net emissions of international aviation at 2020 levels. This is referred to as carbon neutral growth 2020 (CNG2020). CORSIA requires airlines to offset their emissions on international routes above the baseline level. The baseline was initially based on an average of 2019-2020 emissions, but because of COVID-19 was reduced to 2019 levels for the pilot phase. CORSIA’s pilot phase started in 2021 and ICAO Member States can voluntarily participate until 2027. From 2027 onwards CORSIA is supposed to be mandatory for all ICAO Member States, except for Least Developed Countries, Small Island Developing States and Landlocked Developing Countries and states that have a share of international aviation activities in Revenue Tonne Km (RTK) below 0.5% of total RTKs. CORSIA applies to all international flights between participating ICAO Member States. All EEA Member States indicated their intention to join CORSIA during the pilot phase but without prejudice to the legislative talks to modify the EU ETS.

As part of the FF55 package the EC has proposed to retain the EU ETS for intra EEA flights and that CORSIA will apply to flights between the EEA and ICAO Member States outside the EEA which have also signed up to CORSIA or have to join CORSIA in the mandatory phase from 2027 onwards. This study will assess the environmental and economic impacts of two alternative policy scenarios for the EC proposal, whereby these impacts are compared with the impacts of the EC proposal. For the study use is made of the AERO-MS.

Transport & Environment: Press Release, 02/06/2022: More ambitious European carbon market could slash aviation emissions by an extra 53% https://www.transportenvironment.org/discover/more-ambitious-european-carbon-market-could-slash-aviation-emissions-by-an-extra-53/

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