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03
sep

Newsletter September 2013 – Newsletter FLO – Aviation

Arthur Flieger, Attorney at law Flieger Law Office bvba with the cooperation of Stijn Brusseleers, Attorney at law Flieger Law office bvba

ABOUT THE POLICY OPTIONS FOR MARKET-BASED MEASURES TO REDUCE THE CLIMATE CHANGE IMPACT FROM INTERNATIONAL AVIATION – EU ETS

I. Requirement for Global response
The aviation sector has a strong international character. Carbon dioxide (CO2) emissions from international aviation are expected to grow by at least 70% from 2005 levels by 2020. A global approach to addressing these rapidly growing emissions would be the preferred and most effective way of reducing these emissions.

The EU remains committed to seeking multilateral progress. For more than 15 years, the EU has been involved in the discussions aimed at tackling aviation emissions through a global agreement. These discussions have been carried out under the United Nations, in particular in ICAO

II. EU ETS: Inclusion of aviation
The EU ETS is a main policy tool of the EU for reducing greenhouse gas emissions. It sets a mandatory cap on emissions from the sectors included. Companies within these sectors need to cover their emission with allowances provided by government for free or through auctioning. Participants can trade their allowances among each other. This facilitates cost effective emissions reductions.

On European level legislation was adopted that entered into force early 2009 making airlines liable for their emissions from 2012. The legislation applies to EU and non-EU airlines alike.  Emissions from flights to and from Iceland, Lichtenstein and Norway ( EEA ) are also covered. Including aviation in the ETS, Europe became the first region in the world to introduce market-based measures ( MBM’s ) to address emissions in the sector.

 

To support the outcome of the November 2012 ICAO Council, in particular the launch of a high level group on climate change ( HGCC ), the EU made a year derogation from the application of the EU ETS compliance obligations to inter-continental flights ( stopping of the clock ). In this way Europe tried to demonstrate its commitment to progress globally and a meaningful outcome at the 2013 ICAO Assembly. Decision No 377/2013/EU of the European Parliament and of the Council of 24 April 2013 derogating temporarily from Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community.

One will note that “stopping of the  clock” is a time-bound temporary measure. Any adjustment to the EU  ETS thereafter will depend on progress made at the 2013 ICAO Assembly

III. Progress at the 2013 ICAO Assembly
ICAO Assemblies take place every 3 years and provide a forum by which the 191 Member States of the ICAO agree on the way forward in the form of Assembly Resolutions. At its last General Assembly in 2010, ICAO Member States adopted Assembly Resolution A37-19, containing an annex that lists 15 guiding principles for the design and implementation of national and regional MBM’s for international aviation ( such as the EU ETS ). A framework of guiding principles for MBM’s could make a significant contribution to the reduction of national, regional and global CO2 aviation emissions. At the ICAO Council meeting of November 2012, further promising steps have been taken towards the development of a global market-based measure that might complement or replace national and regional MBM’s.

Later this year ICAO Member States will convene for the 38th General Assembly in Montreal ( 24 September – 4 October). The EU expects this forum to bring about the long-expected progress on addressing the climate change impacts of international aviation. At the most recent G8 summit on 18 June 2013, the leaders of the G8 confirmed they will pursue ambitious and transparent action, both domestically and internationally, to tackle climate change, including calling for agreement at the ICAO Assembly in September 2013 on an ambitious package related to both market-based and non-market based measures to address rising aviation emissions.

To facilitate progress throughout 2013, a High-level Group on Climate Change was set up to work on a number of key climate change issues on the agenda for the ICAO Assembly. HGCC work on market-related measures is centred on two strands of work: the ICAO Framework for Market Based Measures and a Global Market Based Measure.

IV. ICAO Framework
The ICAO Framework for MBM’s should elaborate principles, design elements and guidance to ensure the consistent application of national and regional MBM’s to international aviation. 

One key outstanding issue is the geographic scope of such national or regional systems. A resolution on geographic scope would recommend maximum coverage of international aviation emissions by each national or regional system in place. By the same token, it would determine the proportion of international aviation emissions left uncovered by national and regional systems even if all States put measures in place.

Several options are currently discussed in ICAO with regard to the geographical scope of national and regional systems in the context of a MBM Framework. The table below provides an overview of the different options and their estimated coverage.

 

                       Options Maximum potential coverage of international civil aviation CO2 emissions if all States implement measures
Arriving and departing flights within national airspace                               22%
Flights arriving in, departing from and flying over national airspace                               55%
Flights within the Flight Information Regions (FIR’s), including oceanic FIR’s                              100% 
Flights departing from an aerodrome in a State                              100%

Source: Analysis by Manchester Metropolitan University as presented in the submission by the 3 EU Member States represented in HGCC

 

With regard to the EU ETS, the different options would have the following estimated impacts on the coverage of emissions compared to the current scope of the EU ETS that covers emissions from all arriving and departing flights in Europe:

 

                        Options Estimated coverage of CO2 emissions from aviation compared to current scope of EU ETS
Arriving and departing flights within national airspace of each EEA Member State                        10 to 20%
Arriving and departing flights within the aggregated regional airspace ( or FIR’s) of the EEA Member States                        35 to 50%
Flights departing from aerodromes in the EEA Member States                        around 65%

 V. ICAO Global MBM scheme
There exists broad agreement on the necessity and desirability of market-based measures in order to achieve agreed sector goals for mitigating growing CO2 emissions. The aviation industry in its recent IATA Resolution (see below) supports the role of market based measures and the adoption of a single global MBM. Qualitative and quantitative analyses are being carried out by the ICAO Secretariat with the assistance of a group of experts with a view to assessing the technical feasibility of different MBM options, including offsetting and emissions trading.

The Roadmap for a global MBM proposed by EU Member States is the following:
a) Assessment of, and agreement to, the most effective means of allocating emissions limits/responsibilities in a global MBM;
b) Agreement to the effective and non-distortionary means of taking the special circumstances and respective capabilities of developing states into account within the design of a global MBM.
c) Agreement to establish a harmonised monitoring, reporting and verification system for a global MBM;
d) Assessment of, and agreement to, the effective means of administering a global MBM;
e) Agreement to the quality criteria for offsets; and
f) Agreement to a timetable and legal mechanisms for the introduction of a global MBM.

The completed roadmap with the elements listed above should be endorsed by the 39th ICAO Assembly. In parallel, the ICAO Council should develop, as a matter of priority, a common set of monitoring, reporting, and verification standards for measuring greenhouse gas emissions from international aviation.

The international Air Transport Association’s (IATA) Annual General Meeting on 3 June 2013 approved a resolution with an overwhelming majority in favour of States agreeing a global market-based measure. IATA encourages governments to adopt at the ICAO Assembly in September 2013 a commonly agreed, single global MBM Mechanism to be applied to offsetting the industry’s growth in emissions post-2010.

It is encouraging that the industry has for the first time agreed on supporting design principles for a global MBM, and acknowledged that technical and operational measures, though important, are simply not enough to achieve the emission reduction objectives. The EU supports the aviation industry initiative for adoption of a global MBM and remains committed to keeping the momentum and reaching an agreement at the 2013 ICAO Assembly on a binding timetable for the development and implementation of a global MBM.

VI. Remarks in respect to small aircraft operators
Certain flights are exempt from the Community system. According to paragraph (j) of Annex I to the EU ETS Directive, certain flights operated by a commercial air transport operator are exempt from the provisions of the EU ETS ( de minimis exemption ). The conditions are the following:

– the operator is a commercial air transport operator; AND
– the operator either operated less than 243 flights per three consecutive period of four months (Jan-Apr, May-Aug, Sep-Dec) or emitted less than 10,000 tonnes of CO2 annually.

This exemption applies to commercial air transport operators. Non-commercial aircraft operators below the threshold are covered by the EU ETS. Small emitters can take advantage of simplified procedures to monitor their emissions. Recently, the threshold to make use of the simplified procedures has been increased to 25000 tonnes of emissions per year.  (Article 54 of Commission Regulation No 601/2012 of 21 June 2012 on the monitoring and reporting of greenhouse gas emissions).

For further information and comment, please contact Arthur Flieger at Flieger@fliegerlaw.com, Website: www.fliegerlaw.com, telephone: +32 3 238 77 66

 

Copyright A. Flieger
This publication is defined to provide accurate and authoritative information in regard to the subject matter covered. It is transmitted with the understanding that the publisher is not engaged in rendering legal, or any other professional services. If legal advice or other expert assistance is required, professional services should be sought. You can always contact A. Flieger at flieger@fliegerlaw.com.