UPDATE 1-EEX to launch EU aviation carbon permits in April

The European Energy Exchange (EEX) on Tuesday announced it would launch a derivatives market for European Union carbon permits for airlines in April and a spot market by mid-year.

“With this step EEX makes an active contribution to the further development of EU emissions trading and opens its market for a new group of participants,” the EEX said in a statement.

As of Jan. 1 this year, all airlines flying to and from Europe have to cover their carbon dioxide emissions with emission allowances.

So-called EU Aviation Allowances (EUAA) can only be used by airlines to comply with the EU’s emissions trading scheme, the world’s biggest carbon market.

Critics of the scheme, which covers around half of the 27-nation bloc’s carbon dioxide emissions, include non-EU countries such as China, India and the United States.

They argue the EU is exceeding its legal jurisdiction by calculating the carbon cost over the whole flight, not just within Europe. In December, Europe’s highest court found that the EU plan was within international law.

China’s Foreign Ministry said on Tuesday it hoped talks with the EU could resolve a dispute over the region’s airline emissions fee scheme. A day earlier China said its airlines were banned from participating in the carbon scheme.

Leipzig-based EEX is not alone in offering trade in EUAAs. Last month, commodity Exchange Bratislava (CEB) said it would launch trade in EU aviation emissions permits before the end of February.

Henrik Hasselknippe, a managing director at the Green Exchange (GreenX), said he was following the developments: “We will launch the relevant products in due time.”

He was unable to provide specific details on the timing.

“It is encouraging to see the momentum building for the aviation emissions market, although we do note that there are still some uncertainties on the international level,” he told Reuters.

London-based ICE Futures Europe accounts for about 90 percent of all traded volume in EU carbon permits and U.N.-backed offset credits.

A spokesperson from ICE Futures Europe was not immediately available for comment.