The French Presidency of the Council of the European Union sent a non-paper to Member States on Tuesday 4 January seeking their views on certain European Commission proposals for the revision of the EU Aviation Emissions Trading System (ETS).
On 14 July 2021, the Commission had published two proposals on the ETS and aviation (see EUROPE 12764/10): - a proposal amending the ETS Directive (2003/87) regarding the rules applicable to aviation; - a proposal for a decision on the notification of the ‘Carbon Offsetting and Reduction Scheme for International Aviation’ (CORSIA) established by the International Civil Aviation Organization (ICAO).
The French Presidency has identified three issues related to these proposals, on which it is consulting the Member States before drafting a compromise text.
For flights to and from third countries and those between two third countries by EU-based airlines, the Commission proposed to introduce “appropriate provisions” linked to the CORSIA system.
While these flights ‘outside the European Economic Area (EEA)’ currently benefit from a ‘stop the clock’ derogation from the ETS until 31 December 2023, the Commission wants operators to be required to offset the emissions from these flights with corresponding carbon offsets when they reach levels higher than those in 2019.
The ICAO Council decided in June 2020 that the 2019 aviation emissions, rather than the average of the 2019 and 2020 emissions, should be used as the baseline for calculating offset requirements by aircraft operators for the years 2021-2023 (see EUROPE 12518/5).
The reason: to take into account the large decrease in aviation emissions that occurred in 2020 due to the Covid-19 pandemic.
However, according to the Commission, “it is very likely that aviation emissions will not exceed their collective levels from 2019 in 2021”.
Its proposal for a CORSIA-related decision therefore provides that, on the basis of air traffic forecasts to be confirmed in 2022, EU Member States shall notify their operators that their annual compensation needs are equal to zero in 2021, due to Covid-19.
According to Paris, this proposal “does not follow the calculation method defined in CORSIA”.
The three parameters needed for the calculation are currently unknown, the French document points out: (1) actual operator emissions need to be compared with the verified emissions that will be available to Member States in April 2022; (2) the Sector’s Growth Factor (SGF) will be published by ICAO in October 2022; (3) the decision of the ICAO Council to use 2019 as the baseline is still to be approved by the ICAO Assembly in October 2022.
The French Presidency added: “an EU decision that deviates from the methodology defined by ICAO (...) and pre-determines that operators’ compensation obligations are equal to zero in 2021, would disregard the possibility of negative compensation obligations for 2021 and would thus be likely to overestimate the total individual compensation obligations for the pilot phase of CORSIA” (2021-2023).
The CORSIA system allows for negative offset obligations in a given year and for this negative value to be carried forward throughout the CORSIA compliance cycle, which lasts three years.
Timing issue
Another problem identified by the French Presidency concerns the timetable.
As stated in the text of the Commission’s proposal for a decision, it needs to enter into force quickly in order to ensure “legal certainty for national authorities and aircraft operators with regard to CORSIA compensation for the year 2021”.
However, the three missing parameters identified by Paris will not be available until October 2022 at the latest. Furthermore, it is not possible to know when the revision of the ETS Directive for Aviation (which implements the other CORSIA obligations and related implementing and delegated acts) will be adopted.
In the meantime, an EU decision allowing States to notify operators of their offset obligations will have to be done annually, calculating offset requirements according to an ICAO methodology that does not change until 2024 emissions.
Paris therefore proposes to adopt a decision applicable over a period of three years in order to give “legal certainty throughout the pilot phase of CORSIA and until the revision of the ETS Directive for Aviation is adopted”.
Scope of application
Finally, the Presidency notes that the Commission’s proposal for a decision “is silent” on the scope for international flights covered by CORSIA compensation obligations.
Therefore, it proposes two options: define the scope in accordance with the standards and recommended practices under CORSIA; define the scope in accordance with the proposed revision of the Aviation ETS, i.e. not apply CORSIA for international intra-EU flights.
See the French Presidency document (in French): https://bit.ly/33dofFq (Original version in French by Damien Genicot)