The European Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI) adopted by a large majority (66 votes in favour, 9 against, and 12 abstentions) on Tuesday 17 May the draft report by Sunčana Glavak (EPP, Croatia) on the review of the European Union Emissions Trading System (ETS) as regards aviation. With this vote, the ENVI Committee is in favour of eliminating, in 2024, 50% of the free emission allowances allocated to this sector.
In the context of the ETS review, the European Commission had proposed to phase out free allowances in the aviation sector by 2027 (see EUROPE 12764/10).
According to the institution’s forecast, 25% of free allowances should be auctioned in 2024, 50% in 2025, 75% in 2026 and 100% in 2027.
MEPs propose that 50% of the free allowances be auctioned in 2024. This rate should then be increased to 100% starting from 1 January 2025. However, there is an exception to the approach adopted by MEPs.
During the period from 1 January 2024 to 31 December 2029, 20 million allowances would be set aside to be allocated in the same way as a ‘contract for difference’, covering the remaining price difference between fossil kerosene and sustainable aviation fuels, in proportion to the amount of sustainable aviation fuels used. The aim is to encourage airlines to switch to sustainable fuels.
In addition, a further 20 million allowances should be set aside for the same period when flights from the European Economic Area (EEA) to third countries come within the scope of the ETS.
The Commission should ensure that 70% of these allowances are allocated specifically to the use of synthetic aviation fuels, with priority given to renewable fuels of non-biological origin (RFNBO).
Scope
Currently, flights to and from countries outside the EEA are not covered by the ETS thanks to a temporary derogation (‘stop the clock’).
While the Commission plans to apply the international system CORSIA (‘carbon offset and reduction scheme for international aviation’) for these flights, MEPs want to extend the ETS to all flights departing from an aerodrome located in the EEA from 30 April of the year after the revised rules enter into force.
In order to avoid double counting of emissions for these flights, the financial value of expenditure on carbon credits used for CORSIA for flights from the EEA to third countries that implement CORSIA should be deductible from financial obligations under the ETS, the report says.
For international flights arriving at an aerodrome located in the EEA, MEPs propose that the Commission present a report on the effectiveness of CORSIA by 31 December 2027.
If this report concludes that CORSIA is insufficient to meet the EU’s climate objectives, then it should be followed by a legislative proposal to end the ‘stop the clock’ derogation.
MEPs also want to limit the derogation from the ETS for flights between an outermost region of a Member State and that Member State to the year 2027 (as opposed to 2030 in the Commission’s proposal).
Use of revenues
Regarding the use of revenues from the auctioning of allowances, the report envisages that 75% of the proceeds would be allocated to the Climate Investment Fund - the fund that would replace the current Innovation Fund - to support, among other things, the deployment of new technologies to decarbonise aviation, while 15% would go to international climate finance.
Emissions excluding CO2
The report also states that the Commission should put in place, within 6 months of the entry into force of the new rules, a system for monitoring, reporting and verifying non-CO2 emissions from aviation (water vapour, nitrogen oxides, sulphur dioxide, etc.).
The institution would then be required to present a legislative proposal by 2027 to extend the ETS to these emissions. (Original version in French by Damien Genicot)