The European Commission today presented a plan for reducing air travel’s growing contribution to climate change. Airplanes are an important and increasing source of greenhouse gas emissions that are causing global warming. For example, a return flight for two from Amsterdam to the Thai resort of Phuket produces considerably more of the greenhouse gas carbon dioxide (CO2) than the average new car does in a whole year. In a Communication, the Commission says the most promising way to tackle aviation emissions is to bring aircraft operators into the EU’s Greenhouse Gas Emissions Trading Scheme (ETS). The ETS sets an overall cap on greenhouse gas emissions, within which participating operators can buy and sell emission allowances as needed. This would create a permanent incentive for airlines to minimise their emissions.
Environment Commissioner Stavros Dimas said: “The boom in flying is bringing with it a rapid rise in greenhouse gas emissions. Extending emissions trading to the aviation sector will limit these emissions and ensure that aviation, like all other sectors, contribute to reducing the harmful greenhouse gases. Through emissions trading, airlines will be able to do so at the least possible costs.”
Vice President and Commissioner for Transport Jacques Barrot added: “There is a growing consensus in the aviation sector that emissions trading represents the best way forward to cut greenhouse gas emissions”.
Aviation’s contribution to climate change
Aviation’s share of overall EU greenhouse gas emissions is still modest at about 3%, but its emissions are growing faster than any other sector and risk undermining progress achieved through emission cuts in other areas of the economy. EU emissions from international flights grew by 73% from 1990 to 2003. This increase could widen to 150% by 2012 unless action is taken. Such growth would cancel out more than a quarter of the 8% reduction in total greenhouse gas emissions that the Kyoto Protocol requires the EU-15 to achieve between 1990 and 2012.
The need for action
CO2 emissions from domestic flights are subject to emission targets under the Kyoto Protocol, but international flights are not. The 6th Environmental Action Programme committed the EU to take specific action to reduce greenhouse gas emissions from aviation if no such measures were taken by the International Civil Aviation Organization (ICAO), the responsible international body, by 2002. ICAO has not taken such action. It has, however, endorsed the concept of emissions trading.
Putting market incentives at the heart of a comprehensive approach
Given the situation in ICAO and issues of cost-effectiveness, the Commission believes that bringing aviation into the EU ETS offers the most promising way to tackle aviation emissions. In preparing its strategy the Commission examined several other types of market-based solutions, including airline ticket or departure taxes and emissions charges, but concluded that these would be either less effective in environmental terms or less cost-efficient.
The ETS, which currently covers around 11,500 industrial installations, enables participating operators to reduce their CO2 emissions in the most cost-effective way. Each operator receives a limited number of emission allowances, creating a permanent incentive for each to minimise emissions. These allowances can be traded on the market, thus giving operators the flexibility to choose the cheapest way to control their emissions. Bringing civil aviation into the scheme would allow aircraft operators to benefit from this cost-effective approach, enabling them to trade emission allowances in an expanded market with industrial operators and other airlines as necessary.
From an environmental point of view, the Commission believes that the ETS should cover all emissions from any flight departing from the EU, whether to another EU destination or a third country. EU and non-EU carriers would be treated equally.
As part of its comprehensive approach to the problem, the Commission also advocates continuing or strengthening a range of other activities that can help limit emissions from aviation, such as improving air traffic management and continuing efforts to remove legal obstacles to the taxation of jet fuel.
Preliminary estimates based on modelling exercises suggest that the impact on ticket prices would be modest, ranging between zero and an increase of up to €9 per return flight. With an increase of this level, aviation demand would simply grow at a slightly slower rate than otherwise. Any effect on tourism or peripheral regions relying on aviation is likely to be very limited.
The Commission is inviting the European Parliament and the Council to give detailed responses to the Communication. In parallel, the Commission will set up an expert working group of Member States and stakeholders under the European Climate Change Programme to consider certain issues in more detail and report back next year. Subsequently the Commission will present a legislative proposal to revise the ETS. This will be fully coordinated with the general review of the ETS due in mid-2006. The timing of aviation’s entry into the ETS will depend on how quickly the legislation is adopted and implemented.