Meeting on 20 December, at the last Environment Council of 2007, ministers succeeded in reaching a compromise on the details of including aviation activities in the ETS, but their failure to beef up the levels of ambition compared to the original proposal from the Commission could lead them to clash with Parliament next year, when the text goes to second reading (for more information on the first reading vote in Parliament, see EurActiv 14/11/07).
The main divergences surrounded starting dates for the scheme, the amount of CO2 allowances that airlines should receive for free and the question of what should be done with the money raised from auctioning pollution permits.
Under the final compromise in Council:
- All airlines flying to and from EU territory would join the scheme in 2012. Ministers, like MEPs, thus rejected the Commission's proposal that international flights should be given an extra year and ignored threats from third countries, including the US, that they would instigate legal action if the EU attempts to unilaterally force them to comply with the scheme;
- airlines would be required to maintain emission levels at average 2004-2006 levels, which is bound to disappoint MEPs, who had agreed on a 10% reduction and environmentalists that were demanding much bigger cuts;
- in accordance with the Commission’s proposal, 90% of pollution permits would be distributed to airlines for free. MEPs had demanded at least 25% auctioning, saying that otherwise airlines would make windfall profits by passing on non-existent costs to their passengers. Many also feel that auctioning is the only way all airlines would be treated in the same way.
- the question of how to use revenues from emission allowance sales was resolved by stating that the money “should” be invested in climate change mitigation measures but that ultimately the decision is left to member states. The UK and Germany had been insistent on this point, rejecting a request from Parliament that the money raised be used to compensate for a lowering of "taxes and charges on climate-friendly transport such as rail and bus";
- no measures are proposed for dealing with the additional climate impacts caused by Nitrogen Oxide (NOx) other pollutant emissions from airplanes. MEPs had called for the cost of all CO2 permits bought by airlines to be multiplied by two unless legislation was enacted to address this;
- airlines with very low traffic levels on routes to, from or within the EU would be exempt, so that, for example, operators from developing countries, with only limited air traffic links with the EU, will be exempt. Air services of public utilities would also be excluded, and;
- 3% of total allowances will be set aside in a special reserve and handed out for free to new entrants or very fast-growing airlines.
