MEPs aim to stick airlines with steeper carbon bill

Free allowances given to airlines to reduce their ETS costs would be scrapped under EU proposals. [frank_peters/Shutterstock.com]

Lawmakers in the European Parliament’s environment committee have voted to include all flights departing from Europe in the EU’s carbon market while speeding up the phase out of free carbon allowances, a move that would force airlines to pay more to pollute. 

The EU Emission Trading System (ETS) obliges airlines to buy allowances for each tonne of CO2 they emit, but at present this only applies to intra-EU flights. International aviation emissions are covered by the UN’s CORSIA, a global carbon offsetting scheme, which is considerably less stringent than the EU carbon market.

But under revised rules voted by the Parliament’s environment committee, flights outside of Europe would also fall under the EU ETS.

In practice, airlines would be obliged to pay for both EU carbon allowances and the cost of offsetting under CORSIA. They would then receive a credit for the amount paid to CORSIA which could be deducted from the ETS bill, to prevent double charging.

The file was adopted on Tuesday (17 May) in committee with 66 votes in favour, 9 against and 12 abstentions and will face a plenary vote in the European Parliament in June. If successful, it will form the Parliament’s negotiating position in final talks with EU member states to complete the legislation before it becomes law.

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Free allowances given to airlines to reduce their ETS costs would also be scrapped under EU proposals.

While aviation has been included in the ETS since 2012, in practice large portions of airline emissions have been exempt from carbon costs. This is thanks to the generous provision of free carbon allowances.

Currently, over half of airline emissions are covered by free allowances. In 2019, airlines were granted some €800 million worth of gratuities.

The EU executive had proposed ending free allowances by 2027, but the environment committee is pushing for an earlier phase out, setting 2025 as the date for the switch to full auctioning. 

If the environment committee proposals are successful, airlines predict that the added expense of compliance will amount to around €6.4 billion annually by 2030, up from less than €1 billion in 2019.

A4E, an association representing European airlines, said that the phasing out of free allowances by 2025 will push up the cost of flying in Europe.

“Phasing out free allowances by 2025 – even before decarbonisation technologies such as [Sustainable Aviation Fuels] are widely available, will only make travelling in Europe more expensive,” an A4E spokesperson said.

“It will not speed up the deployment of clean fuels or more efficient aircraft and higher prices for intra-EEA travel will negatively impact connectivity and tourism,” the spokesperson added.

In contrast, the environment committee’s stance was welcomed by the clean mobility NGO Transport & Environment (T&E), who hailed it as a promising move towards more fairly pricing the climate impact of European aviation.

“Today’s vote marks an essential change of direction to ensure polluters pay and not our planet. EU legislators have finally decided to take responsibility for aviation’s biggest source of emissions, whilst also addressing its non-CO2 effects,” said Jo Dardenne, aviation manager with T&E.

Innovation and clean fuels

Other amendments agreed by MEPs include ringfencing 75% of the revenues generated from the auctioning of aviation carbon allowances for innovation and new technologies, such as the development of electric and hydrogen-powered aircraft.

Airlines would also receive allowances to finance the purchase of Sustainable Aviation Fuels (SAFs), which are currently available in limited quantities and thus more expensive, up to 2030.

In an apparent boon to transparency, the environment committee additionally wants to force airlines to publish data on their emissions, and to oblige aircraft operators to set up a monitoring scheme for so-called non-CO2 emissions, with a view to expanding the scope of the EU ETS to cover them in the future.

Non-CO2 effects include the release of soot and harmful gases, including sulphur and nitrogen oxide, as well as water vapour, from jet engines. 

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Reactions across the aisle

Rapporteur Sunčana Glavak, a Croatian MEP with the centre-right EPP political group, said that lawmakers sought to strike a balance between the speed of imposing pollution charging and mitigating the impact on industry and flyers.

“With the ETS aviation report we are aligning the aviation sector with our climate goals. But, within that process, we have to offer decarbonisation solutions for the sector, which we managed to achieve in this committee with the introduction of sustainable aviation fuels allowances,” she said. 

“We are all aware that we have to focus on our climate goals, but we also cannot allow the industry to bear the whole burden. We must preserve our mobility and industry,” she added.

The conservative ECR group expressed concerns over the financial impact of the legislation on airlines, pointing out that the aviation sector is still recovering from the decimation wrought by the COVID pandemic and the extra expense imposed by the war in Ukraine. 

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More should be done to protect passengers, who will face higher prices as a result of the legislation, argued Polish MEP Anna Zalewska.

“On one hand, there is an evident imbalance on the EU ETS market in aviation, and an accelerated phase out by itself would not entirely address it. On the other hand, the phase out of allowances is likely to transpose additional costs on passengers, and this has not been sufficiently addressed in the text,” Zalewska told EURACTIV.

Austrian lawmaker Claudia Gamon, shadow rapporteur for the centrist Renew group, took a more positive stance.

“The EU ETS is the EU’s most efficient tool to cap and reduce CO2 emissions in a predictable way. It is market based and stimulates innovation, better than any other tool. This is why I am pleased to see that the environment committee has been sending a strong message for a strong ETS,” she told EURACTIV. 

“Phasing out free allowances, including departing flights to third countries, and tackling Non-CO2 emissions will contribute significantly to reduce emissions from aviation,” she added.

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