Communication from the Commission to the Council, the European Parliament, the European Economic and Social committee and the Committee of the Regions - Reducing the Climate Change Impact of Aviation {SEC(2005) 1184}
Date: 2005-09-27
Institutions: European Commission
Subjects: EU programme, International Civil Aviation Organisation, air transport, climate change, pollution control measures, reduction of gas emissions, the EU's international role

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.9.2005 
COM(2005) 459 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Reducing the Climate Change Impact of Aviation 

{SEC(2005) 1184} 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Reducing the Climate Change Impact of Aviation 

1. 

INTRODUCTION  

Air  transport  has  become  an  integral  part  of  society  in  the  21st  century,  enabling 
both  passengers  and  freight  to  span  large  distances  at  an  unprecedented  speed. 
However,  aviation  also  contributes  to  climate  change.  Although  aircraft  fuel 
efficiency has increased by more than 70% over the last 40 years, the total amount 
of fuel burned has still increased due to even higher growth in air traffic.  

As  a  result,  the  impact  of  aviation  on  the  climate  is  on  the  rise:  whilst  the  EU’s 
total  emissions  controlled  under  the  Kyoto  Protocol  fell  by  5.5%  (-287  MtCO2e) 
from  1990  to  20031,  its  greenhouse  gas  emissions  from  international  aviation 
increased by 73% (+47 MtCO2e), corresponding to an annual growth of 4.3% per 
year. 

Although  aviation’s  share  of  overall  greenhouse  gas  emissions  is  still  modest 
(about  3%),  the  rapid  growth  undermines  progress  made  in  other  sectors.  If  the 
growth  continues  as  up  to  now,  emissions  from  international  flights  from  EU 
airports will by 2012 have increased by 150 % since 1990. This growth in the 
EU’s international aviation emissions would offset more than a quarter of the 
reductions required by the Community’s target under the Kyoto Protocol. In 
the longer run, aviation emissions will become a major contributor if current trends 
continue. 

2. 

THE CURRENT POLITICAL CONTEXT 

This Communication is a basis for discussion with other European institutions and 
stakeholders on internalising the environmental costs of aviation emissions into the 
EU  Emission  Trading  Scheme.  While  the  aviation  sector  is  confronted  with  the 
highest oil and fuel prices in history causing significant economic impacts for the 
airlines, a number of recent dramatic weather events in Europe and abroad give a 
reminder of the potentially huge costs associated with the increase in the frequency 
and severity of such events that climate change is expected to cause. 

Although the economic context is difficult, the problem of climate change remains 
urgent and discussions have to be launched now in order to provide timely input for 
the planned review of the EU Emissions Trading Scheme in June 2006. 

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Annual European Community greenhouse gas inventory 1990-2003 and inventory report 2005. 

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The  strategy  outlined  in  this  Communication  has  to  be  seen  in  the  context  of  the 
following already existing political orientations.  

On  the  basis  of  the  Commission  Communication  “Winning  the  Battle  Against 
Global  Climate  Change”  the  European  Parliament  and  the  European  Council  in 
spring  2005  re-affirmed  the  EU  objective  that  global  surface  temperatures  should 
not rise by more than 2°C compared with pre-industrial levels in order to prevent 
dangerous  and  irreversible  anthropogenic  climate  change.  The  European  Council 
also stated that 

•  reduction pathways for the group of developed countries of the order of 15-30% 
by 2020, compared to the baseline envisaged in the Kyoto Protocol, should be 
considered; 

•  the  Commission  should  continue  its  cost-benefit  analysis  of  CO2  reduction 

strategies and 

•  international  negotiations  should  be  reinvigorated  by  exploring  options  for  a 
post-2012  arrangement  in  the  context  of  the  UN  climate  change  process, 
ensuring the widest possible cooperation by all countries and their participation 
in an effective and appropriate international response. 

On  the  basis  of  these  guidelines  action  needs  to  be  taken  to  ensure  that 
aviation  does  not  undermine,  but  contributes  to,  achieving  this  overall 
objective.  

This  communication  outlines  a  strategy  for  complementing  existing  action  by 
implementing  a  new  market-based  instrument  at  EU  level.  It  is  underpinned  by 
stakeholder consultations and an impact assessment, which are reported separately.  

3. 

THE CLIMATE IMPACTS OF AIR TRANSPORT 

Commercial  aircraft  operate  at  cruise  altitudes  of  8  to  13  km,  where  they  release 
gases  and  particulates  which  alter  the  atmospheric  composition  and  contribute  to 
climate change.  

Carbon dioxide (CO2) is the most important greenhouse gas because of the large 
quantities  released  and  its  long  residence  time  in  the  atmosphere.  Increasing 
concentrations have a well-known, direct effect which warm the earth’s surface.  

Nitrogen  oxides  (NOx)  have  two  indirect  effects  on  the  climate.  Nitrogen  oxides 
produce  ozone  under  the  influence  of  sunlight,  but  they  also  reduce  the  ambient 
atmospheric  concentration  of  methane.  Both  ozone  and  methane  are  strong 
greenhouse  gases.  The  net  result  is  that  the  ozone  dominates  the  methane  effect, 
thus warming the earth. 

Water vapour released by aircraft has a direct greenhouse gas effect, but as it is 
quickly  removed  by  precipitation  the  effect  is  small.  However,  water  vapour 
emitted  at  high  altitude  often  triggers  the  formation  of  condensation  trails,  which 
tend  to  warm  the  earth’s  surface.  Moreover,  such  “contrails”  may  develop  into 

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cirrus  clouds  (clouds  of  ice  crystals).  These  are  also  suspected  of  having  a 
significant warming effect, but this remains highly uncertain. 

Sulphate  and  soot  particles  have  a  much  smaller  direct  effect  compared  with 
other  aircraft  emissions.  Soot  absorbs  heat  and  has  a  warming  effect;  sulphate 
particles  reflect  radiation  and  have  a  small  cooling  effect.  In  addition,  they  can 
influence the formation and properties of clouds.  

In 1999 the Intergovernmental Panel on Climate Change (IPCC) estimated that the 
total  impact  of  aviation  currently  is  about  2  to  4  times  higher  than  the  effect 
stemming from its past CO2 emissions alone. Recent EU research results indicate 
that this ratio may be somewhat smaller (around 2 times). None of these estimates 
take into account the highly uncertain cirrus cloud effects. 

4. 

THE NEED FOR POLICY ACTION AT ALL LEVELS 

4.1. 

Air transport emissions in the UNFCCC and the Kyoto Protocol 

International air transport is treated differently from most other sectors in terms of 
how  its  greenhouse  gas  emissions  are  accounted  for  under  the  United  Nations 
Framework  Convention  on  Climate  Change  (UNFCCC).  Owing  to  a  lack  of 
consensus over whether and how to allocate responsibility for these emissions, only 
domestic  CO2  emissions  are  included  in  the  Parties’  national  emission  totals. 
Emissions  from  international  flights  are  simply  dealt  with  as  a  “memo  item”. 
Consequently they are not subject to the quantified emissions limitations taken on 
by  the  developed  countries  which  ratified  the  Kyoto  Protocol.  A  key  part  of  the 
political  pressure  which  drives  States  to  implement  mitigation  measures  for  other 
sectors is thus lacking in the case of international air transport.  

The Commission argued, in its February 2005 communication2, that international 
aviation  should  be  included  in  any  post-2012  climate  change  regime  to  give 
States  stronger  incentives  to  take  action  on  their  own  and  in  cooperation  with 
others.  

4.2. 

ICAO policies to control aviation emissions 

In the absence of an agreement on the allocation question, the Parties negotiating 
the Kyoto Protocol agreed to include an explicit obligation for developed countries 
to pursue the limitation or reduction of emissions from aviation, working through 
the International Civil Aviation Organization (ICAO). 

Action  taken  so  far  through  ICAO  has  mainly  contributed  to  improving  the 
understanding  of  the  global  climate  impacts  of  aviation.  ICAO’s  188  member 
countries have not been able to agree on regulatory standards or emissions charges 
applicable  to  CO2  emissions,  and  an  attempt  to  identify  and  agree  a  suitable 
efficiency  indicator  for  aircraft  has  failed.  However,  ICAO  has  endorsed  the 
concept  of  international  open  emissions  trading  to  be  implemented  through 

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COM(2005) 35, 9.2.2005 

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voluntary  emissions  trading  or  the  incorporation  of  international  aviation  into  the 
existing schemes of states. 

4.3. 

The case for action at Community level 

The  EU  consistently  participates  in  and  supports  UNFCCC  and  ICAO  activities, 
helping to maximise consistency and participation in mitigation efforts worldwide. 
However,  as  explicitly  recognised  in  the  policy  statements  agreed  by  all  its 
Contracting  States  it  is  not  realistic  to  expect  ICAO  to  take  global  decisions  on 
uniform,  specific  measures  to  be  implemented  by  all  nations.  The  reluctance  of 
developing  countries  to  commit  themselves  to  more  demanding  policies  before 
they see clear leadership from industrialised countries, combined with the lack of 
such action from important industrialised partners who are not Parties to the Kyoto 
Protocol, is likely to prevent this from happening. 

The EU is a major player in global aviation, accounting for about half of the CO2 
emissions  from  international  aviation  reported  by  developed  countries3.  At  the 
same  time,  as  an  organisation  of  developed countries and as  ratifying  Parties, the 
European  Community  and  the  EU  Member  States  have  special  obligations  under 
the UNFCCC and the Kyoto Protocol. 

In  recognition  of  this,  in  the  6th  Community  Environment  Action  Programme 
the European Parliament and the Council decided to identify and undertake specific 
actions  to  reduce  greenhouse  gas  emissions  from  aviation  if  no  such  action  was 
agreed within ICAO by 2002. Since then, the Council has repeatedly recalled the 
need  for  urgent  action  to  reduce  emissions  from  international  air  transport  and 
called upon the Commission to consider such action and make proposals.  

Against this backdrop, the Commission has reviewed the available options. There 
is  no  quick  and  easy  technical  solution.  Hence  there  is  a  need  for  a 
comprehensive  approach,  strengthening  existing  action  and  exploring  new 
measures. 

5. 

TAPPING THE POTENTIAL OF EXISTING POLICIES  

A  number  of  existing  Community  and  Member  State  policies  hold  potential  for 
contributing further to mitigating the climate impact of aviation, albeit to a limited 
extent  or  only  in  the  longer  term.  Apart  from  raising  public  awareness  and 
increasing the performance and competitiveness of alternative modes of transport, 
these include notably research, air traffic management and energy taxation. 

5.1.  More research into cleaner air transport 

The  EU  has  chosen  aeronautics  as  one  of  its  research  and  development  priorities 
with  the  aim  of  minimising  the  environmental  impact  of  aircraft.  Since  the  pilot 
phase  in  1990-1991  under  the  Second  Framework  Programme,  more  than  350 
research projects have been funded at a total cost of 4 billion euros. About 30% of 
this  research  work  has  taken  the  form  of  activities  aiming  at  reducing  the 

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103,411 of 202,779 MtCO2e - 2002 data as reported by Annex I Parties to the UNFCCC. 

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environmental impact of aircraft, in particular CO2 and NOx. In addition, research 
into  better  understanding  the  climate  impact  of  aviation  has  been  investigated 
through the “Global Change and Ecosystem Programme” of the Sixth Framework 
Programme.  A  stronger  orientation  towards  “greening”  air  transport  and  a 
greater  focus  on  its  impact  on  climate  change  will  be  a  priority  in  the  new 
Seventh  Framework  Programme  recently  proposed  by  the  Commission.  Further 
research  into  alternative  fuels  may  reveal  additional  potential  for  reducing 
greenhouse gases emitted by aircraft. 

5.2. 

Improving air traffic management 

While  research  can  increase  the  opportunities  available  tomorrow,  more  efficient 
air  traffic  management  holds  important  potential  in  the  shorter  term.  Fuel 
consumption, for instance, can be reduced by minimising queuing before take-off, 
using more optimal flight paths and reducing the extent to which aircraft must fly 
in holding patterns before landing at congested airports. The Single European Sky 
and SESAME4 initiatives have begun the reforms necessary to reap these benefits. 
Timely progress with implementation must now be a priority. 

5.3. 

Towards more consistent application of energy taxation 

While generally imposed by Member States for fiscal objectives, wider application 
of  energy  taxation  to  fuel  for  commercial  aviation  might  also  contribute  to 
internalising  environmental  costs  and  reducing  CO2  emissions.  On  numerous 
occasions the Commission has stated its preference for normalising the treatment of 
aviation  fuel  as  soon  as  possible  within  the  international  legal  framework 
governing  aviation,  arguing  that  as  a  matter  of  principle  aircraft  fuel  should  be 
subject to energy taxes as are other motor fuels. 

Following  the  adoption  of  Council  Directive  2003/96/EC  restructuring  the 
Community  framework  for  the  taxation  of  energy  products  and  electricity, 
Member  States  can  already  introduce  fuel  taxation  for  domestic  flights.  Fuel 
for domestic flights is already taxed in non-EU countries such as the USA, Japan 
and India, but in the EU only the Netherlands has so far decided to do so. 

Subject  to  mutual  agreement,  fuel  taxation  can  also  be  introduced  for  flights 
between two Member States under existing Community legislation. In such cases it 
would apply to all EU carriers. However, it has been common practice for aircraft 
fuel  for  international  flights  to  be  exempted  from  all  taxes  -  a  policy  originally 
established  to  promote  civil  aviation  during  its  infancy.  The  legally  binding 
exemptions  are  found  in  the  bilateral  air  service  agreements  (ASAs)5.  Avoiding 
discrimination against EU carriers could therefore be difficult on routes where non-
EU  carriers  have  traffic  rights  and  continue  to  enjoy  tax  exemptions  under  the 
relevant ASAs6.  

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The Single European Sky legislation was adopted in 2004. It provides the institutional and regulatory 
basis  for  de-fragmented,  inter-operable  European  Air  Traffic  Control.  SESAME  covers  technical 
implementation of the Single European Sky. 
Contrary to common perception, the 1944 Chicago Convention only precludes taxation of aircraft fuel 
in transit, a provision which can be seen simply as a safeguard against double taxation. 
These regulate traffic rights and other issues relating to international air services. 

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In  this  context,  the  judgments  delivered  on  5  November  2002  by  the  Court  of 
Justice  of  the  European  Communities  in  the  “Open  Skies”  cases7  are  significant. 
They triggered a comprehensive reform of the EU’s external aviation relations. As 
part of this process, more than 200 ASAs between EU Member States and non-EU 
countries have already been amended to open the possibility of taxing fuel supplied 
to  EU  and  non-EU  carriers  on  an  equal  basis.  However,  while  this  process  must 
and  will  continue,  it  will  inevitably  take  time  to  complete.  In  view  of  this 
specificity of the aviation sector, the wider application of energy taxes to aviation 
can not be relied upon as the key pillar of a strategy to combat the climate change 
impact of aviation in the short and medium term. It has therefore not been further 
assessed in the present context. 

6. 

ECONOMIC INSTRUMENTS AS COST-EFFECTIVE DRIVERS FOR CHANGE 

The combined effect of the above existing measures alone will not be sufficient to 
offset  the  growth  in  air  traffic  emissions.  New  approaches  going  further  and 
beyond  traditional  technical  standards  and  voluntary  action  are  needed.  As 
already acknowledged in the Commission’s 1999 Strategy on Air Transport and the 
Environment,  the  need  for  cost-effective  approaches  points  in  favour  of  flexible 
economic instruments. Such measures apply the “polluter pays” principle and also 
tap into the multitude of potential reductions, the costs of which are best known to 
the industry, by sending price signals that reflect environmental policy objectives.  

Several  types  of  market-based  instruments  have  been  considered  (see  impact 
assessment).  However,  instruments  such  as  airline  ticket  or  departure  taxes 
would have an effect  only through dampening  demand and so would  not give 
operators  an  incentive  to  improve  environmental  performance.  While  they  are 
potentially appropriate for pursuing other policy objectives8, the focus has therefore 
been placed on emissions trading and emissions charges as more promising ways 
to address the climate impact of aviation. 

6.1. 

Assessing the options 

Emissions trading works by first setting a limit on total emissions from a group of 
entities, and then letting the market determine the cost for emitting each tonne of 
emissions. By contrast, charges set the cost for emitting a tonne of emissions, but 
then let the entities concerned determine the extent to which emissions are reduced 
in response.  

In  the  present  context  the  two  instruments  also  differ  in  terms  of  environmental 
effectiveness, economic efficiency and potential for wider application. 

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8 

In which the Commission had brought actions against eight Member States regarding bilateral ASAs 
signed with the USA. 
For example, the possibility of raising funds for development aid via airline tickets has recently been 
discussed in the ECOFIN Council. 

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6.2. 

Environmental effectiveness and economic efficiency 

If  emissions  trading  or  emissions  charges  were  applied  to  the  aviation  sector  in 
isolation,  the  two  instruments  would  in  principle  be  equivalent  in  terms  of 
environmental effectiveness and economic efficiency. However, emissions trading 
need not be applied to the aviation sector in isolation. Emissions trading is already 
being  used  as  a  means  of  tackling  climate  change:  Parties  with  emissions 
limitations under the Kyoto Protocol are able to trade with each other. In addition, 
many of these Parties are either delegating, or considering delegating, part of their 
own  emissions  limitation  to  company  level  through  a  domestic  or  regional 
emissions trading scheme.  

With  Directive  2003/87/EC,  the  EU  has  established  the  largest  multi-country, 
multi-sector emission trading scheme seen so far. The European emissions trading 
scheme (EU ETS), covering greenhouse gas emissions from approximately 12 000 
energy-intensive  installations,  began  operation  on  1  January  2005.  Generally 
speaking, the broader the coverage of an emissions trading scheme, the lower the 
costs  of  achieving  the  same  specific  level  of  emissions  reductions.  Therefore,  if 
aviation were to achieve the same environmental goal under emissions trading and 
emissions  charges,  the  economic  costs  for  the  sector  and  for  the  EU  as  a  whole 
would  be  lower  if  this  was  done  under  the  EU  ETS  rather  than  under  a  charging 
system for aviation only.  

6.3. 

Potential for wider application 

In the view of the Commission, both emissions charges and emissions trading are 
compatible  with  the  current  international  legal  framework  for  aviation.  However, 
the concept of emissions charges has been contentious at international level and the 
extent to which such charges can be applied by States to foreign carriers was the 
single most disputed issue at ICAO’s 35th Assembly in October 2004. By contrast, 
the  concept  of  voluntary  emissions  trading  as  well  as  incorporating  international 
aviation  emissions  into  States’  existing  emissions  trading  schemes  has  been 
explicitly endorsed by ICAO. The latter approach fits well with EU climate policy 
since integrated emissions trading is also a fundamental design feature of the Kyoto 
Protocol and is a key component of the EU's future climate change strategy. 

7. 

SPECIFIC EMISSIONS TRADING DESIGN ISSUES 

Given these differences, including aviation in the EU ETS seems to be the most 
promising  way  forward.  However,  a  number  of  technical  design  elements  are 
crucial if the policy is to deliver its full potential for environmental and economic 
efficiency, which will have to be further examined by a new Working Group to be 
set  up  and  will  also  be  developed  in  the  Impact  Assessment.  On  the  basis  of  its 
feasibility study9, the Commission is of the view that the following four issues are 
at  the  centre  of  the  further  debate:  the  type  of  entity  made  responsible  for 
aviation's  climate  impact,  the  extent  to  which  the  full  impact  is  addressed,  the 
types of flights covered, and the approach taken for calculating and apportioning 

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Giving wings to emission trading, CE Delft, July 2005. 

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the sector’s overall emissions limitation. In addition, the impact on prices and the 
allocation of emission rights need further examination. 

It  is  fundamental  that  the  entity  made  responsible  must  be  the  one  with  the  most 
direct control over the type of aircraft in operation and the way in which they are 
flown.  Therefore,  the  Commission  considers  that  aircraft  operators  should  be 
the entities responsible within the EU ETS. 

In order to minimise potential negative trade-offs between the different impacts and 
safeguard  the  environmental  integrity  of  the  overall  scheme,  both  the  CO2  and 
non-CO2  impacts  of  aviation  should  be  addressed  to  the  extent  possible.  In 
doing so, the uncertainties surrounding certain impacts should be balanced against 
the risks they pose to the climate. Pending scientific progress in developing more 
suitable metrics for comparing the different impacts, a pragmatic approach would 
be needed. In the short term, this could be based either on: 

•  a requirement for aviation to surrender a number of allowances corresponding to 
its CO2 emissions multiplied by a precautionary average factor reflecting other 
impacts; or 

•  an approach where initially only CO2 is included, but ancillary instruments are 
implemented  in  parallel  such  as  differentiation  of  airport  charges  according  to 
NOx emissions. 

The Commission believes that the objective should be to provide a workable model 
for  aviation  within  emission  trading  in  Europe  that  can  be  extended  or  replicated 
worldwide. The precise scope will be assessed in the working group to be set up as 
outlined in the Annex. In environmental terms, the preferred option is to cover all 
flights  departing  from  EU  airports,  as  limiting  the  scope  to  “intra-EU”  flights, 
which  both  depart  and  land  in  the  EU,  would  address  less  than  40%10  of  the 
emissions from all flights departing from the EU. As regards the competitiveness of 
the  airline  industry,  the  impact  in  particular  on  relative  market  shares  of  EU  and 
non-EU carriers will be further examined.  

As  regards  calculating  and  apportioning  aviation's  overall  emissions  limitation, 
rules already in place for participants in the scheme are not necessarily suitable for 
aviation.  Only  CO2  emissions  from  domestic  flights  are  accounted  for  under  the 
Kyoto  Protocol,  and  hence  special  arrangements  would  be  needed  to  ensure  that 
this does not adversely affect the accounting system11 linking the EU ETS and the 
Kyoto Protocol. In addition, given the level of integration in the Community’s air 
transport market, a harmonised allocation methodology should be agreed. 

8. 

IMPACTS OF INCORPORATING AVIATION INTO THE EU ETS 

In  all  scenarios  considered  in  the  impact  assessment  accompanying  this 
communication and the feasibility study carried out for the Commission, both EU 

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Estimates of CO2 emissions from Eurocontrol. 2004 estimates indicate that intra-EU flights emitted 
around 52 MtCO2 while all departing flights caused 130 MtCO2. 
Commission Regulation (EC) No 2216/2004. 

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and non-EU carriers would be treated in exactly the same way on routes covered by 
the  scheme.  As  a  result,  the  inclusion  of  the  climate  impact  of  aviation  into  the 
EU ETS  is  unlikely  to  have  any  significant  adverse  affects  on  the  competitive 
position of EU airlines relative to non-EU airlines. According to the Commission 
study,  second-order  effects  such  as  cross-subsidisation  by  carriers  using  profits 
generated  on  routes  outside  the  scope  of  the  measures  towards  routes  covered  by 
the  measure  could  occur  but  would  be  small.  Nonetheless,  the  issue  of 
competitiveness will be further examined in the follow-up to this Communication. 

An  additional  consequence  is  that  cost  increases  stemming  from  inclusion  of  the 
sector in the EU ETS may be passed on to air transport users. However, modelling 
some  illustrative  scenarios  suggests  that  ticket  price  increases  would  be  modest, 
impact 
varying  according 
assessment).  Air  transport  demand  would  not  fall  but  would  simply  grow  at  a 
slightly slower rate (a relative reduction of between 0.2 and 2.1% over a five-year 
period  (2008-2012)  compared  to  business-as-usual  growth  of  more  than  4%  per 
year). 

the  specific  design  parameters  chosen  (see 

to 

Given  these  low  estimates  for  ticket  price  increases,  any  effect  on  tourism  or 
peripheral regions relying on aviation as a key mode of transport would seem to be 
limited  and  should  be  further  explored,  also  taking  into  account  the  existing 
framework for public service obligations.  

9. 

CONCLUSIONS AND NEXT STEPS 

To date, policies instituted at international, regional and national level to mitigate 
climate  change  have  not  required  any  substantial  contribution  from  the  aviation 
sector.  In  view  of  the  likely  future  growth  in  air  traffic,  further  policy  action  is 
needed to prevent this from leading to continued growth in its climate impact. 

Having analysed a number of options, the Commission considers that the best way 
forward, from an economic and environmental point of view, lies in including the 
climate  impact  of  the  aviation  sector  in  the  EU  emissions  trading  scheme. 
Emissions trading is likely to remain a core part of any future strategy to combat 
climate  change,  and  the  EU  ETS  will  help  foster  the  development  of  a  truly 
international  carbon  market  capable  of  tapping  the  potential  for  emission 
reductions across the globe. To prepare for the necessary decisions to be taken, the 
Commission:  

•  will  set  up  an  Aviation  Working  Group  under  the  European  Climate 
Change  Programme12.  This  group  will  be  assigned  the  task  of  considering 
ways  of  including  aviation  in  the  EU  ETS  in  accordance  with  the  terms  of 
reference annexed to this communication. The results will feed into the ongoing 
review  of  the  existing  framework  for  the  EU  ETS13  due  to  report  by  30  June 
2006.  The  Commission  will  aim  to  put  forward  a  legislative  proposal  by  the 
end of 2006;  

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The  ECCP  is  a  multi-stakeholder  consultative  process,  in  which  the  Commission,  national  experts, 
industry and the NGO community work together. 
See Article 30 of Directive 2003/87/EC. 

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•  invites  the  Council  and  the  European  Parliament  to  consider  the  policy  and 
design recommendations in this communication, including questions of timing, 
in preparation for a future legislative decision. 

In  parallel,  a  number  of  existing  policies  and  actions  should  continue  and  be 
strengthened as elements of a comprehensive and consistent approach: 

•  While research aimed at narrowing remaining uncertainty and further improving 
understanding  of  the  effects  of  aviation  on  climate  should  continue,  higher 
priority must be given to EU aeronautics research aimed at actually reducing 
the  negative  impacts  of  air  transport  on  climate  change,  with  this  increased 
emphasis being reflected in the Seventh Framework Programme14.  

•  Timely progress must be made on the processes already begun with the Single 
European  Sky  to  enhance  the  performance  of  the  European  air  traffic 
management system. 

•  Regarding  the  application  of  energy  taxation  to  aviation  fuel,  the  process  of 
removing  all  legal  obstacles  from  bilateral  air  service  agreements  remains 
essential and will continue. 

•  The  Commission  will  take  the  necessary  action,  at  both  European  and 
international level, to continue to keep all options for economic instruments 
open  in  the  event  that  complementary  measures  are  required  alongside 
emissions trading to address the full climate impact of aviation. 

•  The  Commission  will  work  with  EU  Member  States  within  ICAO  towards 
continuous  improvements  in  existing  technical  design  standards,  and  where 
appropriate  the  development  of  new  standards,  aimed  at  limiting  aircraft 
emissions at source. 

14 

COM(2005) 119. 

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Annex : Terms of Reference for the Aviation Working Group set up under the 
European Climate Change Programme 

The  purpose  of  the  working  group  is  to  advise  the  Commission  services  and  will 
consist of experts from Member States and key stakeholder organisations including 
industry, consumer and environmental organisations.  

This  working  group  shall  assess  the  necessary  ways,  as  listed  below,  of 
incorporating  the  climate  impact  of  aviation  into  the  European  emissions  trading 
scheme (EU ETS)15, taking full account of the precautionary principle.  

Coverage of the climate impact of aviation  

The group shall: 

•  assess  how  monitoring  and  reporting  the  climate  impact  of  aviation  can  be 
addressed  by  adding  further  annexes  to  Decision  2004/156/EC,  taking  the 
existing methodologies used therein as a benchmark and noting the potential for 
achieving greater accuracy over time; 

•  explore  whether  the  flexibility  offered  by  the  tier  system  of  Decision 
2004/156/EC  would  be  appropriate  for  the  aviation  sector  or  whether  further 
harmonisation is required; 

•  analyse  the  possibility  that  incomplete  coverage  of  the  climate  impact  of 
aviation  could  provide  an  incentive  for  reduction  of  one  impact  within  the 
scheme at the expense of another outside the scheme; 

•  consider  the  complementary  use  of  charges  or  other  flanking  measures  to 
establish  full  coverage  of  the  climate  impact  of  aviation  in  order  to  avoid  the 
identified potential adverse effects from incomplete coverage.  

Scope of emissions covered 

The group shall consider the flights and emissions covered, taking into account the 
need:  to  limit differences of treatment between short-haul and long-haul services, 
to examine differences in the accessibility of peripheral regions, to reflect on how 
the EU model can be extended to other countries as the EU ETS itself expands, and 
to  capture  a  significant  quantity  of  emissions  in  line  with  the  environmental 
objective of combating climate change. 

15 

Directive 2003/87/EC. 

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Approach  used  for  calculating  and  apportioning  the  overall  emissions 
limitation for the aviation sector  

The group shall consider:  

•  the different models used within the EU and internationally to calculate growth 
and  emissions  projections  for  both  the  aviation  sector  and  other  sectors  of  the 
economy, and the different assumptions used therein; 

•  the  range  of  overall  emissions  limitations  which  should  be  considered  for  the 

aviation sector, taking into account different results from models; 

•  which elements of setting and apportioning the overall emissions limitation can 

be harmonised across the EU; 

•  the  impact  on  the  competitiveness  of  Community  industry,  the  impact  on  the 
price  of  tickets  (considering  inter  alia  the  existence  of  alternative  means  of 
transport) and on emission allocations and the proportionate distribution of costs 
between industry and transport end-users; 

•  how to ensure that the accounting system established in Commission Regulation 
(EC)  No  2216/2004,  which  ensures  consistency  between  trading  under  the  EU 
ETS  and  trading  under  the  Kyoto  Protocol,  is  not  adversely  affected  by  the 
inclusion of aviation. Any design solution needs to balance the introduction of 
specific rules for aviation against the overall objective of its inclusion in the EU 
ETS, i.e. to contribute towards tackling climate change in the simplest and most 
cost-effective manner possible. 

Compliance 

The  group  shall  consider  how  existing  compliance  measures  currently  applied  to 
the  aviation industry can be used in  addition to those already instituted under the 
EU ETS to ensure compliance with the obligations imposed by the scheme. 

Administration 

The group shall consider how best to administer aviation's inclusion in the EU ETS 
taking into account the conclusions reached on emissions limitation, the registries 
system and compliance. 

This  working  group  will  submit  its  conclusions  in  the  form  of  a  report  by 
30 April 2006 at the latest.  

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