Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community COM(2006) 818 final — 2006/0304 (COD)
Date: 2007-05-31
Institutions: European Economic and Social Committee
Subjects: air transport, civil aviation, greenhouse gas, reduction of gas emissions, tradeable emission permit, transport regulations

27.7.2007

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Official Journal of the European Union

C 175/47

4.4 Inadequate incentives for minor uses

4.5 Provision of information

4.4.1
Article 49 entitles, amongst others, professional users
and professional agricultural organisations to request that the
authorisation of a plant protection product be extended to cover
minor uses. Under this article, Member States are also to esta-
blish and regularly update a list of minor uses.

The EESC welcomes this article but notes that it does
4.4.2
not provide holders of authorisations, themselves, with sufficient
incentives to seek to bring about extensions of authorisations
for minor uses.

The EESC proposes that holders of authorisations be
4.4.3
given a bonus in the form of an extension of the period of data
protection in cases where, following the granting of an authori-
sation, they are the first applicants to request several extensions
of authorisations to include minor uses.

The EESC proposes that

4.4.4
the European Commission
facilitates the drawing-up of a centralised European list of minor
uses and makes such a list available for inspection by the
Member States, in place of the proposed lists to be drawn up by
individual Member States under Article 49(6).

4.5.1
Under the proposal for a Regulation, it is possible to
make it obligatory to inform any neighbours who have
requested to be informed and who could be exposed to the
spray drift; such neighbours are to be informed before the
product is used (Article 30).

4.5.2 Whilst the EESC believes that transparency with regard
to the use of plant protection products makes very good sense,
it does, however, take the view that the proposed obligation to
provide information would undermine the confidence in the
law, on which the marketing of plant protection products is
based. We are, after all, dealing here with the use of products
which are deemed to be safe and imposing an obligation to
inform neighbours could convey the opposite assumption.

4.5.3
The EESC believes that implementation of this article is
not conducive to mutual understanding between users of plant
protection products and their neighbours;
it may, on the
contrary, upset social cohesion in rural communities since
making it obligatory to inform neighbours may give rise to the
impression that the products being used are unsafe. This provi-
sion would, in this sense, be counterproductive.

Brussels, 31 May 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation
activities in the scheme for greenhouse gas emission allowance trading within the Community’

COM(2006) 818 final — 2006/0304 (COD)

(2007/C 175/13)

On 8 February 2007 the Council decided to consult the European Economic and Social Committee, under
Article 175 (1) of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 8 May 2007. The rapporteur was Mr Adams.

At its 436th plenary session, held on 30-31 May 2007 (meeting of 31 May), the European Economic and
Social Committee adopted the following opinion by 50 votes to 8 with 4 abstentions.

1. Conclusions and recommendations

strengthened and made more robust as the pre-eminent model
for tackling CO2 emissions at a global level.

1.1
The Committee welcomes the proposed Directive which
offers a carefully considered and pragmatic approach to
moderating and compensating for the rapidly growing volume
of greenhouse gases emitted by the aviation industry.

1.2
By bringing aviation within the remit of the European
Emissions Trading Scheme (ETS) the scheme is itself potentially

The proposal

1.3
is realistic. It recognises the strength of
political, economic and consumer pressures for the continuing
development of air travel and transport whilst using the market

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27.7.2007

mechanism of the ETS to compensate for one of the main,
damaging external impacts of the aviation industry.

1.8.3
The proposed free allocation of allowances to operators
should be eliminated or significantly reduced requiring all, or
the majority, of allowances to be auctioned.

1.4
The proposal is nevertheless vulnerable. It stands or falls
with the ETS — a system which has met with criticism from
many stakeholders, which has yet to prove itself and which in
turn depends on fair allocation of CO2 allowances, imaginative
and innovative investment in CO2 reduction and enforcement of
National Allocation Plans by Member States.

1.8.4
A common limit on the purchase of credits from
JI/CDM schemes is applied to ensure that a high proportion of
emissions reductions occur within the EU.

The EESC welcomes the inclusion in the scheme of all
1.5
flights into or out of Europe from 2012 but believes the start
date should be 2011 as for European operators.

1.6
It is noted that the Directive allows the entry into the
scheme of ‘external’ flexible project credits from the Kyoto Joint
Implementation or Clean Development Mechanisms (JI/CDM).
Support for carbon reduction, certified renewable energy/energy
efficiency schemes in developing countries is positive providing
strict auditing is maintained.

1.7
The Committee recognises that this is a complex issue
but feels the proposal is somewhat opaque and fails to present
its advantages clearly. The proposal appeals in different ways
and at various levels to the EU as a whole,
to individual
Member States,
industry and to the
public. In particular the positive potential of the Directive to
support and reinforce the ETS should be emphasised. It is also
noted that active and complementary support will be required
from other parts of the Commission, particularly Transport and
Energy and Research.

to different sectors of

1.8

The EESC therefore recommends that:

The inclusion of aviation in the ETS is used as an
1.8.1
opportunity to revise the scheme, correct existing mistakes and
strengthen weak areas so that it enables a genuine and effective
market in carbon trading to develop — a critical element in
supporting the EU's pledge to meet a 20 % CO2 reduction by
2020.

1.8.2
The proposed emissions cap is lowered to require avia-
tion to make an adjustment more comparable with other indus-
tries already in the ETS.

1.8.5
Advance planning is considered for how the effects of
the Directive will be presented to the public. Not only will this
further raise awareness of the impact of aviation on climate
change but it should encourage more openness on the financial
implications of the scheme for the customers and operators and
minimise the risk of windfall profit-taking.

1.8.6 Member States should be asked to voluntary offset the
emissions from flights by Heads of State, Heads of Government
or Government Ministers, which are presently exempted for
(flights mostly operated by military
administrative reasons
units), so as to set a positive example.

Complementary work on non-ETS carbon-reduction
1.8.7
measures should also be given a very high priority. These
include eliminating legal barriers to tax and regulatory steps —
particularly on aviation fuel; restricting nitrogen oxide emis-
traffic management and research into
sions;
greater engine and airframe efficiencies.

improving air

2. Introduction

2.1
Aviation has been and remains an integral and important
in many
part of the expanding global economy. Aviation is,
ways, a success story. Since 1960 it has grown each year by an
average of 9 %, a rate 2.4 times greater than the growth in
global GDP. This growth continues and on present trends air
transport will double by 2020.

This success has inevitably created problems such as the
2.2
growth and local
in the context of
impact of airports but
climate change attention is increasingly focussed on how avia-
tions' greenhouse gas and other emissions contribute to global
warming. The aviation industry, as a service sector, provides
about 0.6 % of the EU's economic added value but 3.4 % of its
greenhouse gas (GHG) emissions. Emissions from aviation in the
EU have increased by 87 % since 1990 whilst the EU's total
GHG emissions from all sources fell by 3 % in the same period.

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C 175/49

2.3
International flights have been historically exempt from
fuel tax and are not covered by Kyoto Protocol targets. Taking
into account the long working life of aircraft and the possibili-
ties for further technical and operational efficiencies the growth
of aviation means the sector will continue to increase its GHG
emissions, undermining efforts made in other sectors where
reductions are taking place. Although aviation has, by and large,
seen great
coordination and
enforcement in matters of safety and security it has been diffi-
cult to reach international agreement on environmental issues
which may also impact on commercial interests.

in regulation,

improvements

communication (2)

2.4
The Commission has been seeking a way to encourage or
enforce reduction in aviation GHG emissions for some time. In
2005 it adopted a Communication, ‘Reducing the Climate Change
Impact of Aviation’ (1) In April 2006 the EESC in its Opinion on
this
additional policy
concluded
measures were needed to control the impact of aviation on
climate change and recommended, inter alia, inclusion of avia-
tion in the EU Emissions Trading Scheme. Similar positions
were taken by the Council of Environment Ministers, The
European Council and the European Parliament. The Commis-
sion have now proposed a Directive — the subject of
this
Opinion — which includes aviation in the Community scheme
for GHG emission allowance trading.

that

3. Summary of the proposed Directive

total EU CO2. Under

The present EU ETS (4) covers about 12,000 energy-
3.3
intensive industrial installations which are responsible for 50 %
of
the proposal airlines will receive
tradable allowances to emit certain levels of CO2 each year with
an overall
level of
cap defined by the average annual
emissions generated by the aviation industry in the three years
2004-2006. Operators can sell surplus allowances or buy addi-
tional allowances on the ETS market, e.g. from industrial instal-
lations which have reduced their emissions or from clean energy
projects in third countries under the Kyoto Protocol mechan-
isms.

3.4
The proposed directive will cover emissions from flights
within the EU from 2011 and all flights to and from EU airports
from 2012. Both EU and foreign aircraft operators would be
covered. It is estimated that by 2020 the proposal may add
between EUR 1.8-EUR 9 to the cost of a return ticket within
Europe and more for long-haul flights, e.g. EUR 8-EUR 40 for a
return ticket to New York. The very modest impact of such a
charge in the price-elastic airline industry is the reason why the
scheme is seen as having little impact on growth.

3.5
It should be noted that the Commission recognises that
inclusion of aviation in the ETS is just one of the possible steps
level to deal with the
that need to be taken at international
increasing impact of aviation emissions on the climate.
It
suggests bringing forward proposals related to nitrogen oxide
emissions following an impact assessment in 2008. The Interna-
tional Civil Aviation Organisation (ICAO) is also intending to
make further proposals at
its assembly in September 2007
though indications suggest that pressure is building to weaken
and undermine the EU initiative.

3.1
In the introduction to the proposed Directive it is noted
that growth in aviation emissions could, by 2012, offset more
than a quarter of the EU's environmental contribution made
under the Kyoto Protocol. Reaching international agreement on
action is proving difficult but the proposed Directive is intended
to provide a model for action at a global level and is the only
imitative which offers this possibility.

4. General comments

3.2
The present proposal amends Directive 2003/87/EC on
GHG allowance trading to include aviation in the Community
scheme. An impact assessment accompanying the proposal
concludes that whilst emissions trading is the most efficient
solution to reducing the climate impact of aviation the impact
of the measures would have ‘only a small effect on forecasted
demand growth’ and therefore on the volume of emissions (3). It
must therefore be understood that this proposal is not designed
to restrict the growth of aviation per se but to ensure that some
of its damaging environmental
impacts are offset by actions
mostly in other economic sectors.

(1) COM(2005)459 final 27.9.2005.
(2) NAT/299 Climate Change Impact of Aviation.
(3) Summary of Impact Assessment para 5.3.1.

The EESC welcomes the fact that the inclusion of avia-
4.1
tion in the ETS is the first step, at international level, in getting
air transport to pay some of the environmental cost it has been
externalising since its inception. The inclusion of non-EU opera-
tors is also welcomed. In addition the proposed scheme will
require aircraft that are less fuel-efficient to use a greater permit
allocation, providing a modest stimulus for technical and opera-
tional efficiencies. As low-cost airlines have an average 10 %
higher load factor than ‘legacy’ carriers the proposal will also
have slightly less impact on the low fare carriers whilst encoura-
ging the discounted sale of vacant seats by all airlines.

(4) See Appendix I for a short description of the ETS.

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4.2
The Committee recognises that action on flight pattern
efficiencies, alternative fuels, improved design and higher load
factors will all make some contribution to reducing the growth
of GHG emissions. Nevertheless, most of these measures have
been actively applied in aviation since 1990 and yet this period
has still seen an increase in emissions of over 85 % — a figure
which continues to rise due to the significant
increases in
passenger numbers and freight carried.

transport

GHGs by the air
sector. This creates a major
‘presentation’ problem. The aviation industry is already the
fastest-growing source of GHG emissions in Europe and this
Directive indulges the industry in its insistence on growth
without requiring a limit to emissions. The public will need to
understand that the Directive can stimulate significant resources,
which will be applied to compensatory CO2 reduction.

to

the

tackle

proposes

This Directive

4.3
growing
contribution to climate change by the aviation sector by
including it in the ETS. The ETS itself provides the only interna-
tional, market-related large-scale CO2 regulatory and compensa-
tory mechanism but has experienced significant initial problems
in its trial phase which ends in 2007. This was largely due to
over-allocation of allowances by Member States. For the EU-ETS
to meet its objective to be a market instrument of reducing CO2
emissions it is essential that the Commission, supported by all
Member States is resolute in determining and applying CO2
quotas and ensuring compliance.

In practice the inclusion of aviation might be of great
4.4
benefit to the ETS. Aviation is less price sensitive than most of
the industrial process and energy-generation industries currently
responsible for the majority of CO2 emissions. As (inevitably)
the CO2 share from aviation increases then significant new
for
funds will enter
further carbon savings in other sectors. Whilst aviation itself
may have limited capacity to make such savings it can provide a
conduit for funds enabling other industries to do so.

the ETS system providing investment

4.5
For example, the Commission estimates that the Directive
will result in net GHG reductions of 183 million metric tonnes
of CO2 by 2020 compared with a business as usual scenario.
Projecting the price of carbon during that period is imprecise
and depends on a firm allocation regime but if the aviation
industry purchased 100 million tonnes during that period at an
average price of EUR 30 it would,
inject
EUR 3 billion into CO2 reduction.

in principle,

The EESC in 2007 has

4.6
commenced an extensive
programme of encouraging action and best practice in civil
society on climate change, an integral part of which is to mini-
mise further contributions
the
is, pragmatically, the
Committee recognises that this proposal
best approach to the inclusion of aviation in a carbon-reduction
strategy it must however point out that the proposed Directive
will do virtually nothing to limit the ever-increasing output of

to GHG emissions. Whilst

5. Specific comments

5.1
In terms of achieving the stated objective of significantly
cutting emissions from the industry the proposed Directive is
terminologically inexact. As airlines can buy allowances at
‘market’ rate to cover emissions above the capped allocation the
effect on reducing GHGs from the aviation sector will be
minimal, estimated at a possible 3 % net reduction by 2020, or
less than just one year's growth in GHG emissions from avia-
tion. From the Commission's own figures it can be seen that the
marginal cost increase in ticket prices will have little effect on
the demand for air travel.

5.2
By issuing the great majority of initial allowances free of
charge to airlines and allowing top-up purchasing within the
general ETS (an open as opposed to a closed system for air
transport — or possibly for transport as a whole) the Commis-
sion accepts the status quo and does little to affect the continued
and rapid growth of a GHG-emitting aviation sector. However
the heart of the problem is that such a restriction is currently
politically and economically unacceptable. To make any progress
the Commission has calculated that not only will the inclusion
of aviation in the ETS drive some internal carbon reduction effi-
ciencies but it will also, by balancing-off increased CO2 emis-
sions from aviation by reductions in other sectors, provide
genuine market stimulus and finance for new research and
applications for CO2 reductions elsewhere.

5.3
The Commission notes that a ‘closed’ system of trading
allowances — i.e. within the aviation sector only — the allow-
ance price would be EUR 114-EUR 325 as opposed to the
assumed EUR 30 per tonne. Such a closed system is likely to
increase ticket prices by EUR 8-EUR 30 for a short haul flight.
Whilst this may be thought a more realistic way of affecting
both demand and supporting fuel efficiency and research into
emission minimisation it is unlikely to be supported at EU level
where there is evidence of differing transport priorities. A closed
or ‘transport only’ system would make a global agreement even
more unlikely.

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5.4
In the proposed Directive the Commission has recog-
nised but decided not to take account of the well-researched
analysis that aircraft emissions are between two and four times
more damaging to the climate than those from other indus-
tries (5). (This is largely because most emissions take place in the
upper atmosphere and due to the effects of non-CO2 emissions
such as condensation trails and nitrogen oxides) Complementary
action must be taken on reducing or compensating for nitrogen
oxides.

5.5
Airlines already benefit from the exemption of aviation
fuel from taxation and the free distribution of initial allocations
of carbon allowances will further increase their state-supported
advantages over other transport sectors. There is a risk that
operators use the introduction of the ETS scheme to raise prices
across the board. A clear presentation by the Commission to
the public of the real financial impact of the scheme on industry
costs may mitigate unjustified profit-taking.

Further

5.6
thought should be given to the ‘exclusions’
proposed in the Directive. For example the exemption of flights
by Heads of State, Heads of Government or Government Minis-
ters is particularly inappropriate as this group should be setting
a good example. Although there are administrative reasons for
offering this exclusion (flights operated by the military units
mostly) Member States should be asked to voluntarily offset
these emissions, as some have already decided to do.

Brussels, 31 May 2007.

5.7
As the Commission has opted for an open top-up system
there seems little justification for not bringing the baseline date
of
the scheme into closer alignment with the current EU
commitment for the first phase of the Kyoto Protocol (an 8 %
reduction between 2008-2012 from 1990 levels) and future
commitments (e.g. 30 % by 2020 from 1990 levels). The choice
of 2005 as the base reference year already allows the sector a
‘starting point’ already some 100 % higher than Kyoto. Of
course, taking into account that the aviation is the first transport
sector introduced in the EU-ETS, it is only fair to make initial
allocation on the same principles as introduced in the EU-ETS
rules.

This Directive is unlikely to achieve any significant
5.8
impact on slowing the increase of
total aviation emissions.
Nevertheless the fact that it may stabilise net CO2 emission
through the ETS and in doing also provide resources for further
reductions goes a long way towards justifying the cost and
administrative complexity of
implementation. The proposed
Directive does more than offer an environmental fig-leaf to the
aviation sector — it may positively increase public awareness,
offer significant new carbon-reduction resources and provide a
measure for internalising those external environmental costs
which hitherto the aviation industry has been able to ignore.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(5) IPCC Summary for Policymakers 2007, The science of climate change.

http://www.ipcc.ch/pub/sarsum1.htm.

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APPENDIX I

to the Committee Opinion

The following amendments were rejected by the assembly, but were supported by more than a quarter of the votes cast:

Point 1.8.2

Amend as follows:

‘1.8.2

The proposed emissions cap is lowered to require aviation to make an adjustment more set comparable with other
industries already in the EU-ETS.’

Voting

For: 18
Against: 33
Abstentions: 9

Point 1.8.3

Amend as follows:

‘1.8.3

The proposed free allocation of allowances to operators should be eliminated or significantly reduced requiring all, or
the majority, of allowances to be auctioned. set within the EU-ETS rules and guidance documents.’

Voting

For: 13
Against: 24
Abstentions: 6

APPENDIX II

In 2005, the European Union introduced a Europe-wide market in carbon dioxide emissions for major greenhouse gas
emitting industries. This is the forerunner to a similar system that will operate under the Kyoto Protocol among its signa-
tories from 2008. The EU ETS is designed to prepare European nations for Kyoto.

The scheme is based on the allocation of greenhouse gas emission allowances, called EU Allowances (EUAs), to specific
industrial sectors through national allocation plans (NAPs) with oversight by the European Commission. These allowances
can be traded. The first phase of the EU ETS covers the period 2005-2007, while the second phase coincides with the
Kyoto Protocol's first commitment period, from 2008 to 2012.

The first phase of the EU ETS applies to 7,300 companies and 12,000 installations in heavy industrial sectors in the EU.
These include: energy utilities, oil refineries, iron and steel producers, the pulp and paper industry as well as producers of
cement, glass, lime, brick and ceramics.

The ETS imposes annual targets for carbon dioxide (CO2) emissions on each EU country, and then in turn each country
allocates its national allowance across those companies whose factories and plants are the major emitters of carbon
dioxide — power utilities, building products manufacturers and other heavy industrial enterprises.

Each EUA gives the owner the right to emit one tonne of carbon dioxide. Companies that don't use up all their allow-
ances, that is, emit less than they are entitled to, can sell them. Companies which exceed their emission target must offset
the excess emissions by buying EUAs, or pay a fine of €40 a tonne.

To manage the trade in allowances and verify holdings, the ETS requires all EU Member States to create a national emis-
sions allowance registry holding accounts for all companies included the scheme.

A market operates through brokers and on electronic exchanges where EUAs are traded on a daily basis. What is mainly
being traded are EUA ‘forward contracts’, that is, EUAs for delivery at a future date. These future dates correspond to the
end of the calendar years to which the allowances relate.