COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community in view of the implementation of a single global market-based measure to international aviation emissions
Date: 2017-02-03
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU emission allowance, air transport, greenhouse gas, international transport, pollution control measures, reduction of gas emissions

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 3.2.2017  SWD(2017) 31 final   COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community in view of the implementation of a single global market-based measure to international aviation emissions   {COM(2017) 54 final} {SWD(2017) 30 final}  
 
 
Table of Contents 

1.  WHAT IS THE PROBLEM AND WHY IS IT A PROBLEM? ........................................................... 3 

2.  WHY SHOULD THE EU ACT? .............................................................................................. 10 

3.  WHAT SHOULD BE ACHIEVED? .......................................................................................... 12 

4.  WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES? .................................... 16 

5.  WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE 
AFFECTED? ................................................................................................................................ 23 

6.  HOW DO THE OPTIONS COMPARE? ..................................................................................... 48 

7.  HOW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED? ................................... 56 

ANNEX 1: PROCEDURAL INFORMATION ..................................................................................... 58 

ANNEX 2: STAKEHOLDER CONSULTATION ................................................................................ 60 

ANNEX 3: WHO IS AFFECTED BY THE INITIATIVE AND HOW ....................................................... 73 

ANNEX 4: ANALYTICAL MODELS USED IN PREPARING THE IMPACT ASSESSMENT. ..................... 75 

ANNEX 5: STRONG GROWTH OF GREENHOUSE GAS EMISSIONS IN THE AVIATION SECTOR. ..... 77 

ANNEX 6: 2016 ICAO RESOLUTION A39-3 ON A GLOBAL MARKET-BASED MEASURE SHEME 80  

ANNEX 7: DEVELOPMENTS IN THE RUN UP TO THE 2016 ICAO ASSEMBLY. ............................. 87 

ANNEX 8: INTEGRATION OF AVIATION IN THE EU'S EMISSIONS TRADING SYSTEM…………...88 

ANNEX 9: FEATURES OF THE EU ETS………………………………………………………...90 

2 

 
 
 
 
 
List of Acronyms 

CAEP 

CDM 

Committee on Aviation Environmental Protection 

Clean Development Mechanism 

CNG2020 

Carbon Neutral Growth from 2020 

CO2 

CO2 eq. 

CORSIA 

EAG 

EEA 

EU 

ETS 

EUA 

EUAA 

EUC 

Carbon Dioxide 

Carbon Dioxide equivalent 

Carbon Offset and Reduction Scheme for International Aviation 

Environment Advisory Group  

European Economic Area 

European Union 

Emission Trading System 

European Allowance 

European Aviation Allowance 

Emissions Unit Criteria 

Extra-EEA 

Flights between aerdromes within the European Economic Area and 
aerodromes in a third countries 

GHG 

GMBM 

GMTF 

HLG 

IATA 

ICAO 

Greenhouse Gas  

Global Market-Based Measure 

Global Market Based Measure Technical Task Force 

High Level Group 

International Air Transport Association 

International Civil Aviation Organization 

Intra-EEA 

Flights between aerodromes within the European Economic Area 

LDC 

LLDC 

MBM 

MRV 

MT 

RTK 

SARPs 

SIDS 

Least Developing Country 

Land-locked Developing Country 

Market-Based Measure 

Monitoring, Reporting and Verification 

Million Tonnes 

Revenue Tonne-Kilometre 

Standards and Recommended Practices 

Small Island Developing State 

UNFCCC 

United Nations Framework Convention on Climate Change 

3 

 
 
 
 
4 

 
 
 
 
 
1.  WHAT IS THE PROBLEM AND WHY IS IT A PROBLEM? 

1.1. CONTEXT 

1.1.1.  THE  NEED  FOR  MARKET-BASED  MEASURES  TO  ADDRESS  GREENHOUSE  GAS 

EMISSIONS IN THE AVIATION SECTOR 

Greenhouse gas (GHG) emissions from aviation activities are increasing exponentially. In the 
absence of further measures, carbon dioxide (CO2) emissions from international aviation are 
estimated to almost quadruple by 2050 compared to 2010 (see Annex 5 for more details). The 
strong growth in GHG emissions from the aviation sector risks undermining the goal under 
the  Paris  Agreement  of  keeping  global  warming  well  below  2  degrees  Celsius  above  pre-
industrial levels and pursue efforts to limit temperature increase to 1.5 degrees Celsius (see 
section 3.1 for more details) .  

The International Civil Aviation Organisation (ICAO) has set the objective, supported by the 
aviation  industry1,  of  maintaining  global  net  CO2  emissions  at  2020  levels  through  'carbon 
neutral  growth'  (CNG  2020)2,  i.e.  compensating  emission  growth  above  2020  levels. 
However, as noted by Cames et al. (2015)3, the CNG2020 objective is insufficient to meet the 
Paris  temperature  goals.   According  to  them,  following  an  assessment  of  the  remaining 
carbon budget derived from IPCC’s representative carbon pathway (RCP) 2.6, international 
aviation  emissions  should  start  declining  not  later  than  2030.   Furthermore,  they  remind 
that if  aviation’s  non-CO2 impacts  were  taken  into  account,  efforts  would  need  to  be 
higher. It  is  also  important  to  remind  that  the  aviation  industry  has  set  itself  the  additional, 
more ambitious, goal to halve aviation emissions by 2050 below 2005 levels, but this has not 
been adopted by ICAO.  

As the potential for emissions reduction from new technologies and operational practices is 
limited and more costly in the aviation sector (see Annex IV of the 2013 Impact Assessment4 
for more details on technological and operational measures), ICAO States5 and the aviation 
industry6 agree that the use of market-based measures (MBMs) are necessary for air transport 
to contribute to emission reductions. The use of MBMs allows the sector to offset its strong 
emission growth from increased activity through acquiring emission units from other sectors 
at lower abatement costs. 

Given the intrinsically transnational nature of aviation activities, effective ways of addressing 
GHG  emissions  from  international  aviation  are  through  multilaterally  agreed  measures  at 

1 The International Air Transport Association (IATA) at its 69th Annual General Meeting on 3 June 2013 
endorsed a Resolution on the Implementation of the Aviation "CNG2020" Strategy, available at: 
http://www.iata.org/pressroom/pr/Documents/agm69-resolution-cng2020.pdf 
2 2010 ICAO Assembly Resolution A37-19, available at: 
http://www.icao.int/publications/Documents/9958_en.pdf  
3 Cames, Martin; Graichen, Jakob, Siemons, Anne; Cook, Vanessa 2015: Emission Reduction Targets for 
International Aviation and Shipping. Berlin. 
http://www.europarl.europa.eu/RegData/etudes/STUD/2015/569964/IPOL_STU(2015)569964_EN.pdf  
4 SWD(2013) 430 final  
5 2013 ICAO Assembly Resolution A38-18, available at: http://www.icao.int/environmental-
protection/Documents/A38-17_A38-18.pdf    
6 IATA's Resolution on the Implementation of the Aviation "CNG2020" Strategy, available at: 
http://www.iata.org/pressroom/pr/Documents/agm69-resolution-cng2020.pdf 

5 

 
 
 
 
 
 
 
                                                 
global  and  regional  level.  The  International  Civil  Aviation  Organisation  (ICAO)  is  widely 
considered to be the most appropriate forum for the development of an international market 
based measure for aviation. The EU has therefore continuously advocated for the promotion 
of ambitious, global action in ICAO to complement measures taken at national and regional 
level. 

Technical and operational measures in the aviation sector 

Technological and/or operational measures (e.g. improved air traffic management and more 
efficient operation of the aircraft in the air and on the ground) could achieve 10% emissions 
reduction in the coming years in the aviation sector compare to a business as usual scenario.  
The  use  of  sustainable  biofuels  could  be  a  further  source  for  emission  reductions;  however 
considerable  uncertainty  exists  over  their  availability  and  sustainability  and  their  economic 
viability has not yet been proven. As a result, and as substantiated by data generated by the 
EU ETS, their  present use  by aircraft operators remains extremely small to  date. All  in  all, 
and compared with the estimated traffic growth, the emission gap remains to be addressed by 
other means, which is presently being done by the EU ETS.  

In 2016, ICAO's Committee on Aviation Environmental Protection (CAEP) agreed on a CO2 
standard  for  aircraft,  which  should  guide  their  development  towards  greater  fuel  and 
environmental efficiency. For large new aircraft, the standard will apply as of 2020. Existing 
aircrafts will have to apply the new standard by 2028 the latest.  

The  reductions  achieved  through  these  developments  are  expected  to  be  outpaced  by  the 
larger growth in demand of aviation services. Even under the most optimistic scenario about 
the  effectiveness  of  non-market-based  measures,  aviation  CO2  emissions  in  2050  are  still 
expected to be 3.8 times higher than 2010 emissions due to the forecasted strong increase in 
aviation  activities.  Therefore,  technological  and  operational  measures,  although  important,  
are  on  their  own  insufficient  to  achieve  ICAO's  self-declared  target  of  CNG  from  2020. 
CAEP  therefore  concluded  that  the  only  way  to  enable  the  agreed  climate  objective  was 
through the Global Market Based Measure. 

1.1.2.  INTEGRATION OF AVIATION EMISSIONS IN THE EU'S EMISSIONS TRADING SYSTEM 

The  EU  led  the  way  in  implementing  a  MBM  for  aviation  by  including  flights  between 
aerodromes  within  the  European  Economic  Area  (hereafter  "intra-EEA  flights"),  as  well  as 
flights  between  aerdromes  in  the  European  Economic  Area  (EEA)  and  aerodromes  in  third 
countries (hereafter "extra-EEA flights") in the EU's Emissions Trading System (EU ETS)7 in 
2008  (see  Annex  8).  As  originally  designed,  the  EU  ETS  covers  35%  of  global  emissions 
from domestic and international flights and 50% of all international flights.  

According  to  Directive  2003/87/EC  all  aircraft  operators  carrying  out  aviation  activities 
covered by the EU ETS have to report annually their emissions corresponding to the previous 
year. Then, they have an obligation to surrender as many allowances as emissions have been 

7 EU ETS Directive 2003/87/EC 

6 

 
 
 
 
 
 
 
 
                                                 
reported.  Every  year,  a  number  of  allowances  are  issued  to  aircraft  operators.  The  total 
amount is defined by the "cap", which is 95% of the average 2004-2006 emissions. Contrary 
to  the  cap  for  stationary  installations,  the  cap  for  the  aviation  sector  is  constant  until  2020. 
82% of this amount is issued to operators free of charge, 15% is auctioned and 3% is set aside 
in a "special reserve" to cover the free allocation to new entrants and fast growers. Annex 9 
provides more information on the EU ETS for aviation. 

When  the  ICAO  Council  in  2012  decided  that  ICAO  would  begin  developing  guidance  for 
the implementation of a single, global market based measure (GMBM) covering international 
aviation emissions, the EU legislators temporarily  limited the scope of the EU ETS to  give 
airlines  a  choice  as  to  the  scope  applied  to  their  flights  (intra-EEA  or  all  flights)  in  2012. 
Following  the  2013  ICAO  Assembly  decision  to  develop  a  global  market-based  measure 
(GMBM)  to  address  international  aviation  emissions,  the  EU  limited  the  scope  of  the  EU 
ETS to intra-EEA flights during the period 2013-2016 to drive forward the ICAO process in 
relation to international emissions from aviation.  

Annex 8 sets out the chronological development of the EU ETS.  

1.1.3.  THE  ADOPTION  OF  A  GLOBAL  MARKET  BASED  MEASURE  FOR  INTERNATIONAL 

AVIATION (GMBM) 

ICAO,  after  several  years  of  intensive  negotiations  (see  Annex  7)  at  its  39th  General 
Assembly  in  September/October  2016,  reached  –  for  the  first  time  –  an  agreement  on  an 
ICAO  Resolution  for  the  implementation  of  a  global  market  based  measure  (GMBM)  to 
address  the  growth  in  international  aviation  emissions  globally  from  2021  through  an 
offsetting system aimed at stabilising them at 2020 levels (see Annex 6)8.  

In its first phase from 2021 to 2026, participation of states in the GMBM will be voluntary, 
with the possibility to opt-in or out from the system; all countries should then participate in 
its  second  phase  starting  in  2027,  except  least  developed  countries,  land-locked  developing 
countries,  small  island  developing  states  and  states  with  a  small  share  of  international 
aviation activity (revenue tonne kilometre (RTK) of below 0.5% individually or below 10% 
in cumulative terms). As ICAO has no competence for domestic aviation9, the GMBM is not 
designed  to  cover  domestic  flights.  Sixty-six  countries,  including  all  member  states  of  the 
European Civil Aviation Conference10, Australia, Canada, China, Indonesia, Japan, Mexico, 
New Zealand, Qatar, Singapore, United Arab Emirates and the United States of America had 
declared  in  October  2016  that  they  will  apply  the  GMBM  during  its  voluntary  phase.  A 
complete list of states that have expressed their intention to participate in the voluntary phase 
is available on the ICAO website11.  

By  itself,  the  GMBM  does  not  aim  at  reducing  aviation  emissions.  The  GMBM  is  an 
offsetting mechanism, which enables the aviation sector to continue to grow after 2020 in as 
far  as  emissions  above  a  certain  threshold  are  compensated  for  through  international  offset 
credits (generated in non-aviation sectors mainly). The baseline for the GMBM is set at the 

8 2016 ICAO Assembly Resolution A39-3, available at: http://www.icao.int/environmental-
protection/Documents/Resolution_A39_3.pdf  
9 See statement at http://www.icao.int/environmental-protection/Documents/STATEMENTS/cop4.PDF  
10 ECAC is composed of 44 member states, including all EU member states. A complete list of its members is 
available on: https://www.ecac-ceac.org/member-states   
11 http://www.icao.int/environmental-protection/Pages/market-based-measures.aspx  

7 

 
 
 
 
 
                                                 
global net CO2 emissions from international aviation in 2020 so as to achieve the aspirational 
target of CNG 2020 (although for technical reasons the average 2019-2020 emissions will be 
used). However, as  said before, given the current level  of  participation in  the initial  phases 
and the exemptions for routes to and from certain countries, it is estimated that around 20% 
of emissions growth above 2020 levels will not be offset, leaving a 20 % gap to achieve the 
objective of carbon neutrality from 2020.  

While this resolution on the development of a GMBM is a breakthrough in ICAO's efforts to 
address the growth of international aviation emissions, a number of important features of the 
GMBM  still  need  to  be  developed  and  agreed  in  ICAO  before  the  GMBM  can  be 
implemented  in  2021.  They  relate  to  monitoring,  reporting  and  verification  (MRV).  i.e  the 
transparency rules, and eligibility of offset units, as well as ways to avoid double counting, 
registry  and  governance/compliance  set-up.  Any  delays  in  agreeing  on  those  elements  risk 
delaying the operationalization of the GMBM. These remaining features are key elements for 
the  effectiveness  and  environmental  integrity  of  the  scheme  from  a  climate  standpoint.  It 
should also be reminded that the GMBM is enshrined in a resolution adopted in ICAO and 
thus not a binding international agreement. However, detailed rules to implement the GMBM 
are  to  be  adopted  in  the  form  of  ICAO  Standards  and  Recommended  Practices,  the  former 
being binding on ICAO member states not filing differences to them. In addition, the actual 
implementation of the GMBM will depend on domestic legislation to be developed, adopted 
and implemented by countries and regions participating in the scheme12. 
At  its  39th Assembly,  ICAO  also  adopted  a resolution  on  climate  action  other  than  through 
the  GMBM13.  This  resolution  includes  an  annex  listing  the  key  principles  applicable  to 
MBMs  addressing  international  aviation  emissions,  which  may  also  apply  to  other  market 
measures different from the GMBM. 

Comparing the GMBM and the EU ETS 

Both  the  GMBM  and  the  EU  ETS  are  market-based  measures  to  address  GHG  emissions. 
However, there are important differences between them.  

The first important difference is the nature of the measure: the EU ETS is a legally-binding 
cap  and  trade  system  setting  a  limit  on  the  total  GHG  emissions  so  as  to  reduce  them, 
whereas the GMBM is a carbon offsetting scheme, which allows emissions from the aviation 
sector to continue increasing above the CNG 2020 threshold provided they are compensated 
for with international emission reduction credits.  

Another difference is the level of ambition in terms of emission reductions or limitations to 
be achieved. In contrast to the CNG2020 target under the GMBM (which will only be met at 
80%  due  the  various  flexibilities  and  exemptions),  the  cap  in  the  EU  ETS  for  aviation 
activities is set as 95% of the average 2004-2006 emissions from aviation and is expected to 
decrease  annually  by  2.2%  starting  in  2021.  This  shows  that  the  GMBM  is  less  ambitious 
than  the  EU  ETS  when  comparing  GHG  emission  reductions  achieved  in  a  given 
geographical scope.  

12 See legal study on "Possible legal arrangements to implement a global market based measure for international 
aviation emissions": http://ec.europa.eu/clima/policies/transport/aviation/docs/gmbm_legal_study_en.pdf  
13 2016 ICAO Assembly Resolution A39-2, available at: http://www.icao.int/environmental-
protection/Documents/Resolution_A39_2.pdf  

8 

 
 
 
 
                                                 
Thirdly, the GMBM is relying on international offsets. The quality of international offsets is 
harder to control and raises concerns over additionality and the applicable accounting rules. 
In addition, it should be recalled that the EU 2030 climate objective under UNFCCC should 
be met through domestic reduction efforts14, i.e. without the use of international credits. This 
was  agreed  at  the  European  Council  conclusions  from  October  201415  and  accordingly 
communicated by the EU under the Paris Agreement.   

Under the EU ETS, EU general allowances or EU aviation allowances must be surrendered 
for  each  tonne  of  emitted  CO2  emissions  by  flights  covered  by  the  EU  ETS.  Up  to  2020, 
certain  types  of  international  credits  are  allowed  for  surrendering  but  limited  to  1.5%  of 
emissions. In line with the EU contribution to the Paris Agreement, no international credits 
should be used after 2020 in the EU ETS to ensure that emissions reductions are taking place 
within the EU. 

Finally,  the  geographic  scope  is  obviously  different:  the  GMBM  is  applied  to  international 
flights globally (although routes to and from a number of countries are exempt), whereas the 
EU ETS applies to EEA-related flights, including domestic aviation emissions. 

More information on the EU ETS features on Annex 9. The main features of the GMBM can 
be found on the ICAO Resolution 39-3, in Annex 6. 

1.2. THE PROBLEMS 

Regulation (EU) No 421/2014 introduced Article 28a in the EU ETS Directive 2003/87/EC, 
which requires the Commission to report back to the Council and the European Parliament on 
the  outcome  of  the  2016  ICAO  Assembly.  When  doing  so,  the  Commission  shall  consider 
and,  if  appropriate,  include  proposals  in  reaction  to  the  ICAO  developments  on  the 
appropriate  scope  for  coverage  of  emissions  from  extra  EEA-flights  from  2017  onwards. 
Should  the  EU  decide  not  to  amend  the  EU  ETS  in  response  to  the  outcome  at  the  2016 
ICAO Assembly, the EU ETS will – by default – apply in its full scope from 2017 onwards. 
This  would  mean  that  aircraft  operators  will  be  responsible  for  GHG  emissions  from  all 
flights departing from or arriving at aerodromes situated in the EEA.  

In  its  review,  the  EU  should  recognise  the  landmark  agreement  reached  by  the  39th  ICAO 
Assembly.  With  the  GMBM,  international  aviation  emissions  would  be  adressed  –  for  the 
first time – at global level. Although it is unlikely to result in a significant in-sector reduction 
of GHG emissions in the period up to 2035, which is insufficient under the Paris Agreement, 
which calls “to reach global peaking of greenhouse gas emissions as soon as possible […] 
and  to  undertake  rapid  reductions  thereafter”16  –  the  GMBM  will  take  the  aviation  sector 
one  step  closer  to  achieving  CNG2020.  Based  on  current  levels  of  participation  during  the 
voluntary  phase,  it  is  estimated  that  around  80%  of  emissions  necessary  to  achieve  carbon 
neutrality from international aviation from 2020 will be offset, leaving a 20% emission gap 
compared to what would be needed to meet the CNG 2020 goal.  

14 http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf  
15 EUCO 169/14 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/145397.pdf  
16 
available 
(2015), 
http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf 

Agreement 

article 

Paris 

4(1), 

at: 

9 

 
 
 
 
 
 
 
                                                 
   
In light of what has been agreed so far in ICAO, a return to the EU ETS full scope, even on a 
transitional  basis  until  the  GMBM  is  operationalised,  may  give  rise  to  controversies  with 
third  countries  and  be  interpreted  as  a  signal  that  the  EU  does  not  intend  to  implement  the 
GMBM.  It  could  therefore  negatively  affect  the  prospects  for  finding  agreement  on  the 
outstanding  features  of  the  GMBM  (i.e.  transparency,  accounting  and  offsetting  rules, 
registry and governance) and the ensuing implementation of the GMBM from 2021 by others. 

At the same time, the international climate policy context has also significantly changed after 
the  latest  review  of  the  EU  ETS  for  aviation.  The  Paris  agreement  goals  and  the  EU 
commitment  to  contribute  to  them  with  an  at  least  minus  40%  domestic  target  by  2030, 
compared to 1990 GHG emissions levels, require a fair mitigation effort from all sectors and 
must  be  taken  into  account  in  the  review.  Section  3.1  provides  further  details  on  the  EU’s 
domestic  and  international  climate  commitments,  while  Annex  5,  section  3  highlights  the 
need for early and significant action to reduce global GHG emissions to meet the well below 
2 degrees Celsius objective under the Paris Agreement.     

In this context, the review of the EU ETS for aviation should ensure that the development and 
implementation of the GMBM are not put at risk whilst aviation fairly contributes to the EU’s 
climate targets in the period 2017-2020, but also after 2020.  

While  relevant  rules  for  the  implementation  of  the  GMBM  still  have  to  be  developed,  the 
main  parameters  determining  its  impacts  (environmental  ambition  /  baseline,  geographic 
scope,  exemptions,  type  of  units,  etc.)  are  already  known.  This  allows,  as  requested  by  the 
EU ETS Directive, for a first assessment of the outcome of the ICAO Assembly, which needs 
to look into the post-2020 period, when the GMBM will start to apply. Importantly, this also 
allows  for  a  longer  term  vision  of  impacts  of  EU  policies,  including  on  reaching  the  2030 
climate targets. It must be noted that this is a first assessment carried out on the basis of the 
core  features  of  the  GMBM  agreed  in  the  39th  ICAO  Assembly  (climate  objective/level  of 
ambition,  offsetting  nature…).  The  adoption  of  additional  rules  applicable  to  the  GMBM 
through Standards and Recommended Practices and the actual implementation of the GMBM 
by states in the coming years will provide further details on how this scheme will operate, its 
actual impacts and the extent to which it will deliver on carbon neutrality  from 2020 while 
avoiding distortions of competition. This may require further analysis in the future.   

10 

 
 
 
 
 
 
 
 
 
1.2.1.  PROBLEM  1:  THE  SCOPE  OF  THE  EU  ETS  IN  THE  TRANSITIONAL  PERIOD  (2017-

2020) TO EFFECTIVELY ADDRESS AVIATION EMISSIONS  

The period between January 2017 and December 2020 must be considered as a transitional 
period  during  which  efforts  will  focus  on  the  operationalization  of  the  GMBM,  and  in 
particular on finding agreement on the outstanding features of the GMBM (i.e. transparency, 
accounting and  offsetting rules,  registry) to  ensure that the system will be fit  for start from 
2021.  Therefore,  and  as  required  by  present  legislation,  it  must  be  carefully  considered 
whether  the  scope  of  the  EU  ETS  for  aviation  should  be  amended  to  take  account  of  the 
positive outcome of the 2016 ICAO Assembly. Any amendments to the EU ETS for aviation 
should be fully consistent with EU 2020 climate targets by ensuring that aviation emissions in 
the EU/EEA are addressed effectively as planned, while further incentivizing the transition to 
and implementation of the GMBM from 2021 to maximize the global mitigation impact. 

1.2.2.  PROBLEM 2: POST 2020 IMPLEMENTATION OF THE GMBM AND EU ACTION 

With  the  expectation  that  the  GMBM  will  start  in  2021,  the  preparations  for  its 
implementation through national legislation need to start soon to provide legal certainty to the 
aviation  industry  and  national  authorities.  Besides,  and  considering  the  EU's  commitment 
under  the  Paris  Agreement  and  the  implementation  of  the  2030  climate  and  energy 
framework,  the  contribution  by  the  aviation  sector  to  the  EU's  emission  reduction  targets 
needs to be determined. A higher or lower contribution from the aviation sector will have an 
impact on the efforts by other sectors to ensure that collectively the 2030 target of an at least 
40%  reduction  compared  to  2005  will  be  met.  In  view  of  the  future  implementation  of  the 
GMBM, it is essential to assess the environmental, economic (including on competitiveness), 
and  social  impacts  of  the  different  possible  interactions  between  the  GMBM  and  the  EU 
measure  for  aviation  in  the  period  post-2020.  The  implications  this  may  have  on  the 
relationship  with  ICAO  and  international  partners  must  thereby  also  be  taken  into 
consideration, along with EU commitments under the Paris Agreement. 

1.3. RETROSPECTIVE EVALUATION/FITNESS CHECK 

In  the  context  of  the  review  of  the  EU  ETS  for  phase  4  (2021-2030)  an  evaluation  of  the 
existing  ETS  Directive  was  part  of  the  impact  assessment  work  and  has  fed  into  the 
assessment  of  the  policy  options17.  A  specific  retrospective  evaluation  for  the  EU  ETS  for 
aviation is not considered necessary at this juncture, since the EU ETS for aviation has never 
been applied in its full scope as initially designed: amendments to the scope of the EU ETS 
for  aviation  were  done  on  the  basis  of  extensive  assessments  to  address  the  concerns  and 
opposition  raised  in  relation  to  the  measure  as  initially  designed.  The  2013  Impact 
Assessment18  accompanying  the  proposal  for  Regulation  (EU)  No  421/2014  most  notably 
assessed the political acceptability, as well as environmental effectiveness of the EU ETS for 
aviation  under  different  options  for  geographical  scope,  and  the  impact  of  introducing 
minimum thresholds on evironmental effectiveness and administrative burden.  

17 SWD(2015) 135 final, Annex 4 
18 SWD(2013) 430 final 

11 

 
 
 
 
 
 
 
 
 
                                                 
In  addition, the European Commission  – on an  annual basis  – conducts indepth  analysis of 
the  functioning  of  the  European  carbon  market  and  reports  its  findings  to  the  European 
Parliament  and  the  Council.  Previous  Carbon  Market  Reports19  have  confirmed  the 
effectiveness of, as well as the very high level of compliance with the EU ETS for aviation: 
airlines  responsible  for  more  than  99%  of  emissions  from  intra-EEA  flights  complied  with 
the legislation, including more than 100 commercial aircraft operators based outside the EU 
but operating flights within the EEA20. 

Moreover, analyses in the EU’s ICAO Action Plans have shown that, over 2013-2016, with 
the inclusion of only intra-European flights in the EU ETS, the EU ETS has contributed to 
achieve around 16 million tonnes of emission reductions annually, or almost 65 million over 
2013-2016,  partly  within  the  sector  (airlines  reduce  their  emissions  to  avoid  paying  for 
additional units) or in other sectors (airlines purchase units from other sectors, which would 
have  to  reduce  their  emissions  consistently).  While  some  reductions  are  likely  to  have 
occurred  within  the  aviation  sector,  encouraged  by  the  EU  ETS’s  economic  incentive  for 
limiting emissions or use of aviation biofuels, the majority of reductions are expected to have 
taken place in other sectors.  

In parallel to providing a carbon price which incentivises emission reductions, the EU ETS 
also  supports  the  reduction  of  GHG  emissions  through  €2.1  billion  funding  for  the 
deployment of innovative renewables and carbon capture and storage. This funding has been 
raised from the sale of 300 million emission allowances from the New Entrants’ Reserve of 
the  third  phase  of  the  EU  ETS.  This  includes  over  €900  million  for  supporting  bioenergy 
projects,  including  advanced  biofuels,  which  are  relevant  for  the  decarbonisation  of  the 
aviation sector. In addition, through Member States’ use of EU ETS auction revenue in 2013, 
over €3 billion has been reported by them as being used to address climate change21. 

The extensive assessments above, as well as this Impact Assessment, which has been called 
for  under  Regulation  (EU)  No  421/2014,  are  effectively  evaluating  and  assessing  the 
effectiveness  and  functioning  of  the  EU  ETS  Directive  for  aviation,  which  is  considered 
adequate  in  terms  of  retrospective  evaluation  report  and  fitness  check  of  the  EU  ETS 
Directive for aviation.    

19 Carbon Market Report 2015, available at: 
http://ec.europa.eu/clima/policies/strategies/progress/docs/com_2015_576_annex_1_cover_en.pdf  
20 See http://ec.europa.eu/clima/news/articles/news_2016052001_en.htm  
21 See ICAO Action Plans, for example at: 
http://www.trafi.fi/filebank/a/1435659226/1f1aad3a6c5babd175c5c5629634ab1a/17994-
1_2015__State_Action_Plan_of_Finland.pdf  

12 

 
 
 
 
 
 
                                                 
2.  WHY SHOULD THE EU ACT? 

As  can  be  seen  from  Annex  5,  aviation  CO2  emissions  are  growing  sharply.  Meaningful 
mitigation measures are required for the sector to contribute to effectively addressing global 
warming. The EU should continue doing so while facilitating global action, notably through 
ICAO, as well as through domestic action. Thereby, the EU should not only take into account 
the  recent  political  agreement  on  the  GMBM  it  supported  in  ICAO,  but  also  its  climate 
commitments, both at European and at international level. As recalled in the previous section 
and  set  out  in  detail  in  section  3.1,  the  EU  has  committed  to  reduce  its  GHG  emissions 
through domestic efforts by at least 40% compared to 1990 levels by 2030. This is the basis 
of the EU´s and its Member States’ National Determined Contribution in the context of the 
landmark Paris Agreement, where the EU reiterated its, at least, minus 40% economy-wide 
target.  All  sectors,  including  aviation,  must  fairly  contribute  to  decarbonise  the  European 
economy to meet this target.  

The current EU ETS legislation calls upon the Commission to consider the appropriate scope 
of  the  EU  ETS  for  aviation  emissions  from  activities  to  and  from  aerodromes  located  in 
countries outside the EEA following the outcome of the 2016 ICAO Assembly. Through the 
review  of  the  EU  ETS  for  aviation  the  EU  should  ensure  that  the  development  and 
implementation  of  the  GMBM  is  not  put  at  risk,  in  order  to  maximize  global  climate 
mitigation efforts, whilst safeguarding that aviation continues to fairly contribute to the EU 
climate targets. 

2.1. SUBSIDIARITY 

In  line  with  the  2004  ICAO  Assembly’s  decision  not  to  develop  a  GMBM  but  to  favour 
inclusion of aviation into open regional systems, the EU chose to integrate the aviation sector 
in  the  EU  ETS  by  amending  the  EU  ETS  Directive  2003/87/EC  through  Directive 
2008/101/EC.   

Acting at EU level is more efficient than acting at the Member State level, due to the largely 
transnational nature of aviation, with almost 90% of GHG emissions from aviation in the EU 
coming from international aviation22. Indeed, the single market in aviation is a key goal for 
the EU. Using emissions information as a proxy, it can be said that in relation to intra-EEA, 
on  average,  ~74%  of  aviation  activity  corresponds  to  flights  departing  from  an  EEA 
aerodrome  flying  to  an  aerodrome  situated  in  another  EEA  Member  State.  Furthermore, 
acting  at  the  EU  level  prevents  the  distortion  of  competition  in  the  internal  market  by 
ensuring  that  the  environmental  constraints  imposed  on  intra  and  extra  EEA  flights  are 
harmonised at the EU level.  

This harmonized approach will also ensure that the regulation is compatible with meeting the 
EU's  2030  domestic  climate  targets.  Lastly,  from  an  aviation  industry  perspective,  the 
existence  of  the  EU  ETS  helps  justify  argumentation  against  action  at  national  level  by 
Member  States.  Without  an  effective  system  in  place,  the  likelihood  of  such  action  would 
significantly increase.  

2.2. LEGAL BASIS 

22 SWD(2016) 244 final 

13 

 
 
 
 
 
 
                                                 
The legal basis for the EU ETS Directive 2003/87/EC, as well as all subsequent legislation 
amending it or other legislation regulating GHG emissions, is the environmental legal basis 
enshrined in Article 192 of the Treaty on the Functioning of the European Union. This should 
also remain the legal basis for the new Regulation, as the principal objective of the measure is 
the protection of the environment through the reduction of GHGs. 

14 

 
 
 
 
 
3.  WHAT SHOULD BE ACHIEVED? 

Regulation (EU) No 421/2014 introduced Article 28a in the EU ETS Directive 2003/87/EC, 
which requires the Commission to report back to the Council and the European Parliament on 
the  outcome  of  the  2016  ICAO  Assembly.  When  doing  so,  the  Commission  shall  consider 
and,  if  appropriate,  include  proposals  in  reaction  to  the  ICAO  developments  on  the 
appropriate scope for coverage of emissions from extra EEA-flights from 2017 onwards. Any 
amendments to the scope of the EU ETS for aviation should guarantee that the EU achieves 
its climate targets. In this regard the EU ETS should maintain a high level of environmental 
ambition  within the EU, while  further incentivizing the transition to and implementation of 
the GMBM to maximize the global mitigation impact. Should the EU decide not to amend the 
EU  ETS  in  response  to  the  outcome  at  the  2016  ICAO  Assembly,  the  EU  ETS  will  –  by 
default – apply in its full scope from 2017 onwards. This would mean that aircraft operators 
will  be  responsible  for  GHG  emissions  from  all  flights  departing  from  or  arriving  at 
aerodromes situated in the EEA.  

3.1. THE EU’S DOMESTIC AND INTERNATIONAL CLIMATE TARGETS 

The EU is bound to achieve its domestic and international climate commitments. It is evident 
from the different projections outlined in Annex 5 that all sectors of the economy, including 
aviation, must contribute already prior to 2020, to reduce global GHG emissions to achieve 
these targets. The need for all  sectors of the economy to contribute to emissions reductions 
has been confirmed by the European Council on a number of occassions23, as well as being 
restated  in  the  EU  and  its  Member  States’  Nationally  Determined  Contribution  under  the 
Union’s instrument of ratification for the Paris Agreement24.  

3.1.1.  EU CLIMATE TARGETS 
Pursuant to the Commission's 2011 low-carbon economy roadmap25, the EU should by 2050 
cut its emissions to 80% below 1990 levels through emission cuts in all sectors. In relation to 
the this general commitment, the 2011 White Paper on Transport26 sets a specific target for 
the transport sector, including aviation, to reduce GHG emissions by 60% by 2050 compared 
to  1990  and  by  around  20%  by  2030  compared  to  2008.  Projections  of  the  European 
Environmental  Agency  suggest  that  the  transport  target  will  not  be  met,  unless  additional 
measures  are  put  in  place27.    The  recently  adopted  Commission  Aviation  Strategy  also 
pointed  at  the  relevance  and  effectiveness  of  the  EU  ETS  as  key  tool  to  reduce  the  carbon 
footprint of the aviation sector in the EU28.  
In  October  2014,  EU  leaders  agreed  on  the  climate  and  energy  framework  for  203029, 
including  a  binding  domestic  target  to  reduce  domestic  GHG  emissions  by  at  least  40% 
below 1990 levels by 2030. The European Council of October 2014 concluded that the target 

23 EUCO 169/14 
24 http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf 
25 COM(2011) 112 final 
26 COM(2011) 144 final 
27 European Environmental Agency, "Evaluating 15 Years of Transport and Environmental Policy" (2015), page 
10; available at: http://www.eea.europa.eu/publications/term-report-2015  
28 SWD(2015) 261 final, page 72 
29 EUCO 169/14 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/145397.pdf  

15 

 
 
 
 
 
                                                 
  
be  met  in  the  most  cost-effective  way  possible,  by  reducing  emissions  domestically  in  the 
non-ETS  sectors  by  30%  compared  to  2005  and  in  the  ETS  sectors  by  43%  compared  to 
2005. To the latter end, the linear reduction factor in the EU ETS sectors would be increased 
from 1.74% to 2.2% after 2020. For these calculations the aviation sector, including all intra-
EU flights, was considered as an EU ETS sector. The 2030 framework will succeed the 2020 
climate and energy framework30 which contains the target of reducing GHG emission by 20% 
below 1990 levels by 2020. Legally binding legislation establishes the measures to meet the 
targets  under  the  2020  package  (in  force)  and  2030  domestic  climate  framework  (currently 
under discussion by the co-legislators).  

3.1.2.  INTERNATIONAL COMMITMENT UNDER THE PARIS AGREEMENT  

The  EU  is  strongly  devoted  to  achieve  the  climate  objective  of  limiting  global  average 
temperature  increase  to  well  below  2  degrees  Celsius  above  pre-industrial  levels  and  to 
pursue  efforts  to  limit  global  temperature  increase  to  1.5  degrees  Celsius,  as  committed  to 
under  Article  2  of  the  Paris  Agreement.  Under  the  Paris  Agreement,  "Parties  aim  to  reach 
global peaking of greenhouse gas emissions as soon as possible […] and to undertake rapid 
reductions  thereafter  […],  so  as  to  achieve  a  balance  between  anthropogenic  emissions  by 
sources and removals by sinks of greenhouse gases in the second half of this century" (Article 
4.1).  The Paris Agreement states that “developed country Parties should continue taking the 
lead by undertaking economy-wide absolute emission reduction targets", while “developing 
country  Parties  should  continue  enhancing  their  mitigation  efforts,  and  are  encouraged  to 
move  over  time  towards  economy-wide  emission  reduction  or  limitation  targets”  (Article 
4.4)31. The Paris Agreement is a legally binding international treaty. It entered into force on 
the 4th of November 2016, following its ratification by the EU.  

Consistent  with  the  climate  and  energy  framework  referred  to  above,  in  the  EU  and  its 
Member  States’  Nationally  Determined  Contribution  under  the  Union’s  instrument  of 
ratification  for  the  Paris  Agreement,  the  EU  and  its  Member  States  are  committed  to  a 
binding  economy-wide  target  of  an  at  least  40%  reduction  in  emissions  compared  to  1990 
levels  by  2030,  with  no  contribution  from  international  credits32.  As  an  economy-wide 
objective,  all sectors of the economy are due to contribute to emissions reductions.  

The  EU  is  also  commited  to  meeting  at  least  the  global  aspirational  goal  for  international 
aviation that was agreed by the 2010 ICAO Assembly and reaffirmed by the 2013 and 2016 
ICAO Assemblies, namely maintaining global net CO2 emissions from international aviation 
at 2020 levels through carbon neutral growth33. 

In  its  recent  resolution  on  the  implementation  of  the  Paris  Agreement,  the  European 
Parliament states that “any amendment of the existing legislation on including aviation in the 
EU  ETS  can  only  be  considered  if  the  GMBM  is  ambitious,  and  that,  in  any  case,  intra-
European flights will continue to be covered by the EU ETS”34. 

30 EUCO 17215/08  
31 Paris Agreement (2015), available at: 
  http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf   
32  http://www4.unfccc.int/submissions/INDC/Published%20Documents/Latvia/1/LV-03-06-EU%20INDC.pdf  
33 2010 ICAO Assembly Resolution A37-19, available at: 
 http://www.icao.int/publications/Documents/9958_en.pdf  
34 European Parliament resolution of 6 October 2016 on the implementation of the Paris Agreement and the 
2016 UN Climate Change Conference in Marrakech, Morocco (COP22) (2016/2814(RSP)), paragraph 29 

16 

 
 
 
 
                                                 
3.2. POLICY OBJECTIVES 

3.2.1.  GENERAL POLICY OBJECTIVE 

The general environmental policy objective  of the amendments to  the EU ETS for aviation 
following the 2016 ICAO Assembly remain unchanged since the integration of aviation into 
the EU ETS through Directive 2008/101/EC, namely to ensure the aviation sector's sufficient 
contribution to reducing the impacts of climate change.  

In reviewing the scope for the 2017-2020 period, the EU must ensure that the current level of 
environmental ambition under the EU ETS for emissions from the aviation sector is at least 
maintained  to  meet  the  EU's  domestic  2020  target,  while  supporting  the  implementation  of 
the GMBM in relation to international flights.  

For the period post-2020, when the GMBM is expected to be operational, the changes to the 
system must guarantee that the global mitigation impact of aviation emissions is maximised 
through  the  implementation  of  the  GMBM,  whilst  securing  the  aviation  sector's  adequate 
contribution  to  achieving  the  EU's  domestic  2030  climate  target  and  international 
commitments under the Paris Agreement.  

In addition to the general environmental objective, it must be ensured that both in the period 
up  to  2020  and  post-2020,  the  action  has  no  negative  economic  impact  on  the  EU,  and  in 
paricular its aviation sector, and that it does not harm the relationship with ICAO.  

3.2.2.  SPECIFIC POLICY OBJECTIVES 

The specific objectives for the 2017-2020 period are: 

Environmental objective: 

  Address emissions from aviation activities, pending the implementation of a GMBM 

in 2021, to achieve the EU's 2020 climate targets.  

Economic objective: 

  Maintain the competitiveness level in the aviation sector and the level playing field in 
the  internal  market  for  aviation,  including  by  providing  legal  certainty  to  operators 
and keeping the administrative costs associated with the measure low.  

Relationship to ICAO: 

  Enable  the  development,  transition  and  readiness  for  the  implementation  of  the 

GMBM from 2021. 

  Political/international acceptability of the EU.  

The specific objectives for the period post-2020 are: 

Environmental objective: 

  Ensure that aviation emissions from flights to, from or within the EEA continue to be 
addressed effectively post 2020, so as to at least maintain the EU's current, domestic 
level  of  environmental  ambition  and  relevant  aviation  contribution,  in  line  with  the 
EU's domestic 2030 climate commitment.   

17 

 
 
 
 
 
 
 
  Facilitate  the  implementation  of  the  GMBM  from  2021  to  maximize  the  global 
mitigation impact to meet the at least 2 degrees Celsius target and to pursue efforts to 
limit  global  temperature  increase  to  1.5  degrees  Celsius  under  the  Paris  Agreement 
and ICAO's target of CNG 2020. 

Economic objective: 

  Maintain the competitiveness level in the aviation sector and the level playing field in 
the  internal  market  for  aviation,    including  by  providing  legal  certainty  to  operators 
and keeping the administrative costs associated with the measures low and avoiding 
any duplication of regulation.  

Relationship with ICAO: 

Implementation of the GMBM by the EU and third countries. 

 
  Political/international acceptability of the EU measure.  

18 

 
 
 
 
 
 
 
4.  WHAT ARE THE VARIOUS OPTIONS TO ACHIEVE THE OBJECTIVES? 

Pursuant  to  Regulation  421/2014,  the  Commission  is  to  report  on  the  outcome  of  the  2016 
ICAO  Assembly  to  the  European  Parliament  and  to  the  Council  and  consider  and,  if 
approprite, include proposals in reaction to the ICAO developments on the appropriate scope 
for coverage of emissions of extra-EEA flights from 1 January 2017 onwards.  

The options described below were developed to take account of the positive outcome of the 
2016  ICAO  Assembly,  namely  the  adoption  of  a  resolution  on  the  GMBM,  including  a 
roadmap  for  the  completion  of  its  key  design  elements,  and  to  provide  continued  positive 
momentum to the ICAO process. They build on the expectation that the GMBM will become 
operational in 2021. Therefore, the policy options are divided into options available for the 
2017-2020  period  and  options  available  for  the  period  post  2020  when  the  GMBM  is 
expected  to  be  operational.The  considered  policy  options  up  to  2020  and  post-2020  are 
illustrated in Figure 4-1 below.  

Figure 4-1: Overview of considered policy options 

4.1. 2017-2020 OPTIONS  

All  of  the  options  for  the  2017-2020  period  maintain  the  EU  ETS  to  regulate  aviation 
emissions,  but  with  various  geographical  scopes.  They  rank  from  a  "do-nothing"  scenario 
(automatic  return  to  full-scope),  over  a  scenario  where  all  flights  departing  from  (but  not 
arriving  at)  an  aerodrome  situated  in  the  EEA  are  covered,  keeping  the  current  intra-EEA 
scope. 

19 

 
 
 
 
 
 
 
 
 
4.1.1.  OPTION 0: "DO NOTHING" (RETURN TO FULL SCOPE EU ETS) 

According  to  the  existing  guidelines  for  impact  assessments,  the  option  of  "changing 
nothing"  must  be  considered  as  the  "baseline".  The  “baseline  scenario”  should  always  be 
developed  and  used  as  the  benchmark  against  which  the  alternative  options  should  be 
compared.  

The  EU  policy  aims  at  covering  emissions  from  EU-related  flights  though  market-based 
measures. In the absence of any international developments in this regard the EU ETS would 
continue covering flights to and from third countries. From a legal perspective, should the EU 
decide not to amend the EU ETS in response to the outcome at the 2016 ICAO Assembly, the 
EU ETS will – by default – apply in its full scope from 2017 onwards. This means that if no 
action  is  taken  aircraft  operators  will  be  responsible  for  GHG  emissions  from  all  flights 
departing from or arriving at aerodromes situated in the EEA unless exemptions take place. 
This  option,  despite  having  been  controversial  in  the  past  with  third  countries,  has  been 
favoured by some stakeholders due to its high envoronmental impact.  

This option is the baseline against which the other policy options will be assessed. The key 
features  of  the  full  scope  application,  as  specified  in  Directive  2003/87/EC  as  amended  by 
Directive 2008/101/EC and Regulation (EU) No 421/2014, are summarised in Annex 9. 

4.1.2.  OPTION 1: INTRA-EEA SCOPE 

Option 1 would extend the approach taken under Regulation (EU) No 421/2014 beyond 2016. 
Regulation  (EU)  No  421/2014  limited  the  effective  coverage  of  the  EU  ETS  for  the  2013-
2016  period  to  intra-EEA  flights.  The  enforcement  of  compliance  obligations  up  to  2020 
would be waived for all flights to and from non-EEA destinations. The amount of allowances 
to be auctioned and the amount of free allowances to be allocated would have to be adjusted 
in  proportion  to  the  emissions  coverage.  This  option  is  supported  by  some  stakeholders, 
notably from the aviation industry and from Member States public authorities. 

4.1.3.  OPTION 2: DEPARTING FLIGHTS 

Under option 2, all emissions from intra-EEA flights and from all departing flights to third 
countries  would  be  covered,  while  emissions  from  incoming  flights  from  third  countries 
would be excluded. The total cap for emissions from aviation activities as well as the quantity 
of the free allowances and the allowances to be auctioned for aviation activities would have 
to be adjusted in proportion to the aviation emissions coverage.   

4.2. OPTIONS POST 2020 

All  post-2020  options,  except  the  baseline  option,  consider  that  the  GMBM  will  be 
implemented  from  2021  onwards,  and  it  is  assumed  that  it  will,  at  least,  cover  emissions 
between airports in EEA and in third countries. Different options, however, are assessed with 
regards  to  intra-EEA  flights.  As  referred  before,  this  allows  a  preliminary  analysis  of  the 
impacts  that  different  potential  scenarios  on  the  basis  of  the  already  agreed  features  of  the 
GMBM. 

4.2.1.  OPTION 0: BASELINE 

As for the period before 2020, the "do nothing" scenario would be, by default, applying the 
EU ETS to all flights arriving to or departing from the EEA. As also said before, despite this 
option being controversial at international level it is supported by some stakeholders, notably 
individuals and environmental NGOs, due to its high envoronmental impact.  

20 

 
 
 
 
Under this option, the full scope application of the EU ETS for aviation continues post 2020. 
Contrary  to  the  full  scope  option  under  the  2017-2020  scenario,  where  a  limited  use  of 
international  credits  for  compliance  is  provided  for,  only  EU  allowances  (general  and 
aviation  allowances)  are  eligible  for  compliance.  Moreover,  the  ETS  cap  for  aviation 
emissions  of 95%  of the 2004-2006 average  will  be  reduced in  accordance with the annual 
linear  reduction  factor  that  has  been  proposed  to  apply  to  other  EU  ETS  sector  of  2.2%.  It 
must  be  noted  that  the  implementation  of  the  EU  ETS  for  the  post  2020  period  must  start 
some  years  before  2020.  For  example,  in  the  absence  of  any  amendments,  allocation 
procedures,  including  a  complete  (full-scope)  tonne-kilometre  collection  exercise,  must  be 
undertaken from 2018. 

Table 4-1: Key features of option 0 (2021-2030) 

Feature 

Assumptions 

Regional scopes 

Intra-EEA and Extra-EEA 

Aviation cap 

EU  ETS  aviation  cap  of  95%  of  the  2004-2006  average  aviation  emissions. 
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to 
other EU ETS sector will apply to the aviation cap. 

Allocation 

Free allocation (85%) 

Surrendering 
requirements 

All emissions 

Eligibility of units  EU allowances (general and aviation allowances) 

4.2.2.  OPTION 1 

The  EU  ETS  would  continue  to  apply  to  intra-EEA  flights.  Consistent  with  the  general 
review  of  the  EU  ETS  for  the  period  2020-2030  and  the  analyses  carried  out  to  adopt  the 
2030  domestic  climate  target,  the  annual  linear  reduction  factor  of  2.2%  that  has  been 
proposed  to  apply  to  other  EU  ETS  sectors  would  also  apply  to  aviation  cap  from  2021 
onwards. In addition, only EU allowances (general and aviation allowances) will be eligible 
for  compliance.  In  a  complementary  manner,  emissions  from  extra-EEA  flights  would  be 
subject  to  the  GMBM.  To  avoid  any  duplication  of  regulation,  the  GMBM  would  only  be 
applied to emissions from extra-EEA flights but not from intra-EEA flights.  

Some  stakeholders,  notably  from  the  civil  society,  have  stressed  that  in  the  light  of  the 
expected features of the GMBM the EU should at least keep intra-EEA covered by the EU 
ETS after 2020. 

21 

 
 
 
 
 
 
 
Table 4-2: Key features of option 1 (2021-2030) 

Feature 

Assumptions 

Regional scopes 

Intra-EEA 

Aviation cap 

EU  ETS  aviation  cap  of  95%  of  the  2004-2006  average  aviation  emissions. 
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to 
other EU ETS sector will apply to the aviation cap. 

Allocation 

Free allocation (85%)  

Surrendering 
requirements 

All emissions 

Eligibility of units  EU allowances (general and aviation allowances) 

Notes 

GMBM would apply to extra-EEA flights, including GMBM CNG2020 target 
and the eligibility of international credits for offsetting.  

4.2.3.  OPTION 2 

This  option  should  align  the  EU  ETS  for  intra-EEA  flights  closer  to  the  GMBM  for  extra-
EEA flights by taking several of its design elements. Different manners of achieving this are 
conceivable.  As  under  option  1,  extra-EEA  flights  will  be  covered,  in  any  case,  by  the 
GMBM. 

The most straightforward option (option 2) would change the design of the EU ETS for intra-
EEA  flights  to  operate  like  the  GMBM  as  an  offsetting  mechanism,  while  maintaining  a 
similar ambition level as option 1. Allowances for aviation activities would not anymore be 
issued. Instead, aircraft operators would have to surrender general ETS allowances for their 
emissions above certain levels.The design of the EU ETS would continue to maintain a high 
climate ambition through the following features: 

i. 

The baseline above which offsetting would take place would be the same as the cap 
for  aviation  emissions  under  option  1:  95%  of  the  average  2004-2006  aviation 
emissions  -  and  application  of  the  EU  ETS's  linear  reduction  factor  for  stationary 
installations of 2.2% from 2021 onwards to the aviation cap.  

ii.  Airlines surrender only general EU ETS allowances for emissions above the cap for 

aviation.  

This option also takes into account the opinion by some stakeholders to keep the EU  action 
on intra-EEA flights after 2020. 

22 

 
 
 
 
 
 
Table 4-3: Key features of option 2 (2021-2030) 

Feature 

Assumptions 

Regional scopes 

Intra-EEA 

Baseline 

Allocation 

Surrendering 
requirements 

Eligibility of 
units 

Notes 

EU ETS aviation cap of 95% of the 2004-2006 average aviation emissions. 
From 2021 onwards, the annual linear reduction factor of 2.2% that applies to 
other EU ETS sectors will apply to the aviation cap. 

No issuance of aviation allowances (i.e no free allocation, no auctioning). 
Allowances will be purchased from other EU ETS sectors.  

Only above aviation cap 

EU general allowances 

GMBM  would  apply  to  extra-EEA  flights,  including  GMBM  CNG2020  target 
and international credits for offsetting. 

Another alternative (option 2.1)  could consist of combining the implementation of both the 
EU ETS and the GMBM on intra-EEA flights. The GMBM would be used to offset emissions 
above  2020  levels,  while  the  EU  ETS  would  address  the  gap  in  ambition  between  the  EU 
ETS cap for aviation and the GMBM CNG2020 baseline.  

In this scenario, technical details concerning the interaction between the GMBM and the EU 
ETS need to be clarified because of a number of differences between the key features of the 
two systems. Issues that would need to be addressed are outlined in Table 4-4. 

23 

 
 
 
 
 
 
 
Table 4-4: Difference in key features of the GMBM and the EU ETS 

Feature 

Aviation Cap/Baseline 

EU ETS 

GMBM 

Carbon Neutral Growth from 
2020  (baseline  calculated  as 
2019-2020 
average 
emissions) 

From 

capped 

Emissions 
for 
aviation  at 95%  of  the 2004-
2006 
aviation 
average 
2021 
emissions. 
onwards,  the  annual  linear 
reduction  factor  of  2.2%  that 
applies  to  other  EU  ETS 
sectors  will  apply 
the 
aviation cap. 

to 

Allocation 

Free allocation (85%) 

No free allocation 

Surrendering requirements 

Yearly. 
operators 
individual approach. 

Obligation 
for 
is  based  on  an 

Coverage 

Eligibility of units 

flights 

and 
Domestic 
international flights (between 
EU Member States under the 
intra EEA scope; to and from 
third countries under the full-
scope). 

EU  general  allowances  and 
EU aviation allowances. 

calculation 

Annual 
of 
offsetting  obligations  but 
three-year  compliance  cycle. 
Obligation  for  operators  is 
based  on  global  sectoral 
growth rates. 

international 

flights 
All 
between 
countries 
participating  in  the  scheme 
(except on routes to and from 
exempt countries).  

International 
(eligibility  criteria 
determined) 

credits 
to  be 

While the differences in key features and the need to clarify the details of the GMBM in the 
next  years  make  it  challenging  at  this  stage  to  define  the  precise  parameters  to  model  the 
impacts of option 2.1, notably as regards the administrative effort required, an initial overall 
assessment of its effects is provided in section 5.   

4.2.4.  OPTION 3 

All intra-EEA and extra-EEA flights would be covered by the GMBM. Intra-EEA domestic 
flights  in  respect  of  which  ICAO  has  no  jurisdiction35  would  have  to  be  opted  into  the 
GMBM to safeguard a level-playing field within the EEA market. This option would reduce 
the EU's level of climate ambition. The EU would move from its existing level of ambition to 
accept that aviation emissions are stabilized at 2020 levels. Furthermore, increases above this 
level  would  not  be  compensated  with  domestic  emission  reductions,  but  by  using 
international offsets, representing reductions achieved in third countries and not coming from 

35 See statement at http://www.icao.int/environmental-protection/Documents/STATEMENTS/cop4.PDF 

24 

 
 
 
 
 
 
                                                 
a  cap-and-trade  system  with  possibly  less  environmental  integrity  (e.g.  emission  reductions 
are  not  counted  compared  to  a  fixed  cap  but  to  projected  "business-as-usual"  emission 
growth; thus, in case of a too generous "business-as-usual" projection, emissions that would 
effectively  have  never  occurred  may  be  counted  as  "reductions").  As  explained  before, 
international credits cannot be accounted towards the at least -40% domestic climate target.  

This option is supported by some stakeholders, notably from the aviation industry.  

Table 4-6: Key features of option 3 (2021-2030) 

Feature 

Assumptions 

Regional scopes 

Application of GMBM to international intra-EEA and extra-EEA flights. 
Domestic flights to be opted-in. 

Baseline 

Allocation 

Surrendering 
requirements 

CNG 2020 

No issuance of allowances 

Only above target 

Eligibility of units 

International credits 

Notes 

GMBM would be applied. The legal base for the EU ETS would be 
maintained but intra-EEA and extra-EEA flights exempted.  

4.3. DISCARDED OPTIONS  

The options of covering all intra-EEA flights and 50%  of  departing and arriving  flights  for 
extra-EEA flights (50-50 option),  as well as an airspace approach whereby intra-EEA flights 
would  be  fully  covered  but  emissions  from  extra-EEA  flights  cut  back  in  proportion  to  the 
distance  travelled  within  the  EEA,  were  discarded.  The  50-50  option  has  not  been  further 
assessed,  as  it  is  expected  to  deliver  similar  results  as  the  departing  flights  option36.    An 
option  based  on  "airspace"  was  not  considered,  as  it  was  proposed  by  the  Commission  in 
2013  but  not  adopted  by  the  co-legislators  in  this  form  due  notably  to  claims  that  it  would 
hinder progress in ICAO and concerns linked to complexity37.  

Some  options  mentioned  by  certain  stakeholders,  such  taxation-related  ones,  have  been 
discarded  given  the  difficulties  to  impose  fuel  taxes  for  international  flights  due  to  legally 
binding commitments made in Air Service Agreements with third countries. It should also be 
noted that one of the advantages of market-based measures is that they allow meting climate 
targets  at  the  lowest  cost,  achieving  reductions  where  it  is  cheaper  and  improving  cost-
efficiency.  This  is  also  why  the  majority  of  stakeholders  support  the  use  of  MBMs,  as 
opposed to taxes. Furthermore, now that ICAO has adopted a global markets-based measure 
for  international  aviation  emissions  it  would  not  be  appropriate  for  Europe  to  move  away 
from carbon markets to taxation on CO2 emissions, all the more since strategic partners such 
as  China  and  South  Korea  are  also  addressing  aviation  through  domestic  emission  trading 
schemes. 

36 SWD(2013) 430 final 
37 COM(2013) 722 final 

25 

 
 
 
 
 
                                                 
4.4. CROSS-CUTTING SIMPLIFICATIONS 

The  EU  ETS  Directive  foresees  in  Article  30  (4)  that  the  Commission  shall  review  the 
functioning  of  the  Directive  and  give  consideration  to  on-going  improvements  and 
refinements.  

In view of the 300 largest aircraft operators being responsible for 99% of annual emissions, 
important  simplifications  have  been  made  in  the  past  in  relation  to  small  emitters.  Small 
emitters are defined as aircraft operators operating fewer than 243 flights per period for three 
consecutive  four-month  periods  and  aircraft  operators  operating  flights  with  total  annual 
emissions  lower  than  25000  tonnes CO2  per  year.  While  commercial  aircraft  operators  (i.e. 
airlines offering scheduled flights) benefit from an exemption from the EU ETS in case that 
they emit less than 10000 tonnes CO2 per year, small, non-commercial aircraft operators were 
initially covered by the EU ETS. 

The Commission launched in early 2013 a study by PWC et al. to investigate the costs and 
benefits of the inclusion of small emitters in the EU ETS. It revealed amongst others that the 
obligations with regard to MRV generate relatively higher administrative costs for small than 
large operators. Compared to the level of EU ETS revenues raised from a small emitter, the 
administrative cost can be up to 4 times higher38.  

Consequently,  Regulation  (EU)  No  421/2014  introduced  a  number  of  simplifications  for 
small emitters. The emissions of aircraft operators with total annual emissions lower than 25 
000 tonnes CO2 are consided as verified emissions if they were determined by using the small 
emitters  tool  approved  under  Regulation  (EU)  No  606/2010  and  populated  by  Eurocontrol 
with  data  from  its  ETS  support  facility39.  Moreover,  Member  States  may  implement 
simplified  procedures  for  non-commercial  aircraft  operators  as  long  as  such  procedures 
provide no less accuracy than the small emiters tool provides40.  

In addition, Regulation (EU) No 421/2014 introduced in Annex I (k) of the EU ETS Directive 
a  de-minimis  threshold  until  31  December  2020  to  remove  any  obligations  for  small,  non-
commercial  aircraft  operator  operating  flights  with  total  annual  emissions  lower  than  1000 
tonnes per year. 

While the MRV simplications for small emitters are permanent, the exemption of small, non-
commerical  aircraft  operators  ends  at  the  end  of  2020.  The  extension  of  the  de-minimis 
threshold post-2020 should therefore be considered.  

38SWD(2013)  430  final,  section  2.6,  PWC  et  al.  on  ETS  Aviation  small  emitters,  available  at: 
http://ec.europa.eu/clima/policies/transport/aviation/docs/report_ets_avaiation_small_en.pdf  
39 EU ETS Directive 2003/87/EC, article 28a (6) 
40 EU ETS Directive 2003/87/EC, article 28a (6) 

26 

 
 
 
 
 
                                                 
5.  WHAT ARE THE IMPACTS OF THE DIFFERENT POLICY OPTIONS AND WHO WILL BE 

AFFECTED? 

This  section  will  assess  the  environmental,  economic  and  social  impacts  of  the  different 
policy  options.  The  impacts  will  be  assessed  separately  for  the  2017-2020  options  and  the 
post-2020 options.  

The  quantitative  assessment  of  the  impacts  of  the  different  policy  options  is  based  on  the 
AERO  Modelling  System  (AERO-MS)41,  a  modelling  tool  which  is  specialised  in  the 
aviation  sector.  It  evaluates  the  environmental  and  economic  consequences  for  all  relevant 
actors (airlines, consumers, governments and manufactures) of responses to emission-related 
measures in the aviation sector.  

The AERO-MS  model  was selected as  providing a  mechanism  for  modelling the economic 
and  environmental  impacts  of  policies  without  the  need  for  assumptions  (for  example, 
regarding  the  impact  of  changes  in  airline  costs  on  demand  or  technology  development). 
AERO-MS was also used for the analyses of policies at ICAO and has been performed as part 
of  the  previous  study  in  201342.  Since  that time,  the  tool  has  been  updated  and  now  uses a 
base year of 2010 and it includes forecast years of 2020, 2030 and 2040. A key aspect of the 
AERO-MS method is that it models the effects of policies on supply-side costs and, as they 
are passed through, on demand for air travel, in a feedback approach. As a result, it generates 
the  effects  of  polices  on  the  economics  and  the  environmental  impact  on  aviation.  The 
methodology is explained in more detail in Annex 4. 

An  important  element  is  that  AERO-MS  applies  growth  rates  as  derived  from  ICAO's 
Committee  on  Aviation  Environmental  Protection  forecasts.  While  this  data  is  commonly 
used  for  studies  in  the  aviation  sector,  it  expects  a  continued  strong  growth  in  aviation 
emissions, also related to EU emissions. For instance growth in emissions related to departing 
flights (both intra and extra EU) in the period 2010-2020 is estimated at 36%, with growth 
even  increasing  after  2020  to  reach  an  86%  increase  in  2030  compared  to  2010,  overall 
resulting in average emissions in the period 2021-2030 being 63% above 2010. 

In contrast, the increase in aviation emissions experienced in the last few years is markedly 
lower  (e.g.,  the  UNFCCC  inventory  for  the  EU  report  for  aviation  fuel  –  domestic  and 
international bunkers fuels, based on fuel sold - show almost no increase in the period 2010-
2014).  Therefore  also  a  sensitivity  scenario  is  applied  using  aviation  emission  projections 
from the PRIMES models. PRIMES sees significantly less growth, with emissions of aviation 
fuels  sold  in  the  EU  increasing  in  the  latest  reference  projections  by  only  18%  on  average 
over the period 2021-2030 compared to 2010 in the EU. This is referred to as the low aviation 
emission growth sensitivity.  

PRIMES  energy  model  is  not  aviation  specific.  It  derives  its  growth  rates  on  the  basis  of 
aviation  fuels  sold  in  the  EU  and  simulates  the  European  energy  system  and  markets  on  a 
country-by-country basis and across Europe for the entire energy system. The model provides 
amongst others projections of CO2 emission over the 2015-2050 period in 5-years intervals. 
The data is based on Eurostat statistics for the years 2000-2010. PRIMES has been used as a 
model for the revision of the EU ETS and for establishing binding reduction targets for EU 
Member States  for non-ETS sectors under the Effort  Sharing Regulation for the 2021-2030 
period.  

41 EASA (2010) Research Project EASA.2009/OP15 Study on Aviation and Economic modelling (SAVE) 
42 Technical assessment of possible amendments of the EU ETS Directive for aviation – Final Report (Ricardo-
AEA/R/ED58833, 2013) and SWD(2013) 430 final 

27 

 
 
 
                                                 
The main differences between PRIMES and AERO-MS are due to different growth rates (and 
different rates of energy efficiency improvement). While a continued strong growth in global 
aviation activities is likely, in particular due to significant growth of aviation activities related 
to developing countries, it was deemed appropriate to develop a more conservative sensitivity 
scenario using PRIMES growth projections, in particular for aviation activities related to the 
EU.  In  the  PRIMES  Reference  scenario  increase  by  ~80%  between  2005-2030  (63%  intra-
EU  and  89%  international  extra-EU),  but  the  resulting  energy  demand  increases  far  less. 
(15%  total,  6%  intra-EU  and  20%  international  extra-EU),  showing  the  impact  of  energy 
efficiency.  These  are  due  to  stock  replacement  of  older  aircraft,  better  logistics  including 
more passengers per flight, as well as policy measures such as the Single European Sky. 

5.1. ENVIRONMENTAL IMPACTS 

In terms of environmental impacts, not only the direct impacts of the policy options on the 
overall (EEA-related/global) aviation emissions must be considered. The indirect impacts of 
the  policy  options  through  the  purchase  and  surrendering  of  EU  allowances  from  other  EU 
ETS sectors and offsets through international credits are at least equally important. With the 
aviation sector contributing to the EU's 2020 and 2030 climate targets, its inability to achieve 
absolute  emission  reductions  implies  that  it  will  be  required  to  purchase  allowances  from 
other EU ETS sectors. These purchases of EU allowances from other sectors and the use of 
international  credits  up  to  1.5%  of  emissions  represent  additional  emission  savings  which 
would occur in other sectors.  

5.1.1.  IMPACTS ON AVIATION EMISSIONS 

Compared  to  a  ‘business-as-usual’  scenario  with  no  MBM  in  place  to  address  aviation 
emissions,  all  policy  options  are  expected  to  reduce  overall  aviation  emissions,  both  in  the 
2017-2020 and the post-2020 period. However, neither the 2017-2020 options, nor the post-
2020  options  can  prevent  an  increase  in  aviation  emissions  in  absolute  terms  from  2010  to 
2020 and from 2020 to 2030 respectively. 

5.1.1.1. 

2017-2020 OPTIONS 

With regards to the 2017-2020 policy options, the results in terms of annual CO2 emissions of 
intra-EEA and extra-EEA aviation activities depend on the geographical scope of the option. 
Variation  between  options  in  terms  of  total  EEA-related  (flights  to  or  from  EEA  airports) 
emissions is small, lower than 1%. None of the options is foreseen to have an impact on the 
aviation emissions that are unrelated to EEA flights. 

Option 0 covers 35% of global aviation emissions and is projected to result in 306.72 Mt CO2 
emissions from EEA-related aviation activities per year. 8% of global aviation emissions fall 
within  the  scope  of  option  1.  This  option  is  expected  to  lead  to  308.98  Mt  CO2  emissions 
from  intra-EEA  and  extra-EEA  aviation  activities  per  year.  Option  2  covers  22%  of  global 
aviation emissions and its annual EEA-related aviation emissions are estimated to amount to 
307.84 Mt CO2 emissions.  

28 

 
 
 
 
 
 
 
 
 
 
Table 5-1. Annual emissions 2017-2020 options 

Geographic scope 

Total EEA - related 
Total world 
Covered 

CO2 emissions (Mt per annum)  % change from Option 0 
Option 2 
Option 0  Option 1  Option 2  Option 1 
0.37% 
0.74% 
0.12% 
0.24% 
-39.19% 
-75.57% 

306.72 
945.38 
327.84 

308.98 
947.65 
80.08 

307.84 
946.53 
199.36 

5.1.1.2. 

POST-2020 OPTIONS 

In  relation  to  the  post-2020  policy  options,  the  overall  emissions  relate  to  the  degree  of 
interrelationship of the EU measure with the GMBM. The forecasted emissions under option 
0  are  based  on  the  assumption  that  the  GMBM  is  not  operational  in  the  post-2020  period. 
Variations between options are not significant (between 393.26 Mt and 403.86 Mt per year). 

Option 0 is projected to result in 393.26 Mt CO2 annual EEA-related emissions in 2030. Over 
the period 2021-2030 this option is projected to result in 11,573.57 Mt CO2 emissions from 
global aviation activities. 

Option 1 will result in 1,333.24 Mt CO2 annual emissions from global aviation activities in 
2030  out  of  which  400.45  Mt  CO2  come  from  EEA-related  flights.  This  corresponds  to 
11,617.58 Mt CO2 emissions over the period 2021-2030.  

Option  2  results  in  1,333.62  Mt  CO2  annual  emissions  (400.82  Mt  CO2  from  EEA-related 
flights)  in  2030,  which  correspond  to  11,620.58  Mt  CO2  emissions  from  global  aviation 
activities over the period.  

Under  option  3,  annual  emissions  amount  to  1,336.66  MT  CO2  annual  emissions  in  2030 
(403.86  Mt  CO2  from  EEA-related  flights),  corresponding  to  11,640.46  Mt  CO2  emissions 
over the period.  

Although emissions for sub-option 2.1 were not modelled in detail, they are estimated to be 
in between those for options 2 and 3, closer to the latter when looking at 2030 figures, as the 
growth above 2020 levels becomes more significant. 

These results would be significantly lower in case of the sensitivity scenario with low growth 
of emissions in aviation, which leads to only 289 Mt CO2 EU-related emissions on average in 
the period 2021-2030 

5.1.2.  IMPACTS ON EMISSIONS FROM OTHER SECTORS 

This  sub-section  analyses  how  under  the  different  options  aviation  contributes  to  achieve 
emission reductions in other sectors by acquiring and surrendering emission units, either EU 
allowances under the EU ETS or international credits. Divergences between different options 
are more significant in this case compared to subsection 5.1.1. 

Before  2020,  the  aviation  sector  contributes  to  the  EU's  2020  climate  target  of  reducing 
emissions by 20% compared to 1990 levels. Sectors under the EU ETS are expected to reduce 
emissions  by  21%  compared  to  2005  levels.  For  the  2017-2020  options,  an  EU  ETS 
emissions  cap  for  aviation  emissions  has  been  calculated  based  on  the  historical  aviation 
emissions  for  each  of  the  policy  options.  EU  aviation  allowances  are  surrendered  for  CO2 

29 

 
 
 
 
 
 
emissions up to the aviation cap43. Above the aviation cap, emissions must be offset through 
the purchase and surrender EU allowances from other ETS sectors (or, in a limited manner, 
international credits issued under the Kyoto Protocol mechanisms44. 

Also  post-2020  the  aviation  sector  will  continue  to  contribute  to  the  EU's  climate  target  of 
reducing emissions by 2030 by at least 40% below 1990 levels. Sectors under EU ETS are to 
reduce emissions by 43% below 2005 levels, whereas emissions falling under the proposed 
Effort  Sharing  Regulation  are  to  decrease  by  30%.  As  the  2030  target  is  domestic, 
international  credits  cannot  be  used  to  achieve  it.  Similarly  to  the  2017-2020  options, 
thresholds have been set for the post-2020 options above which emissions must be offset. For 
option 3, this would be ICAO's target of CNG2020, whereas for the other options it would be 
established  in  accordance  with  the  EU  ETS  aviation  cap:  95%  of  the  average  2004-2006 
historical  aviation  emissions,  and  application  of  the  EU  ETS's  linear  reduction  factor  for 
other EU ETS sectors of 2.2% from 2021 onwards to the aviation cap.  

5.1.2.1. 

2017-2020 OPTIONS 

Under  none  of  the  policy  options  will  the  aviation  sector  achieve  absolute  emission 
reductions  in  the  pre-2020  period.  Since  none  of  the  policy  options  prevent  an  increase  in 
aviation emissions between 2010 and 2020, there will be a demand from the aviation sector 
for emission allowances from other ETS sectors and for international credits, thus favouring 
reductions in them. The larger is the scope, the more significant is that demand. 

It  is  expected  that  under  option  0,  117.37  Mt  of  CO2  emissions  (112.45  through  EU 
allowances)  will  have  to  be  offset  annually  (in  2020)  through  EU  allowances  and 
international  credits.  Under  option  1,  this  amounts  to  25.10  Mt  of  CO2  emissions  (23.90 
through  EU  allowances).  Under  option  2,  the  figure  is  71.67Mt  of  CO2  emissions  (71.67 
through EU allowances).  

5.1.2.2. 

POST-2020 OPTIONS  

Under all post-2020 policy options, it is assumed that aviation emissions will increase further 
between 2020 and 2030. Aviation emissions covered by the EU ETS or GMBM are expected 
to increase by at least 81% under option 0 and up to 91% under option 3 by 2030 compared 
to  2010.  Therefore,  under  all  options  demand  will  be  generated  for  emission  units  and 
reductions would be fostered in other sectors. Apart from option 0, main divergences between 
options  are  related  to  the  environmental  ambition  of  the  measure:  the  EU  ETS  cap  or  the 
GMBM  baseline  (CNG  2020).  Depending  on  whether  emissions  are  covered  by  one  or  the 
other emissions reductions will be favoured within EU ETS sectors or in other sectors in third 
countries. 

Under option 0 it is expected that 2,062.35 Mt of CO2 emissions reductions will fostered in 
other sectors covered by the EU ETS over the period 2021-2030 (206.2 annually on average). 
This would be markedly lower in the sensitivity with low aviation emission growth, with only 
832.35 Mt of CO2 emissions to be offset over the period 2021-2030 at the EU level, 83.2 Mt 
per year. 

43 85% of these allowances are allocated to operators for free; another 15% of allowances are available via 
auction 
44 International credits can be used for up to 1.5% of total aviation emissions 

30 

 
 
 
 
 
                                                 
Options  1  and  2  show  very  similar  results.  Under  option  1,  1,703.65  Mt  of  CO2  emissions 
would be offset over the period, including through the EU ETS and the GMBM. From this, 
493 Mt CO2 would correspond to intra-EEA activity covered by the EU ETS, thus fostering 
reductions in other ETS sectors. Under option 2, the global impact is of around 1,705.7 Mt 
CO2  over  the  period,  from  which  495Mt  corresponds  to  intra-EEA  activity  –  resulting  in 
reductions in EU ETS sectors. For both options 1 and 2 this would be markedly lower in the 
sensitivity  with  low  aviation  emission  growth,  with  a  demand  of  only  23  Mt  of  CO2  per 
annum at the EU level for other ETS sectors.  

Similar figures can be estimated for sub-option 2.1. However, as only around 26 Mt per year 
would be covered with allowances under the high growth scenario (whilst for the rest of the 
obligation international credits would be used) the contribution to domestic reductions in the 
EU would be smaller and proportionally decreasing over time.  

Under option 3, 1,354.99 Mt of CO2 emissions  would be  offset under the GMBM  over the 
2021-2030  period,  from  which  144.42  would  correspond  to  intra-EEA  flights.    These 
emissions would be entirely offset with international credits. This means that there will be no 
contribution from aviation to domestic reductions in the EU, while all other sectors would be 
required to step up their efforts after 2020 to compensate for that. This shortfall in ambition 
by intra-EEA aviation could put at risk the economy-wide -40% reduction to which the EU 
committed in the Paris Agreement.  

5.1.2.3. 

IMPACTS ON THE EU ETS 

The potential impacts of the various options on other ETS sectors will be proportional to the 
scale of the net demand for allowances from the aviation sector. Table 5-3 shows the volume 
of additional annual demand between 2021 and 2030, for a range of modelling outcomes. As 
can  be  seen  from  the  table,  the  scale  of  this  impact  depends  primarily  on  the  scope  of  the 
coverage  of  emissions  based  on  the  option  chosen  and  the  expected  growth  in  aviation 
emissions.  To  reflect  the  uncertainty  concerning  the  growth  in  aviation  emissions,  numbers 
are shown for both an estimate based on detailed AERO-MS emission projections as well as 
for emissions projections from the PRIMES model. The subsequent impact of additional net 
demand on the carbon price is the result of the interplay between the supply and demand for 
allowances. 

31 

 
 
 
 
 
 
 
Table  5-3:  Estimated  average  annual  demand  for  general  EU  allowances  from  the 
aviation sector in 2021-2030, in absolute terms (Mt CO2)  

Average annual demand for general EU 
allowances (= emissions aviation over cap for 
aviation) in the period 2021-2030 

High estimate 
 (based on AERO-MS 
emission projections), 
EEA scope 

Option 0 
Departing flights scenario (for 
comparison purposes) 
Options 1 and 2 
Option 3 

206 

135 

49.5 
0 

Low estimate  
(based on PRIMES 
emission projections, 
EUCO30 projection), EU 
scope 
83 

49* 

23 
0 

* The impact assessment supporting the 2030 Climate Change and Energy Framework  
(SWD(2014) 15final), which included all outgoing aviation in its projections, as covered 
by the PRIMES model,  estimated for the scenario GHG40 an average annual demand 
for general EU allowances from the aviation of 49 million. 

As the EU ETS cap sets a binding limit for emissions from stationary installations, additional 
demand for allowances from aviation would not lead to additional emissions but would have 
to  be  matched  by  additional  reductions  in  other  ETS  sectors.  Therefore,  a  net  increase  in 
demand could be reflected through a limited impact on the carbon price signal for other ETS 
sectors as well as through increased revenues from the auctioning of allowances by Member 
States,  leading  to  higher  revenues  from  auctioning  being  available  for  climate  and  energy 
measures. 

Increased  demand  for  allowances  will  have  a  different  impact  on  the  power  sector  and  on 
energy  intensive  industry  which  both  fall  under  the  ETS.  Installations  in  the  power  sector 
have to buy all allowances needed for compliance on the carbon market, and an increase in 
demand would impact the carbon price for these installations. Any such impact will depend 
on  the  volume  of  allowances  and  the  interaction  with  the  Market  Stability  Reserve.  By 
contrast, a smaller impact on industry is expected, since the proposal for revision of the EU 
ETS foresees the continuation of free allocation to industry. Any potential price impact would 
therefore  affect  mainly  those  allowances  which  are  purchased  on  the  market  while  at  the 
same time being offset by a higher value of free allocation. 

The impact due to changes in the carbon price is expected to be proportional to the overall 
increase in the demand for allowances. The overall cap or limit on the number of allowances 
for  stationary  installations  in  the  ETS  is  some  15.5  billion  allowances  in  2021-2030.  The 
different options are expected to have a limited economic impact on other sectors covered by 
the EU ETS, due to the small size of the net demand from the aviation sector when compared 
to  overall  emissions  figures.  Aviation  demand  is  relatively  modest  compared  to  the  total 
GHG  emissions  covered  by  the  EU  ETS.  Overall  emissions  covered  by  the  system  in  the 
period 2021-2030 is forecasted to be between 1887 Mt of CO2 eq in 2020 and 1558.8 Mt of 

32 

 
 
 
 
 
 
 
CO2  eq  in  203045.  When  these  figures  are  compared  with  the  expected  demand  from  the 
aviation sector it can be noted that, with the exception of the baseline option, the proportion 
remains between 1% and 3%. For the baseline option due to the larger scope the proportion 
ranges from 5-12%, depending on the assumed growth in emissions. This means that while 
the net demand for allowances from aviation would result in an increase in the demand for 
ETS allowances this is limited in scale when compared to the overall number of allowances 
on the market.  
Furthermore,  from  2019  on  the  Market  Stability  Reserve46  will  lead  to  adjustment  of  the 
number of allowances to be auctioned depending on the number of allowances in circulation. 
In general, scenarios with a higher net demand from aviation could lead to a swifter reduction 
in  the  surplus.  However,  because  the  number  of  allowances  to  be  placed  in  the  reserve 
reflects the number of allowances in circulation, at the same time a faster increase in the net 
demand for ETS allowances will be partially offset by a lower amount of allowances being 
placed in the reserve. The MSR will therefore mitigate the impacts of an increase in demand 
on the overall balance between supply and demand for allowances in the EU ETS, and thus 
the impact on the carbon price. 

Under  option  0,  206.2  Mt  of  CO2  emissions  must  be  covered  through  ETS  allowances 
annually (over the period 2021 - 2030), or translating to in total a demand of over 2 billion 
allowances in the ETS over 10 years. This number would be reduced to as much as 83 Mt of 
CO2 emissions that need to be covered by ETS allowances annually over the 10 year period 
in case of the sensitivity with low aviation emission growth.  

It is clear that options 1 and 2 would have an impact on the ETS in terms of the net demand 
for  ETS  allowances  from  the  aviation  sector,  although  the  extent  of  this  impact  depends 
strongly  on  the  growth  of  emissions  in  aviation  in  intra-European  flights,  as  flights  to  and 
from  third  countries  would  be  covered  by  the  GMBM.  Under  options  1  and  2,  the  need  to 
cover  emissions  through  ETS  allowances  would  be  reduced  to  around  49.5  Mt  of  CO2 
emissions per annum, or around half a billion over the 10 year period. This number would be 
reduced further to as little as 23 Mt of CO2 emissions per year (230 Mt over 2021-2030) in 
case of the sensitivity with low aviation emission growth. 

Under options 1 and 2, impacts on the ETS are thus probably more limited. It should be noted 
that for instance the Impact Assessment accompanying the proposal for a 2030 Climate and 
Energy  Framework47  simulated  a  net  demand  from  aviation  towards  the  other  ETS  sectors, 
based on all outgoing flights equal to around 488 Mt of CO2 emissions over the period 2020-
2030, or the need to cover emissions through allowances from the ETS at around 49 Mt of 
CO2 emissions per year.   

Under  option  3,  there  would  be  no  need  at  all  to  cover  emissions  via  allowances  from  the 
ETS,  as  also  intra-European  emissions  would  be  addressed  through  the  GMBM,  where 
international credits are allowed. Under this scenario, fewer emissions reductions would need 

45 EU Reference Scenario 2016. Energy, transport and GHG emissions. Trends to 2050. 
https://ec.europa.eu/energy/sites/ener/files/documents/ref2016_report_final-web.pdf   
46 Under the MSR, each year 12% of the surplus of allowances is transferred in the MSR provided the surplus is 
higher than 833 million allowances. If the surplus in the ETS would drop below 400 million allowances, then 
the MSR would start releasing allowances to the ETS market. (See: Decision EU) 2015/1814 concerning the 
establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme 
and amending Directive 2003/87/EC  ) 
47 SWD(2014) 15 Final 

33 

 
 
 
                                                 
to  take  place  in  other  ETS  sectors  to  meet  the  binding  cap  on  emissions  from  stationary 
installations compared to a situation in which aviation would still remain part of the ETS. 

5.2. COMPETITIVENESS AND ECONOMIC IMPACTS 

With  regards  to  the  economic  impacts,  it  is  important  to  assess  the  policy  options' 
implications on operating costs, prices and demand, as well as auction revenues. It will also 
be  necessary  to  contemplate  whether  there  is  a  potential  of  the  policy  options  to  distort 
competition,  in  particular  in  relation  to  direct-city  pair  routes,  one-stop  services  and  tourist 
destinations.  The  administrative  effort  resulting  from  the  different  options  is  also  be 
evaluated.  

Competitiveness  relates  directly  to  improvements  in  productivity.  Assessing  impacts  of 
policies  on  productivity  is  difficult,  not  least  because  there  are  multiple  ways  in  which  to 
measure  productivity.  In  the  widest  sense,  an  increase  in  productivity  refers  to  an 
improvement  in  the  ratio  of  inputs  to  outputs. An  increase  in  fuel  prices  should  lead  to  the 
reduction  of  fuel  as  an  input  per  unit  of  output  (RTK),  for  example  by  incentivising  high 
occupancy  rates  of  aircraft,  as  well  as  investment  into  more  efficient  aircraft.  At  the  same 
time, it may lead to a decrease in the average productivity of capital, as existing aircraft are 
used less intensively (e.g. only when high occupancy rates can be guaranteed). A conclusive 
assessment  of  overall  productivity  impacts  in  this  wider  sense  is  therefore  not  easily 
modelled.  The  present  assessment,  instead,  looks  at  what  is  defined  as  cost/price 
competitiveness: the estimated impact of the policy options on costs and prices in the sector. 
In addition, we look at how the changes in price affect demand and the impact this has on the 
level playing field. Since the administrative costs associated with the measure can also have 
an impact on the level playing field, they must also be considered 

5.2.1.  IMPACTS ON OPERATING COSTS, PRICES AND DEMAND  

All  policy  scenarios  up  to  2020  and  post-2020  imply  minimal  additional  operating  costs 
compared  to  a  business-as-usual  scenario  without  any  market-based-measures  in  place  to 
regulate aviation emissions. The differences in operating costs have a minimal impact on the 
average price per RTK and thus on demand.  

Indeed,  empirical  evidence  on  ticket  prices  for  consumers  confirms  the  minor  economic 
impact the EU ETS for aviation has had up to date: based on a sample of EU and US airlines, 
the EU ETS seems to lead to price increases between 0.43 % and 0.94 % for passenger tickets 
(excluding  taxes  and  charges).  Ryanair  has  been  one  of  the  most  transparent  airlines  by 
publishing  figures  of  the  cost  to  passengers  of  climate  change  measures.  These  have  been 
cited as being €0.25 for passengers flying from continental Europe, and £0.25 for passengers 
buying  tickets  in  the  UK.  Concerning  transatlantic  flights,  US  airlines  have  included  fees 
around $3 to cover for EU ETS costs in their ticket prices. This price top-up due to the EU 
ETS  is  much  lower  than  most  airport  taxes  and  charges  (e.g.  US  charges  of  $16  for 
passengers to arrive and to depart)48. 

48 SWD(2013)430 

34 

 
 
 
 
 
 
 
                                                 
5.2.1.1. 

2017-2020 OPTIONS 

For  the  2017-2020  policy  options,  the  expected  additional  operating  costs  rise  with  an 
increase of the geographical scope of the option.  Total operating costs are summarized in the 
table below, showing very little variation compared to the baseline option. 

Table 5-4: Summary of total operating costs and change over baseline on flights with 
origin or/and destination within the EEA in 2020 

Total operating 
costs (in € million) 

Change over 
baseline 

Intra-EEA/EEA domestic 
Option 0 
Option 1 
Option 2 
Extra – EEA 
Option 0 
Option 1 
Option 2 

93,699  
93,711  
93,720  

281,816  
281,406  
281,631  

- 
0.01% 
0.02% 

- 
-0.15% 
-0.07% 

Change in 
operating costs 
per RTK over 
baseline 

- 
-0.26% 
-0.11% 

- 
-0.71% 
-0.34% 

The slight differences in operating costs result in an almost identical average price per RTK 
for  the  three  options.  The  results  are  presented  in  the  table  below.  The  price  reductions 
achieved  under  options  1  and  2  compared  to  option  0  are  for  all  options  around  0.7%  for 
flights to and from third countries, and 1.11% under the three options, for intra-EEA flights. 
Differences are thus negligible. 

Table 5-5. Summary of price per revenue tonne kilometre (RTK) and overall RTK on 
flights with origin or/and destination within the EEA in 2020 

Calculated price (€) per 
RTK 

Total RTK (millions) 

Intra-EEA/EEA domestic 
Option 0 
Option 1 
Option 2 
Extra-EEA 
Option 0 
Option 1 
Option 2 

 1.11  
 1.11  
 1.11  

 0.71  
 0.70  
 0.70  

89,765  
90,008  
89,886  

411,554  
413,888  
412,700  

The slight difference in price is also reflected in a very limited variation in demand expressed 
as  overall  RTK  of  intra-EEA  and  extra-EEA  flights.  Option  0  results in  an  overall  RTK  of 
501,319  million,  option  1  in  an  overall  RTK  of  503,896  million  and  option  2  in  an  overall 
RTK of 502,586 million.  

5.2.1.2. 

POST-2020 OPTIONS 

35 

 
 
 
 
 
 
 
 
In  relation  to  the  post-2020  options,  the  projected  operating  costs  depend  on  the  degree  to 
which international credits are used for compliance within an option. This is due to the fact 
that the average price of an international credit is estimated to be lower than the average price 
of an EU allowance in the 2020-2030 period.49 Operating costs in 2030 are summarised in the 
table  below.  This  shows  how  the  variations  linked  to  the  different  options  are  very  limited 
compared to those related to other operating costs (i.e., variations in fuel cost). Differences 
between the options are also very small, not reaching 0.5%. 

Table  5-6  Summary  of  total  operating  costs  and  change  over  baseline  on  flights  with 
origin or/and destination within the EEA in 2030 

Total operating 
costs (in € million) 

Change over 
baseline 

Change in 
operating costs 
per RTK over 
baseline 

Intra-EEA/EEA domestic 
Option 0 
Option 1 
Option 2 
Option 3 
Extra-EEA 
Option 0 
Option 1 
Option 2 
Option 3 

134,230  
134,304  
134,329  
134,541  

429,921  
427,955  
427,979  
428,182  

- 
0.06% 
0.07% 
0.23% 

- 
-0.46% 
-0.45% 
-0.40% 

- 
-0.33% 
-0.59% 
-2.61% 

- 
-2.08% 
-2.13% 
-2.53% 

For  the  same  reason  the  operating  costs  slightly  vary,  the  average  price  per  RTK  does  not 
differ much between the options. As shown in the table below variations on prices per RTK 
only amount few € cents. 

Table  5-7  Summary  of  price  per  revenue  tonne  kilometre  (RTK)  and  overall  RTK  on 
flights with origin or/and destination within the EEA in 2030 

Calculated price (€) per 
RTK 

Total RTK (millions) 

Intra-EEA/EEA domestic 
Option 0 
Option 1 
Option 2 
Option 3 
Extra-EEA 
Option 0 
Option 1 
Option 2 

 1.13  
 1.13  
 1.13  
 1.10  

 0.70  
 0.69  
 0.69  

127,276  
127,773 
128,130  
130,997  

631,988  
642,439 
642,810  

49 International credits which meet the standards of the EU ETS for use up to 2020 are currently priced at around 
€0.40, less than one-tenth of the value of EU ETS allowances. 

36 

 
 
 
 
 
 
 
                                                 
Option 3 

Calculated price (€) per 
RTK 
 0.68  

Total RTK (millions) 

645,796  

As regards sub-option 2.1, impacts were not modelled, but are estimated to be between those 
for  options  2  and  3,  as  part  of  the  obligations  are  met  with  allowances  and  part  with 
international offsets.  

In line with the difference in price per RTK, total demand in RTK of intra-EEA and extra-
EEA flights also varies moderately between the options. Option 0 results in an overall RTK 
of  759,264  million,  option  1  in  an  overall  RTK  of  772,791  million,  option  2  in  an  overall 
RTK of 770,928 million and option 3 in an overall RTK of 776,793 million.  

All  these  impacts  would  be  even  lower  with  the  sensitivity  that  foresees  moderate  aviation 
emissions growth, where the amount of emissions to be offset on flights within the EEA is 
expected to be lower.  

5.2.2.  IMPACTS ON LEVEL PLAYING FIELD 

Under  all  policy  options,  the  EU  ETS,  and  the  GMBM  when  applicable  from  2021,  are 
applied uniformly to all operators irrespective of their nationality or any other characteristics. 
Thus,  they  do  not  present  a  direct  distortion  of  competition.  However,  under  certain 
circumstances  a  potential  risk  of  indirect  distortion  of  competition  could  arise  due  a 
preference for alternative flights, which would not be covered by any of the policy options.  

It should be noted that distortions have not been identified during the 5 years where the EU 
ETS  has  been  applied  to  aviation,  and  it  is  expected  that  this  should  be  even  less  the  case 
where  other  routes  will  be  covered,  after  2020,  by  a  new  market  instrument  such  as  the 
GMBM.    

It  must  be  stressed  that  the  possibility  of  distortions  could  increase  with  higher  operational 
costs  associated  to  the  different  measures.  Nevertheless,  as  section  5.2.1  demonstrates,  this 
will  not  be  the  case  in  the  period  up  to  2030,  where  impacts  on  costs  or  prices  per  RTK 
remain very limited. 

Finally, it is important to highlight that under Option 3 the GMBM would apply to all intra-
EEA  flights,  including  those  operated  by  carriers  based  in  third  countries.  Therefore,  if  the 
GMBM  was  not  adequately  implemented  by  some  third  countries  a  risk  of  competitive 
distortions  arises  even  within  the  EEA.  It  must  be  recalled  that  the  GMBM  obligations  are 
enshrined  in  an  Assembly  Resolution,  which  is  not,  in  itself,  legally  binding.  States  can 
reserve to it and not apply the GMBM to their operators flying on European routes. Even if 
technical rules are developed and adopted as standards, it remains to be decided what level of 
detail  those  standards  will  have,  and  what  is  left  to  "recommended  practices"  or  guidance 
documents,  increasing the risk of a heterogeneous implementation that could hinder a level 
playing-field.  There  is  also  a  risk  that  countries  with  lower  capacities  are  not  ready  to 
implement  it  by  2021,  and  that  could  equally  affect  flights  within  the  internal  market.  For 
those  reasons,  it  must  be  pointed  out  that  under  Option  3,  risks  of  competitive  distortions 
could even affect direct competition on routes within the EEA, as the decision to apply the 
GMBM obligation on intra-EEA routes, for some operators, would be in the hands of third 
countries' administrations. 

37 

 
 
 
 
 
 
 
5.2.2.1. 

COMPETITION BETWEEN DIRECT CITY-PAIR ROUTES 

Under all 2017-2020 options, intra-EEA flights are covered by the EU ETS, whereas flights 
outside  the  EEA  are  exempt.  Consequently,  distortions  in  border  regions  are  theoretically 
conceivable, as traffic might shift from within the EEA towards nearby airports outside the 
EEA in response to an increase in relative prices for intra-EEA traffic.  

Under the post-2020 options, the potential for competitive distortions on city-pair routes near 
EEA  region  borders  would  no  longer  exist  under  the  full  convergence  Option  3,  where 
GMBM  applies  to  all  flights,  both  within  and  outside  the  EEA  (with  the  exception  of  the 
foreseen  exemptions  from  GMBM  for  small  states  and  domestic  flights).  As  said  above, 
Option 3 encompasses a more relevant risk of distortion if it is not properly implemented and 
enforced by third countries responsible for the administration of their airlines, as highlighted 
above. In theory, the potential of distortions remain under the other options, although given 
the limited economic impact (price per RTK, as explained in section 5.2.1) it is considered to 
be highly unlikely that companies modify their established routes due to this.  

COMPETITION BETWEEN ONE STOP SERVICES 

5.2.2.2. 
The 2006 Impact assessment50 already explored the risk of route change to use extra-EU hubs 
under the full-scope EU ETS, but found that the likelihood of such a distortion would only 
become  positive at a  carbon price of €75 per tonne CO2. It is  not  expected that allowances 
prices will reach those levels in the period up to 2030. 

Under  a  reversion  to  the  full  ETS  scope  (Option  0),  the  option  with  the  highest  costs  per 
RTK,  allowance  costs  in  2020  would  be  a  mere  0.3%  of  total  operational  costs  for  flights 
between  the  EEA  and  third  countries,  thus  adding  only  €1  to  the  cost  of  a  flight  with  an 
operating  cost  of  €300  per  passenger.  The  magnitude  of  distortions  under  the  other options 
would be even lower due to their lower operating costs. 

As  all  2017-2020  policy  options  fully  cover  intra-EEA  flights,  possible  competition 
distortions are avoided for intra-European travel. However, as the policy options - depending 
on different geographical scopes - may not cover non-stop services in the same way as one-
stop  services,  there  could  be  some  hypothetical  potential  for  distortion  through  the  use  of 
hubs outside the EEA in order to limit the quantity of emissions covered by the EU ETS. 

Similarly  to  the  pre-2021  options,  there  is  some  potential  for  theoretical  competitive 
distortions in all post-2021 options. In options 1 and 2 this would relate to the implementation 
of the EU ETS to intra-EEA routes, while the GMBM applies to routes out of the EEA. In 
any  case,  in  the  light  of  the  much  reduced  cost  impacts,  this  risk  can  be  considered  as 
negligible.  Under  Option  3  this  type  of  risk  disappears,  but,  as  explained  above,  there  is  a 
more relevant risk of competitive distortions (including on intra-EEA flights) if the system is 
not properly implemented by third countries on their operators.  

Again,  given  the  limited  economic  impact  (price  per  RTK)  it  is  considered  to  be  highly 
unlikely that companies modify their established routes due to this. In case of flights covered 
by the GMBM under all options 1, 2, and 3, the risk will depend on which routes are finally 
covered by the ICAO measure, but this is out of the remit of this assessment. 

50 SEC(2006) 1684 

38 

 
 
 
 
 
                                                 
5.2.2.3. 

COMPETITION BETWEEN TOURIST DESTINATIONS 

In  theory,  distortions  between  tourist destinations are conceivable as illustrated in table 5-8 
for the 2017-2020 period and in table 5-9 for the post-2020 period: 

Table 5-8: potential distortion of competition between tourist destinations in the period 
2017-2020 

Option 0 

Option 1 

Option 2 

Tourist located within EEA 

Tourist located outside of EEA 

No  distortion  between 
tourist 
destinations  within  the  EEA  and 
outside  the  EEA,  as  all  flights 
departing and arriving in the EEA 
are covered.  

Potential preference for not travelling 
to  tourist  destinations  within  the 
EEA,  as  flights  to  and  from  those 
destinations are covered.  

tourist 

destinations 

Potential  preference  for  travelling 
to 
in 
outermost  regions  or  outside  of 
the EEA, as all other flights to and 
from  tourist  destinations  within 
the EEA are covered. 

No distortion for travelling to tourist 
destinations  in  the  EEA,  as  flights 
between the EEA and third countries 
are not covered. 

Potential  preference  for  travelling 
to  tourist  destinations  outside  of 
the  EEA  as  only  one  way  is 
covered, as opposed to both ways 
for destinations in the EEA. 

Potential preference for not travelling 
to  tourist  destinations  within  the 
EEA, as the return flight is covered. 

39 

 
 
 
 
 
 
 
 
Table 5-9: potential distortion of competition between tourist destinations in the period 
2017-2020 

Tourist located within EEA 

Tourist located outside of EEA 

Option 0   No  distortion  between  tourist 
destinations  within  the  EEA 
and  outside  the  EEA,  as  all 
flights departing and arriving in 
the EEA are covered.  

Potential preference for not travelling 
to  tourist  destinations  within  the 
EEA,  as  flights  to  and  from  those 
destinations are covered.  

Option 1  Potential 

preference 

for 
travelling to tourist destinations 
outside  the  EEA,  as  flights  are 
covered by GMBM (if at all) as 
opposed to the EU measure. 

Option 2  Potential 

preference 

for 
travelling to tourist destinations 
outside  the  EEA,  as  flights  are 
only  covered  by  GMBM  (if  at 
all)  as  opposed 
the  EU 
measure. 

to 

in 

the  EEA 

No distortion for travelling to  tourist 
destinations 
and 
international destinations in countries 
not  exempted  from  the  GMBM,  as 
GMBM applies to those international 
flights.  Potential  preference 
for 
domestic  destinations  or  destinations 
in  countries  to  which  the  GMBM 
does not apply.  

in 

the  EEA 

No distortion for travelling to tourist 
and 
destinations 
international destinations in countries 
not  exempted  from  the  GMBM,  as 
GMBM applies to those international 
for 
flights.  Potential  preference 
domestic  destinations  or  destinations 
in  countries  to  which  the  GMBM 
does not apply. 

Option 3  No  distortion  of  competition 
between 
international 
destinations  in  countries  not 
exempted  from  the  GMBM,  if 
GMBM  is  applied  to  those 
international  flights.  Potential 
domestic 
for 
preference 
destinations  or  destinations  in 
countries  to  which  the  GMBM 
does  not  apply,  as  domestic 
flights are not covered.  

No distortion of competition between 
international destinations in countries 
not  exempted  from  the  GMBM,  if 
those 
applied 
is 
GMBM 
international 
Potential 
flights. 
preference  for  domestic  destinations 
or  destinations  in  countries  to  which 
the  GMBM  does  not  apply,  as 
domestic flights are not covered. 

to 

The  impact  of  different  ETS  policy  options  on  tourist  destinations  was  analysed  in  detail 
within a separate annex in the previous impact assessment in 2013. The overall finding was 
that  wherever  impacts  could  be  expected  due  to  competitive  distortions  between  different 

40 

 
 
 
 
 
 
destinations  or  the  general  rise  in  fuel  costs,  these  would  be  negligible  due  to  the  low 
allowance costs51.  

A  review  of  the  current  options  confirms  that  this  is  still  the  case.  For  example,  when 
52,  on  the  popular  tourist  route  London 
presuming  a  2020  ETS  price  of  €15/tonne  CO2
Gatwick to Crete, the allowance costs per RTK are estimated at around 0.6 cents(€). Over the 
2,700km  flight  route,  this  means  a  cost  of  around  €17  per  revenue  tonne,  or  ~€1.70  per 
passenger,  which  is  unlikely  to  distort  competition  to  non-EEA  Mediterranean  tourist 
destinations,  such  as  nearby  Turkey  (e.g.  Antalya)  under  Options  1  or  2,  under  which  no 
allowance costs, or only allowance costs for the departing flights would respectively arise for 
flights to Turkey. Equally, the insignificant amounts by which overall flight costs increase are 
not expected to have an impact on overall tourism receipts, e.g. by reducing the number of 
tourist  flights,  or  tourists  spending  less  on  accommodation  and  leisure  activities  at  their 
destination, in order to compensate for higher flight costs. 

The  forecast  allowance  prices  for  the  year  2030  result  in  an  increase  of  around  €67  per 
revenue tonne on the 2,700km flight route from London Gatwick to Crete under the baseline 
option 0, around €6.70 per passenger. Because the same rules apply for intra-EEA and extra-
EEA flights under option 0, no negative impacts would occur (on the contrary, the 2,900km 
London  Gatwick  to  Antalya  flight  route  would  result  in  slightly  higher  prices  due  to  the 
additional 200km).  

Option 1 applies more stringent rules to intra-EEA flights (EU ETS), whilst extra-EEA flights 
only  face  GMBM  international  credits  prices,  which  are  expected  to  be  lower.  Despite  this 
difference, the London Gatwick to Crete route would only create extra costs of around €100 
per revenue tonne, or €10 per passenger, whereas the London Gatwick to Antalya flight route 
would  only  face  GMBM  allowance  prices  of  €16  per  revenue  tonne,  or  about  €1.60  per 
passenger. Thus, the difference between the most extreme options would be a net decrease in 
emissions-related charges of just over €8 per passenger compared to Crete. It is unlikely that 
such a small difference in flight costs would have a tangible distorting impact on tourism in 
Crete. Under all other options, the gap in allowance costs is even lower. 

5.2.3.  IMPACT ON MEMBER STATES' BUDGETS (AUCTION REVENUES) 

Impacts  on  Member  States'  budgets  are  associated  to  proceeds  from  the  auctions  of 
allowances under the EU ETS. All options that foresee allocation of allowances encompass 
some sort of revenue generation for Member States. 

5.2.3.1. 

2017-2020 OPTIONS 

All  2017-2020  policy  options  generate  auction  revenues  for  public  authorities.  Since  the 
number of auctioned allowances depends on the geographical scope of the ETS for aviation, 
the auction revenues in 2020 vary between the policy options as shown below.  

Table 5-10: Auctioning amounts and revenues for EU Member States in 2020 

Auctioned allowances (Mio. EUAAs) 
EUAA price (EUR/EUAA) 
Auctioning revenues (Mio. EUR) 

Option 0 
31.6 
15 
474 

Option 1 
8.2 
15 
124 

Option 2 
19.8 
15 
298 

51 SWD(2013) 430 final, Annex VII 
52 Presumption is derived from long term price projections 

41 

 
 
 
 
 
                                                 
5.2.3.2. 

POST-2020 OPTIONS 

As  opposed  to  the  pre-2021  policy  options,  not  all  of  the  post-2020  options  will  generate 
auction revenues  for public authorities. Under option 0, the auction revenue in  2030 would 
amount to €1,034.2 million and under option 1 to €302.3 million.  

Options  2  and  3  would  not  generate  any  auctioning  revenues,  as  option  2  does  not  foresee 
allocation  through  auctions  and  the  GMBM  does  not  have  any  revenue  generation 
mechanism. 

Table 5-11: Auctioning amounts and revenues for EU Member States in 2030 

Auctioned allowances (Mio. 
EUAAs) 
EUAA price (EUR/EUAA) 
Auctioning revenues (Mio. 
EUR) 

5.2.4.  ADMINISTRATIVE EFFORT 

Option 0  Option 1  Option 2  Option 3 

24.6 

42 

1,034 

7.2 

42 

302 

0.0 

0.0 

- 

- 

- 

- 

The administrative effort to implement the various policy options under  consideration takes 
into  account  the  key  administrative  tasks  under  the  EU  ETS  and  the  GMBM  that  must  be 
performed by the aircraft operators and the competent Member States authorities. These are 
mostly  related  to  MRV  obligations  by  aircraft  operators  and  compliance  activities  by 
competent authorities. 

The key administrative tasks associated with the 2017-2020 options are outlined in Table 5-
12 below.  

42 

 
 
 
 
 
 
 
 
Table 5-12:  Key administrative tasks under the EU ETS 

Entity 

Tasks 

  submission of monitoring plan 
  notifying changes to monitoring plan 
  setting up monitoring and report systems 
  collect, and archive data 
  prepare annual emission report 
  ensure 

that  annual  emission  reports  are  verified  by  accredited 

independent verifiers 

  submit annual emissions report to competent authority 
  purchase and surrender allowances 
  approval  of  monitoring  plan  for  each  aircraft  operator  and  subsequent 

updates to the monitoring plan 

  approval of annual emissions reports as verified by accredited verifiers; 
  administer registry 
  calculate the allocation of free allowances 
  guidance, training, helpdesk for airline operators 
  accrediting verifiers 
  monitoring compliance and enforcing in case of non-compliance 
  prepare legislation and guidance documents 
  administer the EUTL registry 
  approves allocations of free allowances 
  updates aviation operator list 

Operators 

Competent 
Member 
States 
authority 

European 
Commission 

43 

 
 
 
 
 
 
The tasks will generate costs, which can be distinguished between one-off costs or on-going 
costs. Table 5-13 illustrates the type of cost created by the individual tasks.  

Table 5-13: Type of costs incurred under the key administrative tasks 

One-off Costs 

On-going Costs 

Aircraft operators 

 

 

initial preparation (i.e; interpreting 
legislation, training employees) 
setting up of a system to comply 
with legislation 
elaborate monitoring plan 

 
  provision of data for free allocation  

Government 
administrators 

 

 

 
 

initial preparation (i.e. legislation, 
guidance documents) 
setting up of a system to comply 
with legislation 
approval of monitoring plans 
allocation of allowances/defining 
individual share 

  monitoring and reporting of 

emissions  

  verification (fees for third 

 

party verifiers) 
effort of purchasing 
allowances 

  help desk 
 

checking emission report 
and verification statement  

  updating EU ETL for 

aviation sector 
compliance 

 

As assessed under the impact assessment53 accompanying Commission Regulation 600/2012 
(on verification and accreditation under the EU ETS) and 601/2012 (on the monitoring and 
reporting of GHG under the EU ETS) the aim of minimising costs for Competent Authorities 
and operators has always been one of the main elements of the EU ETS MRV.  

Several  measures  have  been  taken  to  reduce  costs  associated  to  monitoring,  reporting  and 
verifying  emissions,  both  by  aircraft  operators  and  by  the  Commission  and  national 
competent authorities. These include the development of IT systems supporting data delivery 
(e.g. reporting in web-based application), review of data (e.g. through automated checks) and 
data management (easier updating of documents, storage and tracking of data). Large aircraft 
operators  have  well-developed  data  management  systems.  This  is  not  always  the  case  for 
smaller ones. However, operators emitting less than 25.000 CO2 tonnes per year can benefit, 
since  2014,  from  using  Eurocontrol's  "Small  Emitters  Tool"  that  facilitates  reporting 
obligations,  not  requiring  additional  verification  of  data  (see  Section  4.4).  In  2015,  268 
aircraft  operators  used  this  tool  to  report  their  emissions,  avoiding  incurring  in  additional 
monitoring and verification costs.   

Larger  companies  must  verify  emission  reports.  Generally,  under  the  EU  ETS,  verification 
costs  are  estimated  to  be  on  average  in  the  order  of  €  800  and  €  1000.  Around  200 
Verification Bodies are estimated to be active in the EU ETS system with a total number of 
verifiers estimated in the order of 1200 individuals. 

On the side of competent authorities, access to Eurocontrol's "ETS Support Facility" reduces 
the  cost  of  checking  emission  reports  and  track  compliance.  Furthermore,  coordination 
amongst  competent  authorities  helps  to  share  best  practices  and  reduce  costs.  The 
Compliance  Forum,  established  in  2008,  meets  every  year  to  carry  out  these  coordination 
activities.  It  is  composed  of  all  the  major  national  and  local  ETS  Competent  Authorities, 
including aviation ones, and the Commission. 

53   SWD (2012) 177. http://ec.europa.eu/clima/policies/ets/monitoring/docs/swd_impact_assesment_en.pdf  

44 

 
 
 
 
 
 
                                                 
5.2.4.1. 

2017-2020 OPTIONS 

Due to the similarity with the system up to 2016, option 0 and option 1 are not expected to 
generate significant additional one-off costs. As the departing flight scope under Option 2 is 
new, it is likely to result in higher one-off costs, especially as regards the initial preparation 
and the help desk.  

When considering the on-going costs, the administrative effort will become more important 
with  an  increase  in  geographical  scope  because  of  the  higher  volume  of  flights  covered, 
which significantly raises the efforts related to MRV. Thus, lowest costs correspond to option 
1, followed by option 2 and option 0. 

5.2.4.2. 

POST-2020 OPTIONS 

In terms of administration, the GMBM will not be significantly different from the EU ETS. 
The same key administrative tasks will have to be carried out. Even though ICAO has still to 
develop the implementation guidance and standards, the GMBM will also be based on route-
based  monitoring,  reporting,  and  verification  (MRV)  of  emissions.  Also  with  regard  to 
transaction  costs  of  buying  allowances  or  international  credits,  no  differences  are  to  be 
expected  compared  to  the  current  EU  ETS.  The  administrative  costs  for  operators  and 
national  authorities  are  therefore  not  expected  to  be  significantly  different  under  the  two 
systems. 

However,  the  implementation  of  the  GMBM  will  require  an  additional  effort  and  result  in 
one-off costs. These costs should be minimal for operators and national administrators in the 
EU ETS as it can be expected that the existing MRV infrastructure and processes can equally 
be  used  for  the  GMBM.  No  major  changes  are  to  be  expected  in  this  respect.  As  the 
surrendering  obligations  will  be  calculated  differently  under  the  GMBM  than  the  EU  ETS, 
there will be one-off costs to establish the implementing regulation and develop guidance for 
the implementation.  

In this light, option 0 would result in insignificant one-off costs for intra-EEA and extra-EEA 
flights. With regard to extra-EEA flights, all other options entail the same one-off costs for 
the introduction of the GMBM. In relation to intra-EEA flights, option 1, similarly to option 
0, only implies insignificant one off costs, whereas options 2 and sub-option 2.1 – that take 
over more elements from the GMBM – and 3 would entail more changes and thus result in 
higher one-off costs.  

With regard to on-going administrative costs, the MRV costs should not differ significantly 
because all options require that emission data is reported, monitored, and verified at the level 
of routes. It is expected that the current MRV requirements under the EU ETS will be to a 
large extent used for the implementation of the GMBM in the EU. Alternatively, it could also 
be  considered  that  the  MRV  rules  for  the  EU  ETS  are  adjusted  to  be  in  line  with  ICAO's 
MRV rules. In either case, as the same or very similar MRV rules will apply under GMBM 
and  the  EU  ETS,  the  on-going  MRV  costs  should  therefore  be  essentially  equal  across 
options. 

With  regard  to  other  administrative  tasks  and  their  costs  for  operators  and  national 
administrators,  options  0  and  3  will  have  lower  costs  because  intra-  and  extra-EEA  flights 
will  be  treated  equally.  With  options  1  and  2,  the  GMBM  rules  will  apply  to  extra-EEA 
flights  and  the  EU  ETS  rules  will  apply  to  intra-EEA  flights.  While  there  are  differences 
between  GMBM  and  EU  ETS  rules  (e.g.  related  to  the  type  of  allowances  or  credits  to  be 
surrendered,  the  calculation  of  the  surrender  obligation),  these  differences  should  not 

45 

 
 
 
 
generate significant additional administrative costs for operators and national administrators 
once IT and administrative processes are established. It is important to note that an operator 
will only deal with one national administrator ("one-stop shop") even if rules differ for extra- 
and intra-EEA flights. 

Sub-option 2.1. leads to the highest administrative complexity because EU ETS and GMBM 
rules  are  applied  simultaneously  applied to  intra-EEA  flights.  This  will  complicate also  the 
calculation  of  the  surrender  obligation.  This  is  particularly  due  to  the  fact  that  under  the 
GMBM operators' obligations are calculated on the basis of the global growth of the sector 
compared to 2020 levels while under the EU ETS aircrafts operators' obligations are based on 
their overall individual emissions compared to a base year. 

In  the  implementation  of  options  1  and  2,  special  attention  needs  to  be  given  to  operators 
from  non-EEA  countries  that  operate  intra-EEA  flights  and  do  not  benefit  from  the  small-
emitter  exemption.  These  non-EEA  operators  should  in  principle  be  administered  by  their 
home country for all international flights (including intra-EEA flights) under the GMBM. To 
avoid double regulation, adjustments might be needed in the implementation of the EU ETS 
and  the  GMBM  to  avoid  that  emissions  are  reported  and  offset  twice.  The  development  of 
outstanding  MRV  rules  in  ICAO,  notably  on  transparency,  will  be  relevant  in  this  regard; 
equally,  the  eventual  adaptation  of  the  EU  ETS  MRV  in  the  coming  years  can  play  an 
important  role.  Avoidance  of  duplication  would  require  specific  administrative  checks  to 
ensure that carriers are complying with their obligations under the systems. This would help 
to  ensure  a  level-playing  field  between  all  operators  –  irrespective  of  their  nationality  –  on 
intra-EEA routes.   

The administrative burden is expected to be, in principle, greater for small airline operators, 
since large airline operators are likely to be able to build upon their existing IT systems and 
even incorporate national variations if necessary. However the review of the EU ETS in 2014 
already  introduced  simplified  MRV  requirements  for  small  emitters  that  extremely  reduce 
this burden under the EU ETS. 

In any case, the costs of implementing the GMBM would be higher in case this is not done in 
a  harmonised  manner  within  the  EU.  Using  common  rules  for  the  implementation  of  the 
GMBM  –  based  on  the  provisions  of  the  current  EU  ETS  Directive  –  will  contain  the 
administrative costs for operators and national administrators.  

5.3. SOCIAL IMPACTS 

The  social  impacts  of  a  policy  are  the  impacts  on  people,  their  employment  prospects,  and 
rights, access to services, quality of life, income, health and safety. Social impacts also focus 
on  distributional  impacts  of  a  policy  option  i.e.  across  and  within  different  social  and 
economic groups, identifying ‘winners’ and ‘losers’ and assessing whether the policy is likely 
to improve or aggravate existing inequalities. For this assessment, the main areas of interest 
are the potential impacts of the policy options on lower income social groups by potentially 
reducing access to air travel, and on employment if jobs are lost or created as a result of the 
policy options. 

5.3.1.  IMPACT ON LOWER INCOME GROUPS 

The minor impact on prices and overall passenger demand both under the 2017-2020 and the 
post-2020 policy options has already been alluded to above. As the ticket prices will remain 
stable  for  intra-EEA  flights  and  even  decrease  for  extra-EEA  flights  with  reduced  ETS 

46 

 
 
 
 
coverage, low income groups will not be negatively impacted and there will not be a risk to 
increase inequalities in Europe. 

5.3.2.  IMPACT ON EMPLOYMENT 

Employment impacts may occur from a rise or fall in airlines’ activity as a result of the policy 
options  for  the  period  up  to  2020  and  post-2020.  Employment  impacts  are  roughly 
proportional to overall activity.  

In the timeframe between 2017 and 2020, option 1 is expected to generate a 0.4% and option 
2 a 0.2% higher EU aviation sector employment in 2020 than the baseline option (option 0). 

For  the  post-2020  options,  EU  aviation  sector  employment  in  2030  is  expected  to  be  1.5% 
higher under option 1, 1.39% under option 2 and 2.74% under option 3 in comparison to the 
baseline option 0. 

However, in comparison to the baseline option 0, the policy options up to 2020 and post 2020 
reduce government revenues from the emissions trading, thus reducing public sector budgets 
and employment, or requiring tax increases in other sectors to compensate for the shortfall in 
revenue - consequently reducing employment in the affected sectors. The impact on total net 
employment  (across  the  whole  economy)  is  not  clear,  although  it  is  expected  to  be  even 
smaller than in the aviation sector. 

5.4. IMPACT ON OUTERMOST REGIONS 

Under  all  pre  and  post-2020  options  economic  impacts  for  outermost  regions  are  almost 
insignificant.  

5.4.1.  2017-2020 OPTIONS  

Under  the  2017-2020  options,  option  0  covers  flights  between  EEA  mainland  and  the 
outermost  regions.  Such  flights  are  exempted  under  option  1.  However,  domestic  flights 
within  a  given  outermost  region  are  covered  under  the  ETS54.  Under  Option  2,  outermost 
regions are treated as ‘third countries’, except that domestic flights within them are subject to 
the  requirements  of  the  EU  ETS.  This  means  that  flights  from  mainland  EEA  countries  to 
outmost  regions  and  flights  within  outermost  regions  are  covered.  All  other  flights  are  not. 
Thus, option 0 followed by option 2 cover the largest share of flights related to the outermost 
regions and option 1 the lowest.  

The  difference  in  coverage  has  an  impact  on  aviation  emissions  from  EEA  related  flights 
within,  to  and  from  outermost  regions.  Option  0  results  in  10.21  Mt  CO2  emissions  per 
annum in 2020, option 1 in 10.37 Mt CO2 emissions per annum in 2020 and option 2 in 10.28 
Mt CO2 emissions per annum in 2020.  

Due  to  the  difference  in  coverage,  ETS  allowance  costs  of  flights  to/from  the  outermost 
regions for 2020 will also vary between the three options. However, the impacts are expected 
to  be  very  limited  in  all  cases,  always  below  €0.1  per  RTK  and  in  most  cases  even  below 
€0.02 

54 Except for flights performed in the framework of public service obligations, which have been exempted under 
the aviation ETS Directive 

47 

 
 
 
 
 
 
 
                                                 
Table 5-14: RTK of flights within EU ETS/GMBM scope to/from the outermost regions 
in 2020 

Canary islands 
Azores 
Madeira 
Saint Martin 
Guadeloupe 
Martinique 
Mayotte 
Réunion 
French Guiana 

Op. 0 
9,668.7  
 408.0  
 605.5  
 6.7  
 797.8  
 811.1  
 49.0  
1,445.1  
 346.5  

RTK (millions) 

Op. 1   Op. 2 

Allowance cost per 
RTK (€) 
Op. 0  Op. 1   Op. 2 

 95.3   4,619.2  
 126.7  
 9.8  
 282.9  
 0.0  
 3.4  
 -    
 381.2  
 1.2  
 394.5  
 -    
 21.8  
 -    
 621.8  
 -    
 191.7  
 -    

0.01  
0.01  
0.01  
0.02  
0.01  
0.01  
0.01  
0.01  
0.01  

0.02  
0.02  
0.04  
- 
0.07  
- 
- 
- 
- 

0.01  
0.01  
0.01  
0.02  
0.01  
0.01  
0.00 
0.01  
0.00  

5.4.2.  POST-2020 OPTIONS 

Under  all  2030  options,  flights  between  EEA  mainland  and  outermost  regions,  as  well  as 
within outermost regions are treated as intra-EEA flights.  

Nevertheless,  CO2  emissions  from  EEA-outermost  regions  aviation  activities  vary  between 
the options. Under options 0 and 1, they would result in 13.16 Mt CO2 emissions in the year 
2030;  13.8  Mt  CO2  emissions  in  2030  would  be  the  consequence  of  option  3  and  13.23  of 
option 2. 

The tables below summarise the impacts modelled or the different options for the year 2030. 
Allowance costs per RTK generally range from €0.02 and €0.03 for options 0 to 2; option 3 
has with even lower costs. 

These values suggest that overall impacts on flight cost and therefore structure, frequency or 
accessibility in the regions, as well as impact on the price of goods to be imported/exported 
are so low that they can be considered as negligible.  

48 

 
 
 
 
 
 
 
 
 
 
Table 5-15: RTK of flights within EU ETS/GMBM scope to/from the outermost regions 
in 2030 

Op. 0 

RTK (Millions)   
Op. 2 
Op. 1 
 13,612.20    13,638.71    13,315.33  
 479.90  
 830.17  
 11.15  
 1,163.37  
 1,195.85  
 75.62  
 1,948.24  
 548.40  

 575.02  
 854.95  
 11.14  
 1,189.61  
 1,218.45  
 79.65  
 2,197.13  
 554.39  

 582.19  
 856.87  
 11.15  
 1,192.25  
 1,220.11  
 79.87  
 2,202.92  
 555.55  

Op. 3 
 14,185.79  
 588.01  
 883.75  
 11.40  
 1,231.30  
 1,261.82  
 80.59  
 2,248.59  
 565.62  

Canary islands 
Azores 
Madeira 
Saint Martin 
Guadeloupe 
Martinique 
Mayotte 
Réunion 
French Guiana 

Table 5-16: Allowance  costs  per RTK  of  flights  within  EU  ETS/GMBM scope  to/from 
the outermost regions in 2030 

Allowance cost per RTK (€) 

Canary islands 
Azores 
Madeira 
Saint Martin 
Guadeloupe 
Martinique 
Mayotte 
Réunion 
French Guiana 

Op. 0 
0.02  
0.02  
0.02  
0.06  
0.02  
0.02  
0.03  
0.02  
0.02  

Op. 1 
0.02  
0.02  
0.02  
0.06  
0.02  
0.02  
0.03  
0.02  
0.02  

Op. 2  Op. 3 
0.00  
0.00  
0.00  
0.01  
0.00  
0.00  
0.01  
0.00  
0.00  

0.02  
0.02  
0.02  
0.06  
0.02  
0.02  
0.03  
0.02  
0.02  

5.5. CROSS-CUTTING ISSUES  

5.5.1.  SMALL EMITTERS 

In relation to the aviation sector, practically all small and medium sized enterprises (SMEs) 
covered  by  the  system  are  small  emitters.  Therefore  this  assessment  will  focus  on  small 
emitters as regards the impact on SMEs.  

As  explained  in  previous  sections,  Regulation  421/2014  amending  the  EU  ETS  Directive 
introduced permanent simplifications for small  emitters in relation to MRV as a result of a 
study by PWC et al at the request of the Commission.  

The study by PWC et al. revealed that the EU ETS covers about 300 "large" aircraft operators 
– with annual emissions higher than 25,000 tons CO2 – who are responsible for about 99 % 
of  emissions  and  around  2600  non-commercial  small  emitters  (e.g.  business  jets)  who  are 
responsible  for  only  1  %  of  emissions.  The  study  also  showed  that  the  MRV  obligations 

49 

 
 
 
 
 
 
 
 
 
 
 
 
generate  relatively  higher  administrative  costs  for  small  than  large  operators.  Compared  to 
the level of EU ETS revenues raised from a small emitter, the administrative cost can be up to 
4 times higher.  

The  simplifications  for  operators  with  emissions  below  25  000  tons  introduced  by  the 
Regulation  are  estimated  to  drastically  reduce  costs  for  operators  emitting  less  than  25  000 
tonnes CO2. In particular, these operators can report emissions to competent authorities using 
Eurocontrol's "Small Emitters Tool".  

On the other hand, Regulation 421/2014 also introduced an exemption for small (below 1 000 
tons  CO2  emissions  per  year)  non-commercial  operators.  Whereas  commercial  aircraft 
operators (i.e. airlines offering scheduled flights) benefit from a permanent exemption from 
the  EU  ETS  in  case  that  they  emit  less  than  10  000  tonnes  CO2  per  year,  small,  non-
commercial aircraft operators emitting less than 1 000 tonnes CO2 per year are only exempted 
until 2020. 

Please see the 2013 Impact Assessment, section 2.6 and the 2013 PWC et al. study on ETS 
aviation small emitters for further details.55  

5.5.2.  LEGAL CONSIDERATIONS AND RELATIONSHIP WITH ICAO 

By  contrast  with  the  EU  ETS  for  intra-EEA  flights  which  is  functioning  well  and  is  being 
fully complied with – by EU and non-EU operators alike -the implementation of the EU ETS 
on flights to and from third countries (extra-EEA flights) has been subject to controversy in 
the past. Legal and political issues related to the different options should thus be considered. 
It is also important to look into the GMBM legal form and the consequences it may have in 
relation with the different options.   

Legal and political aspects in the light of the experience with the implementation of the EU 
ETS 

The  EU´s  competence  to  address  both  domestic  and  international  aviation  emissions, 
including from flights to and from third countries, was recognized by the European Court of 
Justice  on  its  Judgment  of  21  December  201156,  also  considered  to  be  consistent  with  the 
Chicago  Convention.  Therefore,  there  are  no  legal  competence  issues  that  prevent  the 
development and implementation of any of the options that have been assessed  both for the 
period 2017-2020 and post-2020. 

Risks can be identified where the EU regulates flights to or from third countries (option 0 and 
2  for  the  period  2017-2020,  option  0  for  the  post-2020  period).    A  number  of  countries 
opposed  the  full-scope  EU  ETS  alleging  that  the  EU  would  have  no  competence  to  oblige 
their  operators  to  participate  in  the  EU  ETS.  This  demonstrates  that  any  of  those  options 
could be opposed by third countries and by airlines, using the additional argument that now 
ICAO  has  adopted  a  resolution  on  a  GMBM  for  international  aviation  emissions,  which  is 
expected  to  be  the  global  measure  to  be  applied  to  international  flights,  as  defined  by  the 
Chicago Convention, between third countries and the EU. Political opposition may generate 
retaliation measures from third countries or create compliance problems.  

55 SWD(2013) 430 final, section 2.6, PWC et al. on ETS Aviation small emitters, available at: 
http://ec.europa.eu/clima/policies/transport/aviation/docs/report_ets_avaiation_small_en.pdf 
56 Case C-366/10 

50 

 
 
 
 
                                                 
Under those options there is a risk that third country aircraft operators57 seek not to comply 
with  the  EU  ETS  obligations.  In  fact,  in  the  past,  the  United  States  adopted  the  'EU  ETS 
Prohibition Act' which would have allowed its authorities to seek to forbid airlines based in 
the  United  States  to  comply  with  the  EU  ETS.  While  this  risk  cannot  be  avoided,  non-
compliance cases can always be enforced by member states’ competent authorities, and fines 
can be imposed according to the EU ETS Directive. In the past, two airlines have paid fines 
of more than €1 million each for non-compliance with the EU ETS for intra-EEA flights, and 
those airlines have now come into compliance under the current intra-EEA scope.  

Risks  associated  with  third  countries  opposition  and  non-compliance  are  less  significant 
under options limiting the scope of the EU action to intra-EEA flights (option 1 pre 2020 and 
options 1 and 2 post-2020). The experience in the period 2013-2016 shows that the intra-EEA 
scope  has  not  raised  political  opposition,  and  aircraft  operators,  including  from  third 
countries, have  largely complied with  the EU ETS obligations. Compliance rates are above 
99% of emissions covered, including more than 100 commercial operators that are based in 
third countries.  
The outcome of the 39th ICAO Assembly and its consequences 

While  not  an  ICAO  member  (the  EU  is  only  an  observer  in  ICAO),  the  EU,  through  its 
Member  States,  made  its  opposition  clear  during  the  negotiations  over  the  GMBM  being 
qualified  as  the  "exclusive"  market-based  measure.  The  language  in  the  Resolution  would 
permit  co-existence  between  the  GMBM  and  other  regional  or  domestic  market  measures  - 
which is relevant for the EU, but also for other States implementing similar measures, such as 
South Korea or China from next year. Of course, this must be read in conjunction with the 
preambular language pointing at the need to make sure that the same international emissions 
should  not  be  accounted  and  paid  twice  and  that  any  overlap  and  duplication  should  be 
avoided,  thereby  also  suggesting  the  possible  co-existence  between  the  GMBM  and  other 
national or regional measures. This is further reinforced by the Annex on general principles 
for  MBMs  added  during  the  Assembly  to  the  second  climate-related  resolution58.  The 
Assembly also adopted another resolution acknowledging the growing existence of regional 
cooperation  and  recognised  the  establishment  of  regional  aviation  systems,  such  as  exist  in 
the  EU.  It  supported  the  need  to  better  integrate  them  in  an  ICAO  context,  which  should 
provide  good  basis  for  the  removal  of  current  obstacles  posed  by  ICAO’s  State-based 
approach,  not  well  enough  adapted  to  how  the  EU  and  its  Member  States  operate.  Finally, 
ICAO  practice,  when  adopting  standards  for  instance,  also  allows  States  to  develop  or 
maintain more ambitious levels domestically, should they so wish. The EU has notably done 
so in the field of safety for instance. 

In  any  case,  it  must  be  noted  that  rules  on  MRV  and  eligibility  of  emission  units  are  still 
pending  adoption  by ICAO.  Depending  on  the content  of  these  rules  and  how  the EU  later 
adapts its MRV rules duplication between the GMBM and the EU ETS could be minimised 
or  even  avoided,  and  consistency  ensured,  thereby  allowing  for  an  harmonious  relationship 
between the GMBM and the EU ETS. 

The GMBM legal form and its risks 

57 For information on the commercial airlines based outside the EEA with the highest numbers of flights within 
at 
the  EEA, 
http://data.consilium.europa.eu/doc/document/ST-16247-2013-INIT/en/pdf, Annex III 
58 ICAO Resolution A 39-2 

Impact  Assessment 

the  Commission's 

analysis  of 

the  2013 

additional 

see 

51 

 
 
 
                                                 
A risk that has to be taken into account under post-2020 options (1, 2 and 3) is related to the 
weakness of the legal form under which the GMBM has been adopted. The GMBM’s main 
features  are  enshrined  in  an  ICAO  Assembly  Resolution,  which,  despite  its  political 
importance, is not legally binding. The study on “Possible legal arrangements to implement a 
global  market  based  measure  for  international  aviation  emissions”  (by  Pablo  Mendes  de 
Leon, Vincent Correia, Uwe Erling and Thomas Leclerc for the Directorate General Climate 
Action59) shows that from a legal perspective the best solutions to guarantee that the GMBM 
is  implemented  as  a  binding  measure  would  be  an  amendment  of  the  Chicago  Convention, 
supplemented with the establishment of Standards (yet to be developed and agreed), or a new 
treaty  to  which  technical  annexes  would  be  attached.  However,  such  processes  would  take 
many years to complete as they involve ratification by the States party to the treaty, with the 
risk  of  non-achievement  in  the  end.  The  combination  of  a  resolution  with  ICAO  Standards 
(yet  to  be  developed  and  agreed),  which  is  how  the  GMBM  is  expected  to  be  regulated,  is 
considered  a  more  pragmatic  approach,  but  it  is  recognized  that  its  potential  to  effectively 
deliver  an  effective  regulatory  framework  depends  significantly  on  the  political  support  of 
countries  to  adopt  national  legislation  and  implement  the  system.  Once  national  rules  to 
implement ICAO Standards are adopted, these become binding, not needing any ratification. 

Therefore, a risk exists under options 1, 2 and 3 that the GMBM is not duly implemented by 
certain  countries,  or  that  the  adoption  of  the  corresponding  domestic  legislation  is  delayed. 
Airlines  from  third  countries  could  not  fulfil  their  obligations  under  the  GMBM  in  the 
absence of domestic legislation and enforcement measures. Such situation could undermine a 
to  competitive  distortions.  
homogeneous 
Furthermore, there is a certain risk that the implementation of the GMBM will be delayed or 
not materialise because a number of important features of the GMBM  – notably relating to 
the transparency, accounting and offsetting rules, registry, compliance and governance – still 
need to be developed and agreed in ICAO before the GMBM can be effectively implemented. 

implementation  of 

the  GMBM, 

leading 

These legal risks could affect flights to and from third countries under post-2020 options 1, 2 
and 3, but also intra-European flights under option 3 and sub-option 2.1. To minimize these 
risks, the EU legislation has and could further elaborate rules applicable by default, including 
under post-2020 options 1 and 2. In all circumstances the Commission maintains the right of 
initiative at any stage, should these risks materialise.  

Conclusions: the GMBM and its compatibility with the different EU ETS options 

- Before 2020 the GMBM will not be operational. No consideration needs to be given to the 
interaction of the possible options with the GMBM.  

-  So  far,  the  implementation  of  the  EU  ETS  on  intra-EEA  flights  has  not  faced  legal  nor 
political challenges. Compliance rates are very high. This confirms that past controversies on 
the EU ETS were limited to extra-European international flights 

-  The  Assembly  Resolution  on  the  GMBM  is  politically  relevant  and  may  have  legal 
consequences in States, but is not an international treaty. In addition, it does not exclude the 
possible co-existence between the GMBM and other schemes.  

59 http://ec.europa.eu/clima/policies/transport/aviation/docs/gmbm_legal_study_en.pdf  

52 

 
 
 
 
 
                                                 
-  The  legal  weakness  of  the  GMBM  could  pose  risks  in  terms  of  implementation  of  the 
measure by third countries, which could entail competitive distortions and affect its climate 
objective  

-  The  GMBM  Resolution  is  expected  to  be  completed  with  standards  and  recommended 
practices  (SARPs)  whose  content  still  needs  to  be  developed.  Standards  have  legal  effects, 
requiring  domestic  legislation  to  be  implemented.  Some  rules  could  also  be  contained  in 
recommended  practices  or  guidance  documents.  It  must  be  noted  that  states  can  file 
differences to SARPs and it is usual practice for states to impose stricter requirements than 
those contained in ICAO rules. The development and implementation of SARPs are relevant 
steps  through  which  legal  and  political  aspects  related  to  the  different  post-2020  EU  ETS 
options could be addressed.  

53 

 
 
 
 
 
 
6.  HOW DO THE OPTIONS COMPARE? 

6.1. ENVIRONMENTAL IMPACTS 

In  general,  the  most  relevant  environmental  impacts  are  the  consequence  of  the  reductions 
achieved  in  other  sectors  through  the  purchase and  cancellation  of  units.  In  the  2017-2020, 
these  impacts  vary  with  the  scope;  after  2020  the  divergences  are  linked  to  the  different 
climate ambition between the EU ETS and the GMBM. Importantly, the use of international 
credits under the GMBM means that it does not contribute to reduce emissions in the EU, but 
in third countries, affecting the ability to reach the domestic 2030 climate target. The direct 
impacts in terms of total emissions under each option show lower variations. 

6.1.1.  2017-2020 Options 

The  wider  the  geographical  scope  of  the  policy  option,  the  lower  the  global  annual  CO2 
emissions from aviation activities. Consequently, the option with the narrowest geographical 
scope  (option  1)  would  result  in  an  additional  0.24%  of  emissions  compared  to  the  option 
with  the  widest  geographical  scope  (option  0).  Option  2,  would  result  in  0.12%  more 
emissions  than  option  0.  However,  due  to  the  short  period of  time  during  which  the  policy 
options will be applicable, the difference in effects on CO2 emissions from the aviation sector 
between the options is relatively small (2.26 million CO2 emissions per year). 

Similarly,  the  additional  emission  reductions  that  can  be  achieved  by  other  ETS  sectors 
through the demand for EU allowances from the aviation sector depend on the geographical 
scope of the policy option. In this case, variations are significant: under option 0, demand is 5 
times higher and under option 2, demand is three times higher than under option 1.  

6.1.2.  Post-2020 Options 

The  emission  savings  will  become  lower  the  more  the  EU  ETS  for  intra-EEA  flights  is 
converged to the GMBM. Thus option 3 will result in the least emission savings with 0.73% 
higher global aviation emissions and 2.81% higher emissions in the EEA per year than option 
0. The difference in emission savings between options 1 and 2 compared to option 0 is almost 
identical with an increase of 0.47% and 0.5% respectively at global level (2.07 and 2.17% at 
EEA level).  

The additional emission savings that can be achieved in other sectors through the demand for 
EU allowances and international credits from the aviation sector show higher variation. These 
are  the lowest  under  option  3  with  135.4  Mt  annually  on  average  in  the  2021-2030  period. 
This  is  due  to  the  fact  that  the  required reduction  in  emissions  for  intra-EEA  flights  is  less 
ambitious under the GMBM option compared to the other options with additional EU action.  

Option  1  and  option  2  show  better  results:  they  are  likely  to  result  in  similar  emission 
reductions  by  other  sectors  with  170.3  MT  CO2  and  170.4  MT  CO2  additional  emission 
reductions per year (2021-2030) respectively. Moreover, it has to be recalled that intra-EEA 
flights under options 1 and 2 would contribute to domestic emissions reductions by other EU 
ETS sectors by requiring the purchase of around 49.5 million allowances annually (around 26 
million under sub-option 2.1).  

Since  the  price  of  international  credits  is  expected  to  be  lower  than  the  price  of  EU 
allowances during the 2021-2030 period and not being any limits on the use of international 

54 

 
 
 
 
 
 
credits for offsetting under option 3, this is the only option where intra-EEA aviation will not 
trigger any demand for EU allowances from other sectors. The whole amount of emissions to 
be  offset,  including  the  part  corresponding  to  intra-EEA  activity  would  be  covered  with 
international credits. This means that there will be no contribution from intra-EEA aviation to 
domestic reductions  in  the  EU  under  option  3,  while  all  other  sectors would  be  required to 
step up their efforts after 2020. This shortfall in ambition by intra-EEA aviation under option 
3 could put at risk the economy-wide -40% reduction to which the EU committed in the Paris 
Agreement.  

6.1.3.  Impact on the EU's 2030 targets and commitments under the Paris Agreement 

The EU and its Member States are committed to a binding target consisting in an economy-
wide objective of an at least 40% reduction in GHG emissions by 2030 compared to 1990. 
The  European  Council  of  October  2014  concluded  that  the  target  be  met  in  the  most  cost-
effective way possible, by reducing emissions  in the non-ETS sectors by 30%  compared to 
2005  and  in  the  ETS  sectors  by  43%  compared  to  2005.  To  achieve  the  latter,  it  has  been 
proposed to increase the linear reduction factor applicable to the EU ETS sectors from 1.74% 
to 2.2% after 2020. For these calculations the aviation sector, including all intra-EU flights, 
was  considered  as  an  EU  ETS  sector.  This  was  reflected  in  the  Nationally  Determined 
Contribution submitted by the EU and its Member States under the Paris Agreement. 

Assuming regulation of intra-EEA aviation under the EU ETS (post-2020 options 1 and 2), 
demand  for  allowances  would  be  around  23  million  annually  between  2021  and  2030  (230 
million  over  the  period)  as  implied  by  the  low  emissions  growth  scenario  in  PRIMES,  and 
around  49.5  million  annually  (495  over  the  period)  in  AERO.  This  would  be  the  sector 
contribution to reaching the EU's 2030 climate goals, along with other sectors. 

If the aviation sector was not regulated under the EU ETS but exclusively by the GMBM the 
demand for allowances from aviation would no longer occur. The regulation under the 
GMBM (as under post-2020 option 3) would not foster any domestic emissions reductions in 
the EU, as the GMBM is operating on the basis of international offsets. Aviation would thus 
not contribute to the EU's climate goals. Therefore, in order to attain the agreed domestic 
reduction in the EU, other sectors would need to increase their contributions. 

6.2. COMPETITIVENESS AND ECONOMIC IMPACTS 

Divergence  in  impacts  on  operating  costs,  price  and  demand  between  options  are  very 
limited. Impacts can be considered negligible compared to those associated with other types 
of costs, such as fuel costs. This also leads to absence of risk of competitive distortions. The 
highest risk, in this regard, can be associated to a possible non-implementation of the GMBM 
by  certain  countries,  which  could  result  in  competitive  distortions.  This  could  affect  intra-
EEA  flights  under  option  3  in  case  a  state  does  not  properly  implement  the  GMBM  on  its 
operators  flying  between  EU  member  states.    Finally,  with  regards  to  impacts  on  national 
budgets,  the  larger  is  the  scope  of  emissions  covered  by  the  EU  ETS,  the  higher  are  the 
revenues generated by auctions of allowances.   

6.2.1.  IMPACTS ON OPERATING COSTS, PRICES AND DEMAND 

6.2.1.1. 

2017-2020 OPTIONS 

55 

 
 
 
 
 
 
 
In general, the differences in impacts on operating costs, price and demand are minimal. The 
narrower the geographical scope of the 2017-2020 option, the less significant the additional 
operating costs resulting from it. Thus the operating costs are the highest under option 0 and 
the lowest under option 1. Compared to option 0, the operating costs are -0.1% lower under 
option  1  and  -0.04%  lower  under  option  2.  The  three  options  result  in  an  almost  identical 
average price per RTK (difference of less than 1% per RTK) with option 0 having the highest 
price per RTK and options 1 and 2 having the same price. The reduction in price per RTK is 
reflected  in  an  overall,  albeit  small,  raise  in  demand  for  intra-EEA  and  extra-EEA  flights, 
which increases with the narrowing of the scope of the option. Compared to the baseline, the 
overall RTK increases by 0.5% under option 1 and by 0.25% under option 2. 

6.2.1.2. 

POST-2020 OPTIONS 

Divergence in impacts on operating costs, price and demand are also very limited in the post-
2020 scenarios, especially on flights to and from third countries. The operating costs and the 
average price per RTK are the lowest under option 3 and the highest under the baseline full 
scope option (option 0).  

All options show a reduction of costs compared to the baseline. Compared to the baseline, the 
operating costs in 2030 under option 3 are -2.61% lower for intra-EEA and -2.53% lower for 
extra-EEA  flights.  For  intra-EEA  flights,  the  operating  costs  in  2030  would  also  be  lower 
under option 1 (-0.43%) and option 2 (-0.59%) albeit less significant than under option 3. For 
extra-EEA flights, the reduction of operating costs under option 1 (-2.56%) would be almost 
identical as under option 3 and slightly lower under option 2 (-2.13%).  

Similarly, the average price per RTK is highest under the full scope (baseline) option 0 for 
intra-EEA  and  extra-EEA  flights.  In  contrast,  it  is  the  lowest  under  option  3  for  intra-EEA 
flights with a change in price per RTK of -2.75% for intra-EEA and -2.65% for extra-EEA 
flights compared to option 0. For intra-EEA flights, the calculated price is almost identical for 
options 1 and 2 and slightly less compared to option 0 (-0.5% and -0.65% respectively). The 
calculated  price  for  extra-EEA  flights  under  options  1  and  2  is  identical  to  the  price  under 
option 3, which results in a change in price per RTK of approximately -2.65% for options 1 
and 3 and of -2.22% for option 2.    

The  change  in  price  per  RTK  compared  to  the  baseline  is  reflected  in  an  overall  raise  in 
demand  for  intra-EEA  and  extra-EEA  flights  in  comparison  to  option  0.  Consequently,  the 
overall RTK for intra-EEA (+2.92%) and extra-EEA (2.18%) flights would increase the most 
significantly  under  option  3.  The  raise  in  demand  would  be  less  significant  under  option  1 
(+0.5% for intra-EEA and +2.04 for extra-EEA flights) and option 2 (+0.67% for intra-EEA 
and +1.71% for extra-EEA flights). 

6.2.2.  IMPACTS ON LEVEL PLAYING FIELD 

Although none of the policy options directly distort competition, there is a theoretical risk of 
indirect  distortion  of  competition  in  favour  of  city-pair  routes  outside  the  EEA  in  border 
regions,  the  use  of  hubs  outside  of  the  EEA  in  one-stop  services  and  tourist  destinations 
outside the EEA. However, it must be noted that distortions have not been identified during 
the 5 years where the EU ETS has been applied to aviation, and this should be even less the 
case where other routes will be covered, after 2020, by a new market instrument such as the 
GMBM.    

56 

 
 
 
  
 
As  anticipated,  the  implementation  of  the  GMBM  may  represent  a  risk  of  competitive 
distortions if a state, for political or capacity reasons, does not apply it to its operators. This 
would affect extra-EEA flights under options 1 and 2, but also intra-EEA flights under option 
3, as there would be airlines flying within Europe being administered by third countries. 

6.2.2.1. 

2017-2020 OPTIONS 

In  relation  to  the  2017-2020  options,  the  risk  of  distortion  of  competition  is  highest  under 
option 0 and lowest under option 1 with regards to city-pair routes and one-stop services with 
option  0  having  the  most  important  impact  on  the  total  operational  costs  for  flights. 
Conversely, the risk is inversed in relation to the indirect distortion of competition between 
tourist  destinations,  with  the  risk  being  highest  under  option  1,  which  exempts  extra-EEA 
flights  from  the  scope  of  the  EU  ETS  and  lowest  under  option  0,  treating  intra-EEA  and 
extra-EEA  flights  equally  and  thus  making  extra-EEA  flights  than  intra-EEA  flights  of  the 
same distance.  

The  risk  of  indirect  distortion  of  competition  is  considered  to  be  theoretical  under  all  three 
policy options, mainly due to the low magnitude of the extra allowance costs. 

With  regards  to  the  city  pair  routes  and  the  one  stop  services,  the  geographical  borders 
between European and the rest of the world, from which it is mostly separated by sea, as well 
as the tariffs, visas and other barrier to the free movement of goods and people that generally 
exist between the EEA and other countries render the potential risk even more hypothetical.  

6.2.2.2. 

POST-2020 OPTIONS 

As  with  the  pre-2020  options,  significant  distortions  in  relation  to  city-pairs  and  one-stop 
services  are  unlikely  to  occur  in  practice,  partly  due  to  the  low  magnitude  of  the  extra 
allowance costs relative to total costs, as well as the geographical and political barriers to the 
free  movement  of  goods  and  people  that  generally  exist  between  the  EEA  and  other 
countries. Under the full ETS scope (Option 0), allowance costs in  2030 would on average 
account for around 3% of costs for flights between the EEA and third countries, thus adding 
around €10 to the cost (and price) of a flight with an operating cost of €300 per passenger. 
Cost  increases  (and  therefore  potential  distortions)  are  generally  significantly  lower  for  all 
other  options,  and  variations  amongst  them  not  relevant,  as  the  GMBM  would  in  all  cases 
cover flights to and from third countries – and non-EEA related routes with higher traffic. As 
said above, there are  specific risks attached to option 3 in case some states do not properly 
implement the GMBM on their operators.  

For the same reasons mentioned above, also in relation to tourism is the potential risk purely 
theoretical.  

6.2.3.  IMPACT ON MEMBER STATES' BUDGETS (AUCTION REVENUES) 

All 2017-2020 policy options generate auction revenues for public authorities. The wider the 
geographical scope of the policy option, the more important the auction revenue. The auction 
revenues generated under option 1 represent 26% of the auctioning revenues generated under 
the full scope option; under option 2 these are 63% of full scope ones.  

57 

 
 
 
 
 
 
In  contrast,  only  options  0  and  1  under  the  post-2020  scenario  would  generate  auctioning 
revenues.  Due to the larger scope, the revenue would be more than three times higher under 
option 0.  

6.2.4.  ADMINISTRATIVE EFFORT  

6.2.4.1. 

2017-2020 

In terms of one-off administrative costs, option 2 would generate the highest administrative 
effort, whereas the effort resulting from options 0 and 1 would be almost identical. In relation 
to  the  on-going  costs,  the  administrative  effort  would  be  the  highest  under  option  0  and 
lowest under option 1. Option 1 is thus, overall, the one with lower costs.  

6.2.4.2. 

POST-2020 

In terms of administration, the GMBM will not be significantly different from the EU ETS. 
However,  technical  rules  under  ICAO,  notably  on  MRV,  still  need  to  be  developed  and 
adopted. Once this is the case, the assessment of administrative efforts could be refined. 

In any case, the same key administrative tasks will have to be carried out. The GMBM will 
also  be  based  on  route-based  monitoring,  reporting,  and  verification  (MRV)  of  emissions. 
The administrative costs for operators and national authorities are therefore not expected to 
be significantly different under the two systems. 

However,  the  implementation  of  the  GMBM  will  require  an  additional  effort  and  result  in 
one-off costs. These costs should be minimal for operators and national administrators in the 
EU ETS as it can be expected that the existing MRV infrastructure and processes can equally 
be used for the GMBM.  

Option 0 followed by option 1 would result in the lowest one-off costs due to their similarity 
with  the  current  system.  Options  1,  2  and  3  would  raise  additional  one-off  costs  resulting 
from  the  implementation  and  operation  of  the  new  requirements  under  the  GMBM.  They 
would  be  higher  under  option  3  because  of  the  GMBM's  coverage  of  both,  intra  EEA  and 
extra  EEA  flights  and  highest  under  2.1,  as  both  systems  are  applied  jointly  on  intra-EEA 
flights (plus the GMBM on extra-EEA ones).  

With regard to on-going administrative costs, the MRV costs should not differ significantly 
because all options require similar compliance (e.g. MRV of emissions at the level of routes). 
To keep administrative costs to a minimum and avoid double regulation, the administrative 
rules  under  the  EU  ETS  and  the  GMBM  should  be  consistent  and  converge  as  much  as 
possible,  taking  account  of  the  technical  guidance  still  to  be  developed  by  ICAO. 
Complexities  attached  to  sub-option  2.1  mean  that  the  administrative  effort  for  this 
alternative is expected to be higher than under the other options. 

6.3. SOCIAL IMPACTS 

6.3.1.  LOWER INCOME GROUPS 

Due to the predicted stable ticket prices under all policy options up to 2020 and post-2020, no 
impact is expected on lower income groups.  

58 

 
 
 
 
 
 
 
 
 
6.3.2.  EMPLOYMENT 

The impact on total net employment (across the whole economy) is considered to be difficult 
to estimate and thus unclear. With regards to employment in the aviation sector, between the 
2017-2020 policy options, is assumed to be highest under option 1 and lowest under option 0. 
After 2020, employment in the aviation sector is likely to grow under all options compared to 
the baseline, more under option 3 and almost identically in relation to options 1 and 2. In any 
case, variations are small (less than 1.3% difference compared to baseline between options 1 
and 3). 

6.4. OUTERMOST REGIONS 

Overall, the allowance costs per RTK remain very low on flight with outermost regions and 
are  therefore  is  not  expected  to  significantly  affect  structure,  frequency  or  accessibility  of 
flight services or to have any impacts on the price of imported or exported goods.  

Under  the  2017-2020  policy  options,  option  0,  followed  by  option  2  result  in  the  lowest 
allowance costs per RTK in the outermost regions. Post-2020, option 0 is expected to lead to 
the  highest  allowance  costs  per  RTK.  Option  3  followed  by  option  2  result  in  the  lowest 
allowances costs per RTK, being in all cases very small.  

The  direct  emission  reductions  resulting  from  the  coverage  of  EEA  flights  to,  from  and 
within  outermost  regions  in  2020  are  the  most  important  under  option  0  and  the  least 
significant  under  option  1.  After  2020,  they  are  lowest  under  options  0  and  1,  closely 
followed by option 2.  

6.5. SMALL EMITTERS 

With  regards  to  all  of  the  post-2020  options,  extending  the  de-minimis  threshold  for  non-
commercial aircraft operators beyond 2020 would maintain the environmental effectiveness, 
due to the small amount of GHG emissions covered by the exceptions, while containing the 
administrative burden and costs for aircraft operators, as well as for national administrations. 
Simplified MRV procedures for small emitters are assumed not to change. 

6.6. LEGAL AND POLITICAL CONSIDERATIONS 

There are no legal obstacles to any of the options. However, there is a risk that a number of 
third  countries  and  airlines  oppose  the  EU  measure  alleging  that  the  EU  would  have  no 
competence  to  oblige  their  operators  to  participate  in  the  EU  measure.  The  risk  of  such 
opposition increases where the EU regulates extra-EEA flights (2017-2020: options 0 and 2; 
post-2020: option 0). Options 1 for the period 2017-2020 and 1 and 2 post-2020 only regulate 
intra-EEA  flights,  as  in  the  period  2013-2020,  where  the  EU  ETS  has  been  successfully 
applied and compliance rates have been very close to 100%. For the post-2020 period, option 
3 should not raise any negative reactions from stakeholders in the aviation industry.  

Opposition/non-acceptance  of  an  option  could  lead  to  a  higher  risk  of  non-compliance  by 
operators, for which the EU ETS contains legally-binding enforcement measures.  

A potential risk for all of the options entailing the GMBM post-2020 (all options except for 
option 0) is that the GMBM is not duly implemented by certain countries, or that the adoption 
of  the  corresponding  domestic  legislation  is  delayed.  In  particular  with  option  3,  this  could 
lead  to  distortions  on  the  internal  EU  market  for  aviation  if  responsible  administrations  in 

59 

 
 
 
 
 
 
third countries do not properly enforce the compliance of their airlines with the GMBM for 
flights operated within the EEA. 

6.7. CONCLUSIONS  

Pre-2020 period 

All three options for the period running from 2017 to 2020 show very similar results in terms 
of intra-EEA emissions, economic and social impacts. Due to the short period of time during 
which the policy options will be applicable, the difference in effect on CO2 emissions from 
the  aviation  sector  between  the  options  is  relatively  small  (2.26  million  CO2  emissions  per 
year). 

To ensure a smooth transition towards the post-2020 period, including by allowing ICAO to 
finalize  the  remaining  work  to  allow  for  the  start  of  the  GMBM  in  due  time,  option  1  is 
preferred,  i.e.  continuation  of  the  EU  ETS  for  intra-EEA  flights  as  in  2013  to  2016.  This 
option allows maintaining the current level of environmental ambition, results in the lowest 
operating costs and price per RTK, and requires the lowest administrative effort. Its impacts 
on the level playing field, as well as its social impacts, are, as is also the case for the other 
two options, negligible. Finally, the EU ETS for intra-EEA flights has a compliance rate of 
above 99% which shows its acceptance with all airlines (including the major US and China 
carriers) that operate within the EEA.  

Post 2020 period 

The assessment shows significant differences between the options with regard to the climate 
impact from intra-EEA flights: 

Option  3  –  the  application  of  the  GMBM  –  the  analysis  and  conclusions  will  need  to  be 
complemented in the light of further development on the implementation of the GMBM and 
the risks identified can be better assessed. While the GMBM is meant to address international 
emissions  on  a  global  scale,  it  will  not  by  itself  contribute  to  the  EU's  2030  objective  of 
reducing  emissions  by  at  least  40%  through  domestic  efforts,  as  set  out  in  the  EU's 
commitment to the Paris Agreement based on its currently agreed basic features and nature.. 

Options 1 and 2 lead directly to significant emissions savings. The required emission savings 
from  intra-European  aviation  will  be  in  line  with  the  efforts  of  other  sectors  in  the  EU 
economy.  Furthermore,  as  airlines  will  surrender  EU  ETS  allowances,  the  emissions  from 
intra-EEA flights will be offset by domestic emissions reductions within the EU.  

Sub-option  2.1  is  a  hybrid  between  options  2  and  3  because  airlines  would  have  the  same 
obligation  as  under  option  2  but  could  offset  their  emission  growth  after  2020  with 
international  credits  instead  of  EU  ETS  allowances.  This  could  lead  to  lower  emission 
reductions within the EU compared to options 1 and 2, and would mean that the contribution 
of intra-EEA aviation would decrease at  a time where  all other  sectors of the EU economy 
would be required to intensify their efforts to meet the EU 2030 climate target.  

With regard to the relationship to ICAO, option 0 – a return to the full scope of the EU ETS 
covering  all  arriving  and  departing  flights  –  would  revive  international  tensions  and  most 
likely hinder the introduction of the GMBM at the global level. The option 0 should therefore 
be discarded. All other options resolve the main disagreement with international partners, i.e. 
the coverage of emissions by the EU ETS outside the European airspace, because extra-EEA 
flights will only be covered by the GMBM. As regards intra-EEA flights, options 1, 2, and 
sub-option  2.1  are  in  line  with  the  ICAO  Resolution  listing  principles  for  market-based 

60 

 
 
 
 
measures and build on the current EU ETS for intra-EEA flights that has been successfully 
implemented.  Option  3  –  the  implementation  of  the  GMBM  for  intra-EEA  flights  –  would 
avoid  any  risk  of  criticism  but  this  would  come  at  a  high  environmental  cost  (as  discussed 
above).  

The  other  economic  and  social  impacts  do  not  differ  significantly  between  the  post-2020 
options. 

Finally  the  analysis  provided  above  will  need  to  be  reassessed  ahead  of  the  start  of  the 
GMBM  to  take  account  of  new  developments  as  regards  its  implementation,  including  the 
development  of  rules  for  eligibility  of  units  and  transparency.  According  to  the  Resolution 
adopted at the 39th ICAO Assembly, SARPs on eligibility of units and monitoring, reporting 
and  verification  must  be  adopted  by  2018.  Following  that,  states  should  start  taking  steps 
towards  the implementation  of  the  GMBM.  Other  developments  are  also  needed,  such  as  a 
registries system or setting up the relevant bodies for the governance of the GMBM. 

Therefore,  it  can  be  concluded  that  for  the  post-2020  period  no  final  decisions  should  be 
made  at  this  stage.  As  explained  above,  in  order  to  facilitate  the  process  towards  the 
operationalization of the GMBM option 0 should be discarded, so the intra-EEA scope could 
become the default option. Once there is more clarity on the rules and actions taken by ICAO 
and  third  countries  to  implement  the  GMBM,  a  report  and  review  under  the  EU  ETS 
Directive should be undertaken. 

61 

 
 
 
 
 
Table 6-1. Comparison of the 2017-2020 policy options against effectiveness and 
efficiency criteria 

EFFECTIVENESS 

Objectives 

Objective 1 

Objective 2 

Environment 

Economic 

Objective 3 

ICAO 
relationship 

Policy option  

Option 

Option 1 

Option 2 

0  

++ 

+ 

+ 

≈ 

+ 

- 

-- 

≈ 

- 

Magnitude of impact: ++ strongly positive; + positive;  – – strongly negative; – negative; ≈ 
marginal/neutral;  ?  uncertain;  n.a.  not  applicable.  Cost-effectiveness  is  assessed  by 
comparing costs and emisions reductions achieved.  

Table 6-2. Comparison of the post-2020 policy options against effectiveness and 
efficiency criteria 

EFFECTIVENESS 

Objectives 

Objective 1 

Objective 2 

Environment 

Economic  

Objective 3 

ICAO 
relationship 

Policy option  

Option 

0  

++ 

Option 1 

Option 2 

Option 2.1 

Option 3 

+ 

+ 
-60 
--61 

≈ 

≈ 

≈ 

- 

≈ 

-- 

≈ 

≈ 

+ 

++ 

Magnitude of impact: ++ strongly positive; + positive; – – strongly negative; – negative; ≈ 
marginal/neutral;  ?  uncertain;  n.a.  not  applicable.  Cost-effectiveness  is  assessed  by 
comparing costs and emisions reductions achieved. 

60 Can only be fully assessed once all details of the GMBM are known 
61 Can only be fully assessed once all details of the GMBM are known 

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
7.   HOW WOULD ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

The  policy  objectives  identified  in  section  3  should  be  monitored  through  operational 
objectives as defined in the table below. Operational objectives and respective indicators for 
both the periods 2017-2020 and post-2020 can be defined jointly, as the nature of the policy 
objectives is similar. 

Table 7-1: Operational objectives 

Policy 
objectives 

Objective 
1: 

Environm
ent 

Objective 
2: 

Economic 

2017-2020 

Post 2020 

Address 
aviation 
emissions 
meet 
targets 

to 
2020 

Address  aviation 
to 
emissions 
meet 
2030 
targets 

Maximize  global 
impact 
through 
GMBM 

Operational 
objectives 

reduce 
Sufficiently 
aviation  emissions  or 
contribute  to  EU  (and 
efforts  with 
global) 
reductions 
other 
sectors. 

in 

Indicators 

Aviation 
emissions 

Reductions 
achieved  in  other 
sectors 

Maintain 
competitiveness  
including 
reduced 
administrative 
burden  

Maintain 
competitiveness,  
including 
reduced 
administrative 
burden  

Contain costs. 

Minimise 
divergence 
between  current  and 
future 
technical 
implementation rules 

prices 
Units 
multiplied 
by 
offset  emissions 
to 
compared 
aviation 
operational costs 

Objective 
3: 

ICAO 

Development 
and 
for GMBM 

readiness 

Acceptance  of 
EU measure 

Implementation 
of GMBM 

Acceptance 
EU measure 

of 

of 

Adoption 
rules, 
implementation 
GMBM. 

ICAO 
actual 
of 

Concrete 
international 
developments 

Compliance rates 

No  rejection  of  EU 
measures 
and 
compliance with them. 

The Commission will periodically assess the implementation and results of the chosen option. 
This  will  be  done  on  the  basis  of  quantified  data  as  regards  objectives  related  to  the 
environmental  and  economic  impacts,  and  from  a  more  qualitative  perspective  as  regards 
other  objectives,  as  specified  below.  The  EU  ETS  implementation  provides  transparent 
information  that  allow,  by  large,  monitoring  the  abovementioned  objectives;  the  GMBM  is 
expected  to  provide  additional  information,  notably  on  global  international  aviation 
emissions. 

The  general  policy  objective  of  ensuring  the  aviation  sector's  adequate  contribution  to 
reducing the impacts of climate change and meting the corresponding climate targets will be 
monitotred on a yearly basis through the information provided by compliance data under the 
EU ETS and, once implemented, under the GMBM as well.  

Under the EU ETS, every year, aircraft operators will report their emissions and surrender the 
corresponding  amount  of  allowances.  Compliance  actions  take  place  electronically  through 
the  Union  Registry,  which  allows  collecting  individual  and  aggregated  information.  The 

63 

 
 
 
 
 
 
registry also includes data on the allocation issued under the EU ETS. This data will easily 
allow the monitoring: 

(a)  The  evolution  of  aviation  emissions  covered  by  the  EU  ETS:  the  Union  Registry 

provides annual emission data, as registered by the aircraft operators. 

(b) The  contribution  of  aircraft  operators  to  foster  emission  reductions  in  other  ETS 
sector.  Apart  from  emissions  data,  the  Union  Registry  also  contains  allocation  data. 
This allows calculating the amount of additional units purchased by aircraft operators. 
(c)  The  economic  impacts  of  the  system.  As  explained,  the  registry  data  allows 
calculating  the  amount  of  units  companies  would  have  to  purchase.  Unit  prices  are 
available  through  trading  platforms  as  well  as,  in  the  case  of  allowances,  from  the 
periodic  auctions  that  take  place  regularly  throughout  the  year.  This  information 
makes  possible  estimating  the  actual  economic  impact  of  the  system  for  aircraft 
operators. 

(d) Compliance data. 

Similar mechanisms, including a registry, are expected to be in place for the implementation 
of the GMBM, which should provide information on its functioning at global level. 

The data mentioned above, available from the Union Registry, will allow under both periods 
the  evaluation  of  the  extent  to  which  the  aviation  sector  is  contributing  to  meet  the  EU 
climate  targets  either  by  reducing  emissions  or  through  the  purchase  of  units  from  other 
sectors under the EU ETS cap for stationary installations, as well as the economic impacts it 
represents. The Commission will periodically assess those aspects in its reports, including its 
annual Carbon Market Report. 

The policy objectives of enabling the development of the GMBM (2017-2020) or facilitating 
its implementation from 2021 to maximize the global mitigation impact (post-2020), as well 
as  to  ensure  the  international  acceptability  of  the  EU  ETS  are  of  a  different  nature. 
Monitoring  these  objectives  will  require  a  qualitative  assessment  based  on  factual 
information,  rather  than  a  quantitative  one.  This  will  require  the  Commission  to  closely 
follow the international developments in the coming years, including the adoption of relevant 
Standards  and  Recommended  Practices  by  ICAO.  In  this  light,  it  is  recommended  that  the 
Commission reports on these developments to the European Parliament and the Council, and 
makes proposals, as appropriate, to adapt to them.  

64 

 
 
 
 
 
ANNEX 1 

PROCEDURAL INFORMATION 

1.  Organisation and Timing 

The  Directorate-General  (DG)  for  Climate  Action  was  leading  the  preparation  of  this 
initiative and the work on the impact assessment in the European Commission.  

An  inter-service  steering  group  (ISG),  chaired  by  DG  Climate  Action  and  the  Secretariat-
General  was  established  in  February  2016  for  preparing  this  initiative.  The  ISG  met  four 
times in the period from February 2016 to October 2016. The following Directorates-General 
(DGs)  participated in  the work of  the group: Secretariat-General (SG), Legal Service (SJ), 
EEAS, DG GROW, DG MOVE, DG ENER, DG ENV, RTD, DG REGIO, DG FISMA and 
DG TRADE. 

An indicative roadmap was adopted in September 2015. 

An online public consultation took place from 7 March to 30 May 2016 (see Annex 2). 

2.  Consultation of the Regulatory Scrutiny Board 

The  Regulatory  Scrutiny  Board received  the  draft  version  of the  present  impact  assessment 
report on 27 October 2016 and following the Board meeting on 23 November 2016 issued a 
positive  opinion  on  25  November  2016.  The  Board  made  several  recommendations.  Those 
were addressed in the revised IA report as follows: 

RSB recommendations 

Modification of the IA report 

The  report  should  explain  why  there  is  a  need 
to act now for the post-2020 period, given that 
several  important  features  of  the  GMBM  are 
still  unknown.  It  should  also  clarify 
the 
timeline  of  the  various  decisions  to  be  taken 
and the possible need for review clauses in the 
various options. 

Subsection 1.2, on the problem definition, 
has been further developed to explain why a 
first assessment of the post-2020 scenario has 
been carried out. Section 6.7 of the impact 
assessment clarifies that no final decision is 
made on the post-2020 period. A new review 
will have to be carried out before 
implementing the GMBM. The timeline is 
also further clarified. 

The report should better justify or reconsider its 
choice  of  baseline,  which  appears  unrealistic 
and  which  the  report  in  fact  recommends 
discarding as a viable option. 

The  choice  of  the  baseline  has  been  better 
justified  in  section  4,  explaining  why  the 
baseline  (full-scope)  corresponds  to  a  "do-
nothing" scenario. 

The report should more thoroughly explain the 
legal  compatibility  between  the  envisioned 
GMBM and the EU ETS if both are to apply in 
parallel. 

The  report  should  clarify  how  each  option 
would  contribute  to  reaching  the  2030  EU 
climate  objectives  and  the  Paris  Agreement, 
and how other parallel policies contribute. The 
analysis should present the scale of the aviation 

The structure of Section 5.5.2, on legal issues 
and  the  relationship  with  ICAO,  has  been 
reviewed  to  improve  clarity  and  a  specific 
box addressing the RSB recommendation has 
been added. 

The  EU  2030  climate  objectives  and  the 
commitments  under  the  Paris  Agreement 
have  been  further  explained  under  sections 
1.2  and  1.3,  including  by  clarifying  the  role 

65 

 
 
 
 
 
ETS, and explain what costs the options would 
impose on other sectors in the ETS system. 

The  report  should  explain  the  differences  in 
cost and benefit estimates that derive from the 
two  quantitative  models  used  and 
the 
implications of these results for the impacts and 
comparison of options. 

The report should reflect stakeholders' views in 
a comprehensive and balanced way throughout 
the report, and the report should explain why it 
does  not  consider  some  stakeholder  favoured 
options. 

of  aviation.  A  specific  subsection  6.1.3  has 
been  included  to  clarify  how  the  different 
post-2020 options contribute to these goals. 

Section 5.1 includes a specific subsection on 
the  impacts  on  other  ETS  sectors  where 
additional explanations have been introduced 
to address the RSB comment.  

Section 5 and Annex 4 have been completed 
with  more  information  on  the  tools  (AERO 
and  PRIMES)  used  to  model  quantitative 
impacts and the implications this has. 

New  content  has  been  added  throughout 
section  4,  explaining  which  options  are 
favoured  by  different  stakeholders,  and 
explain why some have been discarded.  

3.  Evidence and external expertise used  

The underlying econometric modelling and analysis in this study was carried out by Ricardo-
AEA Ltd.   The modelling is based on the latest version of the  AERO-MS tool, which uses 
flight  operations  for  2010  as  its  baseline  and  it  includes  scenario  years  of  2020,  2030  and 
2040. See Annex 4 for further details on the model used. The results on direct environmental 
impacts  (i.e.  emissions  from  that  aviation  sector),  the  results  were  checked  against  data 
resulting from EUROCONTROL analysis on emissions forecasts. 

As  regards  GHG  emission  forecasts/projections  referred  to  in  Annex  5,  this  study  used  the 
United  Nations  Enironmental  Programme’s  Emission  Gap  Report  2015  and  the  fifth 
Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) in relation to 
general 
intenational  aviation 
specifically, the study relied on the 2016 ICAO Environmental Report. In relation to overall 
EU  GHG  projections  in  Annex  5,  reports  from  the  European  Environmental  Agency  were 
used as a basis.  

international  emissions  forecast.  For  emissions  from 

Any  GHG  emission  projections  are  always  accompanied  by  uncertainties  resulting  from 
various sources, such as social, economic and technical trends. 

Moreover, the study heavily relied on the previous Impact Assessment from 2013, in relation 
to  the  emission  reduction  potential  from  technical  and  operational  measures,  impact  on 
tourism, as well as in relation to small emitters.  

66 

 
 
 
 
 
 
ANNEX 2  

STAKEHOLDER CONSULTATION 

1.  Process and quantitative results of the public consultation  

The European Commission organized a public online consultation from 7 March to 30 May 
2016,  i.e.  12  weeks  on  market-based  measures  to  reduce  the  climate  change  impact  from 
international  aviation62,  which  sought  input  on  questions  concerning  the  policy  options 
currently  being  developed  at  the  International  Civil  Aviation  Organisation  (ICAO)  and  in 
relation to the EU emissions trading system (EU ETS). The public consultation was carried 
out  using  the  “General  principles  and  minimum  standards  for  consultation  of  interested 
parties by the Commission”.  

While  the  consultation  was  open  to  everyone,  it  received  responses  in  particular  from 
individuals/private  persons,  civil  society  organisations,  private  enterprises,  professional 
organisations, international organisations and public authorities.  

The public consultation consisted of a questionnaire in English with eight main questions that 
combined  multiple  choices  with  space  limited  to  4  000  characters  to  explain  the  choices 
made. Respondents were also given the opportunity to provide further comments at the end of 
the  questionnaire.  This  report  follows  the  structure  of  the  eight  main  questions  and  the 
possibility  for  general  comments  in  the  consultation  questionnaire.  The  individual 
stakeholder submissions can be downloaded on the consultation website.  

2.  Stakeholders' participation in the public consultation  

The  Commission  received  108  formal  replies  from  a  broad  spectrum  of  stakeholders  (see 
Figure II-1), as shown in Table II-1, however no responses were received from airports, the 
aircraft manufacturing industry or technology suppliers.  

Table II-1: Classification of stakeholders responding to the questionnaire 

Number of responses 
31 
22 
16 
15 
9 
8 
6 
1 
108 

Stakeholder category 
As  an  individual  /  private 
person 
Civil society organisation 
Private enterprise 
Professional organisation 
International organisation 
Public authority 
Other 
Academic/research 
institution 
Grand Total 
Notes: Other includes: an airline representative, a European industry association, an interest 
group  (university  lecturer  and  students),  a  non-governmental  organisation  -  airline  trade 
association,  an  organisation  representing  the  outermost  regions  of  the  EU  and  a  trade 
association. 

% of responses 
29% 
20% 
15% 
14% 
8% 
7% 
6% 
1% 
100% 

62 The results of the public consultation are available at 
http://ec.europa.eu/clima/consultations/articles/0029_en.htm  

67 

 
 
 
 
 
 
                                                 
A  number  of  coordinated  responses  were  received,  indicating  that  respondents  followed  a 
template  for  answers.  Four  different  templates  were  identified  from  the  analysis  of  the 
sample, as shown in Figure 0-1. However, since respondents were free to adapt the answers 
to  correspond  with  their  own  views  all  responses  have  been  analysed  individually  in  the 
following sections. 

Figure  0-1:  Distribution  of  the  responses  by  stakeholder  group  -  showing  coordinated 
responses 

As an individual / private person
Civil society organisation
Private enterprise
Professional organisation
International organisation
Public authority
Other
Academic/research institution

0

5

10

15

20

25

30

35

Unique responses
Coordinated responses 3

Coordinated responses 1
Coordinated responses 4

Coordinated responses 2

A total of 24 responses were received from airlines or aviation associations. However, they 
identified themselves in a range of stakeholder groups – private enterprise (10), professional 
organisations  (7),  international  organisation  (6)  and  other  (1).  The  majority  of  this  report 
considers responses by the stakeholder categories that were listed in the survey (as shown in 
Figure  0-1),  however,  where  appropriate,  the  responses  given  by  the  group  of  airlines  and 
aviation associations are considered as well. 

Responses  were  received  from  respondents  residing  in,  or  organisations  based  in,  13  EU 
Member  States  (Austria,  Belgium,  Czech  Republic,  Denmark,  Finland,  France,  Germany, 
Hungary, Italy, Netherlands, Portugal, Spain and the United Kingdom), while responses were 
also  received  from  other  non-EU  locations  such  as  Hong  Kong,  Kenya,  Lebanon,  Norway, 
Switzerland,  United  Arab  Emirates  and  the  United  States.  The  distribution  of  responses  by 
country  of  residence  (for  individuals)  or  by  country  of  establishment  (for  organisations)  is 
shown in Figure 0-2. In total, 44% of the responses were from Austria or Germany, while a 
high  proportion  of  responses  (16%)  were  also  received  from  organisations  located  in 
Belgium.  A  total  of  31  responses  were  received  from  individuals;  of  these,  27  (87%)  were 
from Austria and Germany. 

68 

 
 
 
 
Figure 0-2: Distribution of the responses by country of residence/establishment 

Austria

Belgium

France

Netherlands

Spain

Finland

Czech Republic

Denmark

0

5

10

15

20

25

30

Unique responses
Coordinated responses 2

Coordinated responses 1
Coordinated responses 3

Notes:  Other  includes:  Hong  Kong,  Kenya,  Lebanon,  Norway,  Switzerland,  United  Arab 
Emirates and United States 

3. 

a. 

Responses to the individual questions 

Mitigation efforts from international aviation 

Overall,  most  stakeholder  groups  agreed  that  ambitious  targets  for  emissions  reductions  in 
international aviation should be agreed and that a MBM is one way to reduce emissions from 
international  aviation.  However,  there  were  differences  in  relation  to  the  desirable  level  of 
ambition and that appropriate mechanisms to reduce emissions. These are summarised in the 
following paragraphs.  

Public  authorities  considered  that  the  ambition  level  for  emissions  reductions  in 
international aviation needs to be raised in order to limit the global temperature rise to below 
2 °C. The responses consistently showed support for pursuing action through ICAO and most 
mentioned the need for net emissions not to exceed 2020 levels (CNG2020). 

Civil society organisations considered that a more ambitious approach is required and were 
strongly in favour of increasingly ambitious targets over time, in line with achieving the 1.5 
ºC  Paris  goal.  As  aviation  emissions  are  projected  to  continue  to  grow,  in-sector  emissions 
reductions were seen to be important. Some organisations were of the opinion that emissions 
from  flights  to  or  from  EU  airports  should  not  be  offset  by  reductions  in  other  sectors. 
Instead,  improvements  to  technology  and  operations  should  be  incentivised.  Regarding  the 
GMBM, six of the 22 organisations in the category recommended that aviation should pay for 
all  external  costs,  not  just  those  above  2020  levels  and  ten  organisations  considered  that 
ICAO  policies  must  not  limit  more  ambitious  policies  by  states  and  regions.  Some 
organisations  also  felt  that  state  aid  and  fuel  subsidies  should  be  withdrawn,  while  demand 
management (e.g. operating restrictions), Value Added Tax (VAT) and ticket taxes should be 
introduced. Additionally, most organisations believed that it is necessary to address the non-
CO2 impacts from aircraft, such as emissions of NOx and water vapour at high altitudes. 

The  responses  from  individuals  similarly  supported  an  ambitious  approach.  In  particular, 
German  and  Austrian  individuals  emphasised  that  a  business  as  usual  approach  with  minor 
improvements  will  not  be  sufficient.  Instead  they  proposed  that  a  ‘polluter-pays’  principle 
should be supervised by EU authorities, with closer monitoring of emissions necessary. Other 

69 

 
 
 
 
 
comments included suggestions that offers for cheap flights should not be allowed and that 
airlines  and  fuel  should  not  be  subsidised.  Individuals  from  other  countries  had  a  similar 
vision  for  international  aviation  in  the  future.  For  example,  one  individual  suggested  that 
aviation  emissions  should  be  included  from  all  flights,  that  airlines  should  pay  VAT  on 
tickets and aviation fuel and that airports and airlines should not receive state aid. Meanwhile, 
another  one  individual  suggested  that  the  IATA  2050  targets  should  be  converted  into  a 
binding commitment.  

international  organisations 
Private  enterprises,  professional  organisations  and 
responding  to  the  questionnaire  mainly  included  airlines,  aviation  associations  and  fuel 
manufacturers.  These  respondents  supported  the  ICAO  objective  to  cap  the  growth  of  net 
CO2 emissions from international aviation from 2020, along with the goal to halve net CO2 
emissions by 2050 compared to 2005. Airlines commented that efforts to improve efficiency 
should be continued, while the potential of biofuels was also highlighted by some  of them. 
There were calls for governments to reach an  agreement on a single GMBM to  replace the 
EU ETS for aviation. A global measure would limit the administrative complexity and ease 
the transition from the EU ETS legislation. However, it was noted that emissions should be 
reduced  in  line  with  what  is  economically  and  technically feasible and  that  a  MBM  should 
not hinder the growth of the aviation industry, distort competition or put unjustified burdens 
on airlines. 

Responses from other types of stakeholders generally considered that efforts must be made 
to  achieve  emissions  reductions  in  international  aviation.  An  Austrian  research  institution, 
was of the opinion that tax exemptions (particularly with regards to value added and mineral 
oil  tax)  need  to  be  phased  out  to  support  decarbonisation  efforts.  Meanwhile,  a  university 
lecturer  and  group  of  students  supported  ICAO’s  plans  for  a  GMBM.  However,  it  was 
recognised that ambitious limits and strict penalties must be set to ensure its effectiveness – at 
a minimum these limits could be the projected 2020 emissions level. 

b. 

Elements of a robust GMBM 

A  number  of  points  were  frequently  listed  by  respondents  in  all  stakeholder  groups 
concerning which elements should emerge from the 2016 ICAO Assembly to provide for the 
implementation of a robust GMBM by 2020. These are as follows: 

  The GMBM should be a global system that does not discriminate between airlines on 

the same route to avoid introducing competitive distortion. 

 

It  should  be  based  on  a  robust  MRV  system  that  is  consistent  with  United  Nations 
Framework  Convention  on  Climate  Change  (UNFCCC)  guidelines  to  avoid  double 
counting. The MRV system should begin as soon as is practicable.  

  The GMBM should be clear and environmentally effective. It should also be easy to 

implement to reduce the administrative burden. 

A  review  of  the  additional  points  raised  by  each  stakeholder  group  and  any  differences  in 
opinion is provided below. 

Public  authorities  noted  that  the  measure  should  be  regularly  reviewed  to  ensure  that  the 
objectives of the Paris agreement are achieved.  Most respondents were of the opinion that for 
the  measure  to  have  good  environmental  integrity,  the  criteria  for  offsetting  units  must  be 
clear and transparent and should only permit units with high environmental quality. Half of 
the  respondents  in  this  group  also  stated  that  the  Special  Circumstances  and  Respective 
Capabilities (SCRC) principle should be accommodated. 

70 

 
 
 
 
 
Civil society organisations consistently stated that a legally binding agreement with strong 
political  commitment  should  come  into  force.  Most  civil  society  organisations  were  of  the 
opinion  that  a  substantially  more  ambitious  goal  than  the  CNG2020  target  is  required, 
although others believe CNG2020 is a potential starting point. In relation to the allocation of 
emissions  allowances,  organisations  consistently  stated  that  these  should  be  distributed 
equitably  and  that  the  allocation  of  free  allowances  should  only  occur  in  special 
circumstances. Six of the 22 respondents in this category also emphasised that more must be 
done  to  encourage  in-sector  emissions  reductions,  while  five  organisations  suggested  that 
routes between developed countries should be subject to more ambitious climate policies. 

Individuals generally shared similar views to civil society organisations; this appears to be 
largely  related  to  the  large  number  of  coordinated  responses.  In  particular,  individuals 
consistently stated that the measure must have high durability and efficacy and that credits to 
offset  emissions  must  follow  strict  criteria  in  terms  of  environmental,  social  and 
developmental aspects. 

Airlines  and  aviation  associations  emphasised  the  need  for  a  scheme  which  is  easy  to 
implement  to  limit  the  administrative  and  cost  burdens.  The  need  for  clear  guidelines  on 
MRV  requirements  and  the  eligibility  criteria  for  emissions  credits  were  also  frequently 
stated,  in  addition  to  potential  provisions  for  differentiation  at  route-level  via  phased 
implementation. There were also comments indicating that there is already a commitment to 
CNG2020 and that the GMBM should only apply to emissions above this target. 

Several  other  points  were  raised  by  other  private  enterprises,  professional  organisations 
and international organisations. Fuels suppliers stated that ICAO’s basket of measures to 
reduce aviation emissions should continue to be endorsed as a complementary measure, while 
an  international  industry  body  supporting  emissions  trading  suggested  that  a  centralised 
registry  is  necessary  to  track  trades,  avoid  double  counting,  reduce  transaction  costs  and 
enable greater liquidity. A private enterprise suggested that the GMBM should also include 
mechanisms to reduce the unpredictability and volatility of the carbon price  – one way this 
could be achieved is to review emissions targets regularly. 

Some additional points were raised by other types of stakeholders. For example, a non-EU 
trade organisation stated that there is a concern that the cost of offsetting will be fully passed 
on  to  consumers  and  suggested  that  the  costs  associated  with  a  MBM  should  be  shared 
between operators and consumers. 

c. 

Actions to achieve climate goals 

Respondents in  most  stakeholder groups stated that if MBMs  are to  be  applied to domestic 
flights,  they  should  closely  follow  the  ICAO  GMBM  design.  This  will  avoid  additional 
complexity, administrative burdens and double counting. In addition to MBMs, a number of 
other  potential  actions  to  address  emissions  from  domestic  aviation  were  provided.  A 
summary of the viewpoints expressed by each of the stakeholder groups is provided below. 

Public  authorities  had  varying  points  of  view  concerning  whether  domestic  MBMs  are 
appropriate but agreed that any such measures should be consistent with the ICAO GMBM. 
Opinions expressed by different authorities included: 

  a Czech authority commented that the implementation of another complex measure at 
domestic level may not be appropriate for countries with limited internal flights; 

  a  Danish  authority  suggested  that  a  voluntary  extension  to  the  GMBM  to  cover 

domestic aviation could be considered; 

71 

 
 
 
 
 
  a German authority suggested that domestic aviation emissions should be accounted 

for alongside other transport modes as part of national transport plans; 

  a Finnish authority suggested that other actions, such as the optimisation of airspace 
use,  fleet  renewal  and  the  deployment  of  sustainable  alternative  fuels  should  be 
explored further. 

Civil  society  organisations  emphasised  that  measures  for  domestic  aviation  must 
complement the GMBM so that all aviation emissions are covered. This could be achieved by 
establishing  domestic  caps/targets  consistent  with  the  goals  of  the  Paris  Agreement.  They 
considered that the GMBM should act as a minimum level of ambition and that states should 
use it as a platform for more ambitious goals. Furthermore, the GMBM should not prohibit 
states from implementing more ambitious measures (such as addressing non-CO2 emissions 
or  implementing  stricter  standards).  Many  stakeholders  also  believed  that  the  potential  to 
transfer  short  distance  air  travel  (for  both  passengers  and  freight)  to  more  climate-friendly 
modes should be investigated. 

Individuals  from  Germany  and  Austria  shared  very  similar  opinions  to  civil  society 
organisations,  primarily  due  to  the  coordinated  responses.  Additionally,  one  citizen 
considered  that  the  use  of  renewable  jet  fuel  should  be  promoted  (e.g.  through  mandates, 
variable ATM and airport fees), while another one considered that international and domestic 
aviation should follow the same rules. 

Airlines and aviation associations consistently noted that as the ICAO GMBM will cover 
all  international  flights  (including  cross-border  intra-EU  flights),  there  will  no  longer  be  a 
need  for  an  EU  ETS  for  aviation.  Many  organisations  remarked  that  some  factors 
contributing to aviation emissions are outside the direct control of aircraft operators. It was 
suggested  that  domestic  actions  should  first  focus  on  infrastructure  improvements,  efficient 
airspace  design,  air  traffic  management  system  upgrades,  airport  improvements  and 
sustainable  alternative  fuels.  Within  Europe,  tangible  progress  on  the  Single  European  Sky 
would also make a large contribution towards addressing aviation emissions at the domestic, 
regional  and  international  scales.  One  airline  suggested  that  all  European  countries  should 
treat domestic emissions consistently. 

Several  other  private  enterprises,  professional  organisations  and 
international 
organisations commented that as CO2 emitted during both domestic and international flights 
contributes  to  climate  change,  mitigation  measures  should  be  largely  similar.  One 
organisation suggested that domestic aviation should ideally be included within the GMBM 
but they recognised that this may be difficult to agree. On the other hand, biofuels producers 
consider that governments should encourage investment to develop more sustainable aviation 
fuels.  Another  organisation  suggested  that  the  ICAO  Assembly  Resolution  should  not 
prohibit  countries  from  implementing  more  ambitious  measures  (e.g.  addressing  non-CO2 
emissions). 

Other  types  of  stakeholders  suggested  different  domestic  level  actions.  For  example,  one 
suggested that a carbon-based ticket tax could be implemented. This has greater potential for 
implementation  compared  to  the  taxation  of  fuel  which,  although  it  is  not  'outlawed'  by 
international agreements such as the Chicago Convention (which only states that fuel already 
on  board  an  aircraft  should  not  be  taxed),  would  require  changes  to  bilateral  air  service 
agreements  that  generally  discourage  taxation.63  Another  commented  that  countries  are 

63 The removal from Air Service Agreements of limitations on the ability to apply taxation is Commission 
policy, but has been slow to be implemented in practice.  

72 

 
 
 
                                                 
already  obliged  to  submit  state  plans  to  ICAO  on  aviation  carbon  emissions.  If  national 
governments wish to impose additional measures on domestic flights they have the power to 
do so. 

d. 

Principles and criteria for EU ETS after 2016 

The comments received for this question largely focus on whether the inclusion of aviation in 
the EU ETS will be appropriate after the implementation of the ICAO GMBM. Contrasting 
opinions  were  expressed  depending  on  the  stakeholder  group.  Some  stakeholders  consider 
that EU action must continue if the ICAO GMBM does not enable the achievement of the EU 
emission reduction targets. However, as indicated earlier, many organisations believe that the 
introduction of the GMBM will remove the need for inclusion of aviation within the EU ETS 
and  that  compliance  with  two  MBMs  would  be  challenging.  The  differences  in  opinion 
among stakeholder groups are presented below.     

Public  authorities  consistently  stated  that  a  review  of  the  EU  ETS  should  assess  the 
advantages and disadvantages of continuing the system for aviation. The following factors to 
consider were suggested: 

 

the extent to which the ICAO GMBM is in line with EU ambitions and the targets set 
in the Paris Agreement; 

  whether the ICAO resolution places restrictions on the EU ETS; 

 

 

 

the  potential  impact  of  continuing  the  EU  ETS  on  competitive  distortion  between 
operators; 

the additional complexity and administrative burden on operators; 

the environmental effectiveness. 

One authority also raised the issue that, in its original scope, the EU ETS caused problems for 
many  operators  due  to  difficulties  with  overflight  permits.  A  similar  situation  should  be 
avoided. 

Civil society organisations strongly believe that a review of the EU ETS should be guided 
by whether combined ICAO and EU action allows for a fair contribution to both the 1.5 °C 
Paris target and EU 2030 targets. Organisations consistently stated that the EU should ensure 
a level playing field between transport modes in the single market and that flights departing 
or arriving in the EU must not be offset with carbon credits from other sectors. Many civil 
society organisations stated the need for the EU ETS to regain credibility and effectiveness 
by permanently removing surplus certificates from the market. This should help to develop an 
effective price for emissions. Additionally, approaches to allow for non-CO2 emissions to be 
included were also considered important by a number of organisations. 

A few individual citizens that responded to this question suggested that a review of the EU 
ETS should ensure that it is compatible with the GMBM. Many generally share similar views 
to civil society organisations. A citizen stated that it is important to ensure that all emissions 
are counted, while another one suggested that the review should ensure that detailed data on 
aviation is collected to enable progress to be tracked.  

Almost  all  European  airlines  and  aviation  associations  expect  that  the  adoption  and 
implementation  of  a  GMBM  will  lead  to  the  replacement  of  the  EU  ETS  for  aviation. 
Respondents noted that the EU ETS should therefore be amended to allow for an appropriate 
transition mechanism and to ensure that operators do not have to comply with two separate 

73 

 
 
 
 
 
(and possibly overlapping) schemes. However, one airline, stated that aviation should be part 
of  a  single  simple  and  efficient  scheme  that  covers  both  international  and  domestic  flights. 
Non-EU  airlines  and  aviation  associations  consistently  stated  that  a  review  of  the  EU  ETS 
should ensure that it is aligned with the GMBM and only applies to flights within Europe.   

In addition to opinions that the EU ETS is likely to be replaced by the GMBM, other private 
enterprises,  professional  organisations  and  international  organisations  listed  different 
guiding principles. For example, an air charter company suggested that the EU ETS should be 
replaced with a CO2 tax, while an international organisation recommended that a review of 
the ETS should be orientated towards a cost-effective reduction in GHG emissions produced 
by domestic aviation.  

Other  types  of  stakeholders  were  generally  of  the  opinion  that  a  review  should  consider 
whether the inclusion of aviation in the EU ETS is still appropriate after the ICAO GMBM is 
implemented. 

e. 

Options for EU ETS 2017-2020 

The responses to this question could be categorised under three main options as follows: 

  Revert to the original scope of the EU ETS from the 1st January 2017, as stipulated by 
Regulation  421/2014.  This  would  mean  inclusion  of  all  flights  into  and  out  of  the 
European Economic Area (EEA). 

  Extend  the  current  ‘stock  the  clock’  derogation.  This  would  mean  inclusion  of  only 

intra-EEA flights (excluding flights to and from different outermost regions). 

  Repeal the EU ETS for aviation, or completely suspend its application. 

In  addition,  stakeholders  suggested  a  number  of  other  potential  options  to  be  considered, 
while respondents also frequently stated that the options should depend on the outcomes of 
the  2016  ICAO  Assembly.  The  results  vary  significantly  by  stakeholder  group  and  are 
presented in Figure II-3.  

Figure  II-3:  Which  options  should  be  considered  for  the  EU  ETS  for  aviation  for  the 
period 2017-2020? 

Public authority (8)

Civil society organisation (22)

Individuals (31)

Private enterprise (16)

Professional organisation (15)

International organisation (9)

Academic/research institution (1)

Other (6)

0

5

10

15

20

25

30

35

All flights to/from EEA

Intra-EEA only

Repeal/completely suspend

Other suggestion

Did not answer

Notes: n=108. The total number of respondents by stakeholder group is indicated next to its 
label  on  the  y-axis.  A  total  above  this  number  reflects  cases  where  multiple  options  were 
suggested. 

74 

 
 
 
 
 
 
Public authorities generally suggested that the EU ETS should only cover intra-EEA flights. 
A  German  public  authority  also  suggested  that  closer  attention  should  be  given  to  flights 
involving  airports  geographically  close  to  but  not  inside  the  EEA  to  avoid  a  competitive 
disadvantage for airlines operating within the EEA.  

All civil society organisations believed that the EU ETS for aviation should revert back to 
its  original  scope  to  contribute  to  the  pre-2020  ambition  of  the  Paris  Agreement.  In  their 
opinion, free allocations for air operators should also be greatly limited.  

Individuals  mostly  shared  the  same  opinion  as  civil  society  organisations.  However,  one 
citizen stated that the suspension of EU ETS for intra-EEA flights is an option.  

Private enterprises, professional organisations and international organisations offered a 
more diverse range of opinions. Among airlines and aviation associations, 12 out of 24 (50%) 
considered  that  the  EU  ETS  for  aviation  should  be  suspended  or  repealed  as  the  ICAO 
GMBM is expected in 2020. This would prevent discrimination against air carriers operating 
within Europe. However, 9 respondents suggested that the intra-EU scope should continue if 
ICAO does not agree targets for international aviation, or if a pre-implementation phase and 
MRV system is not established. A suggestion by one airline that only flights departing in the 
EEA should be included was also received. No consensus was visible among other types of 
private enterprises, professional organisations and international organisations. 

Other  types  of  stakeholders  suggested  the  EU  ETS  should  be  completely  suspended, 
proposed that the current derogation for flights to and from third countries should continue up 
to 2020 or did not have a clear view on this question, 

f. 

Options for EU ETS post-2020 

Beyond  2020,  many  respondents  noted  that  options  for  the  EU  ETS  should  depend  on  the 
scope  and  environmental  integrity  of  the  agreement  reached  at  the  2016  ICAO  Assembly. 
The views of each stakeholder group are summarised below. 

Public authorities generally considered that it is preferable for a single global measure to be 
in operation. However, a number of respondents noted that should the GMBM be insufficient 
to achieve the Paris Agreement goal, other options could be explored. Two options suggested 
are the inclusion of domestic flights in the EU ETS, or the continuation of the EU ETS for 
intra-EEA flights with a higher level of ambition than the GMBM. It was acknowledged that 
this  second  option  must  be  approached  sensitively,  so  as  not  to  undermine  the  efforts  of 
ICAO. 

Civil society organisations expect that the GMBM will offer an incomplete solution which 
may  not  be  suitably  ambitious  or  cover  all  emissions  sufficiently.  For  this  reason,  it  was 
consistently stated that international flights must continue to be included in the EU ETS and 
that  EU  2030  targets  for  aviation  should  be  consistent  with  other  ETS  sectors.  Many 
organisations believe it is particularly important for the EU ETS to be retained for intra-EU 
routes to avoid market distortions between different transport modes. Other options were also 
suggested such as: targeting the same reductions in aviation emissions as for stationary sites, 
reviewing the number of allowances alongside the goals of the Paris Agreement, addressing 
non-CO2 emissions via a multiplier or by imposing a levy, and removing VAT exemptions, 
fuel tax exemptions and airport subsides (as these work at cross-purposes to the ETS). 

German and Austrian individuals submitted similar responses to civil society organisations. 
In  addition,  one  citizen  considers  that  three  options  are  possible  for  beyond  2020:fully 

75 

 
 
 
 
integrate the EU ETS with the ICAO GMBM, exempt aviation from the EU ETS or subject 
intra-EEA flights to the EU ETS and exempt them from the ICAO GMBM. 

Airlines and aviation associations generally consider that MBMs should not be duplicative, 
therefore  international  aviation  should  be  subject  to  only  one  measure.  It  was  frequently 
highlighted  that  MBMs  are  one  out  of  a  basket  of  measures  to  reduce  emissions.  Other 
reductions  are  envisaged  to  come  from  the  CO2  efficiency  standard  for  new  aircraft, 
operational measures and sustainable alternative fuels. However, some airlines suggested that 
the  EU  should  provide  assistance  to  countries  that  wish  to  use  the  GMBM  to  cover  their 
domestic aviation emissions. 

Several comments were received from private enterprises, professional organisations and 
international  organisations,  stating  that  from  2020,  emissions  allowances  for  aviation 
should be auctioned, rather than being given away for free. 

In the other types of stakeholders category, one further point was made by an organisation 
representing  the  outermost  regions  of  the  EU,  suggesting  that,  after  2020,  the  European 
Commission  should  maintain  the  special  status  of  the  outermost  regions  with  regards  to 
aviation emissions, which would help to support their economy.  

g. 

Improvements to the EU ETS for aviation 

A range of suggestions were  submitted concerning which elements could be considered  for 
the  EU  ETS  in  order  to  improve  its  environmental  effectiveness  and  take  into  account 
international  developments.  Differing  views  were  submitted  depending  on  the  stakeholder 
group, as described below. 

Public authorities provided a range of options that could be considered for the EU ETS. To 
improve  its  environmental  effectiveness,  the  ETS  should  be  reformed  to  reduce  the  current 
surplus  of  emission  allowances  in  addition  to  lowering  the  emissions  cap.  To  take  into 
consideration  international  developments,  one  authority  suggested  evaluating  whether  any 
adjustments are needed to include the new international offset mechanism established by the 
Paris Agreement. 

Civil society organisations frequently raised three main points in relation to improving the 
system’s effectiveness. These are to bring the EU ETS target in line with the ambition of the 
Paris Agreement, to reduce/stop free allowances and to maintain the principle of not relying 
on  international  offset  credits  (to  avoid  market  distortions).  However,  other  organisations 
suggested  that  international  offsets  could  be  utilised  if  their  environmental  integrity  is 
guaranteed. Many organisations also suggested that the EU should cooperate with ICAO to 
allow for a single, high quality MRV scheme to be implemented.  

Individuals supported a reduction in the number of allowances and a stricter regulation of the 
auctioning of allowances. One citizen stated that in addition to the EU ETS, other measures 
should be considered if the environmental impact of aviation is to be contained in line with 
the target of the Paris Agreement. 

Airlines and aviation associations emphasised their wish that the GMBM replaces the EU 
ETS  for  aviation.  It  was  suggested  that  EU  ETS  requirements  concerning  domestic  flights 
should  be  aligned  with  the  GMBM.  Many  airlines  also  noted  that  any  changes  to  the 
allocation or auctioning of allowances should be thoroughly assessed so as not to adversely 
affect  the  financial  situation  of  domestic  and  regional  carriers.  One  non  EU  airline 
organisation noted that  the EU has  severely  limited the  use  of carbon offsets  under the EU 
ETS, yet the GMBM  is expected to be an  offsetting scheme. It suggested that EU Member 

76 

 
 
 
 
States and other countries should take steps to promote carbon offset projects worldwide to 
stimulate a robust market and to achieve further emissions reductions. 

Private  enterprises,  professional  organisations  and  international  organisations  listed  a 
variety  of  options  to  consider.  For  example,  several  organisations  (such  as  an  energy 
company  and  a  railway  association)  suggested  that  the  allocation  and  auctioning  of 
allowances  should  be  evaluated.  An  aircraft  operator  risk management  company  also  noted 
that ICAO GMBM proposals may be detrimental to current environmental effectiveness and 
may  cause  distortion  within  the  EU  ETS.  However,  another  professional  organisation 
suggested that the ICAO GMBM should replace the EU ETS for aviation and that this could 
be the first step for a truly global emissions trading system. 

Other types of stakeholders did not suggest any options in relation to this question. 

h. 

Small emitters exemption 

The responses to this question can be categorised into the following main groups: 

  Yes - the exemption should continue (36 responses); 

  No - there should be no exemptions (41 responses); 

  Other - alternative measures are suggested (22 responses); 

  No opinion, or did not answer this question. (16 responses). 

A number of the respondents also provided some conditions, or explanations to their answers. 
These are summarised in the text below. In addition, a number of respondents suggested that 
more than one option is feasible. As the Figure II-4 shows, opinions varied depending on the 
stakeholder group.  

Figure II-4: Should small non-commercial operators continue to be exempted from 2021 
onwards? 

Public authority (8)

Civil society organisation (22)

Individuals (31)

Private enterprise (16)

Professional organisation (15)

International organisation (9)

Academic/research institution (1)

Other (6)

0

5

10

15

20

25

30

35

Yes

No

Other

No opinion/Did not answer

Notes: Notes: n=108. The total number of respondents by stakeholder group is indicated next 
to  its  label  on  the  y-axis.  A  total  above  this  number  reflects  cases  where  multiple  options 
were suggested. 

Public  authorities  generally  considered  that  small  non-commercial  aircraft  operators 
(emitting less than 1 000 tonnes of CO2 per year) should continue to be exempted from the 
EU ETS after 2020 to avoid a disproportionate administrative burden. The French authorities 

77 

 
 
 
 
 
 
 
considered that small  commercial operators should  also be exempt  and  that  the exemptions 
should  be  harmonised  between  the  EU  ETS  and  the  GMBM.  Belgian  authorities  also 
suggested that small non-commercial operators should pay an emission charge, based on the 
EU  ETS  support  facility  data,  or  that  such  operators  should  be  obliged  to  use  a  certain 
percentage of sustainable fuels. 

Civil society organisations either indicated that exemptions should be avoided, or that other 
measures such as fuel taxation and/or VAT would be more effective. 

Individuals  consistently  stated  that  exemptions  should  be  avoided;  however,  where 
necessary, simplified measures with regards to emissions calculation and reporting could be 
considered. One German citizen suggested that small non-commercial aircraft operators with 
operations  in  the  public  interest  or  running  demonstration  flights  to  test  technology  should 
continue to be excluded but privileged persons flying for private use should not be exempted. 
Alternatively, one citizen suggested that a fuel tax could be considered. 

The  majority  of  private  enterprises,  professional  organisations  and  international 
organisations  (including  airlines  and  aviation  associations)  indicated  that  exemptions  to 
the EU ETS should continue; however, a number of other comments were received. Among 
these were options such as a fuel tax, a phased-in approach, use of a forfaiting system, or a 
simplified compliance method. 

Other  types  of  stakeholders  seemed  to  be  less  decisive,  with  50%  of  respondents  in  this 
category not answering this question. 

i. 

Other comments  

Additional  comments  were  received  from  many  stakeholders.  Those  most  relevant  to  this 
study are summarised below. 

Public authorities provided further comments to be considered when reviewing the EU ETS 
for aviation. For example, French authorities suggested that broad international consensus is 
important  to  achieve  the  highest  environmental  efficiency,  while  multilateral  discussions  to 
promote  European  ambitions  in  reducing  CO2  emissions  must  also  take  place.  Belgian 
authorities  suggested  that  there  are  regular  occurrences  of  a  large  aircraft  operator,  not 
normally flying intra-EEA flights, having a single flight diverted (e.g. due to weather) within 
the EEA (hence creating an intra-EEA flight) and having to perform a full verification of that 
single flight. The scope of the EU ETS should be reassessed to remove such flights from the 
scope (if the EU ETS continues to apply only to intra-EEA flights). 

Civil  society  organisations  emphasised  that  in  addition  to  ICAO  measures,  action  at  EU 
level  is  still  required to  ensure  that  reduction efforts  are  suitably  ambitious.  In  this  respect, 
complementary  measures  such  as  fuel  taxation  and  improved  efficiency  standards  were 
frequently noted. 

Individuals most notably commented on the potential for the implementation of VAT on air 
tickets  and  for  a  fuel  tax  to  ensure  equal  competition  between  transport  modes  in  the  EU. 
Although  not  directly  related  to  the  EU  ETS,  several  other  suggestions  were  received, 
including calls for greater visibility of CO2 emissions on flight tickets (to increase consumer 
awareness), extra fees on ineffective technology and greater investment in research to reduce 
the climate damaging effects of aviation. 

Airlines and aviation associations called for greater clarity and further consultation on the 
future of the EU ETS after 2016 to ensure that the correct planning and investment decisions 

78 

 
 
 
 
 
can be made. One airline also called for the removal of the EED which duplicates the current 
measures.  Comments  from  other  private  enterprises,  professional  organisations  and 
international  organisations  mainly  related  to  the  supporting  research  to  promote  in-sector 
reductions  and  the  importance  of  reducing  emissions  from  aviation  via  measures  that  are 
clear and have high environmental integrity. 

79 

 
 
 
 
 
 
 
 
 
 
 
ANNEX 3  

WHO IS AFFECTED BY THE INITIATIVE AND HOW 

Who is  affected 

How are they affected? 

With  the  initiative's  continued  contribution  to  achieve  the  target  under 
the EU ETS, Member States will not be responsible for emissions from 
the  aviation  sector  to  meet  their  national  emissions  target  under  the 
Effort Sharing legislation for non-ETS sectors.  

Member States 

In the period up to 2020, only flights within outermost regions will be 
covered  by  the  EU  ETS,  which  results  in  negligible  impact  on  those 
regions  compared  to  the  baseline  scenario.  But  even  if  flights  to  and 
from  outermost  regions  were  to  be  covered,  the  impact  would  be 
insignificant  due  to  the  low  allowances  costs  of  flights  within  EU 
ETS/GMBM. 

15%  of  allowances  under  the  EU  ETS  aviation  cap  are  auctioned  by 
Member  States.  In  2020,  the  auction  revenues  under  the  initiative  are 
expected  to  be  around  €123.6  million  and  in  2030  around  €302.3 
million.  

National  competent  authorities  are  significantly  involved  in  the 
implementation  and  enforcement  of  the  initiative,  which  results  in  an 
administrative burden, which relates to the training of staff, the approval 
of  monitoring  plans,  the  allocation  of  allowances,  the  checking  of 
emission  reports  and  verification  statements,  as  well  as  to  ensure 
compliance.  

In the period up to 2020, the resulting administrative costs will be lower 
than  under  the  baseline  scenario  due  to  the  lower  share  of  flights 
covered.  Post-2020,  the  administrative  costs  for  intra-EEA  flights  will 
be  the  same  under  the  initiative,  as  under  the  baseline  scenario.  The 
administrative burden resulting from the application of GMBM to extra-
EEA  flights  cannot  yet  be  fully  estimated  due  to  the  GMBM 
implementing rules, in particular in relation to MRV, still having to be 
developed.  

Aircraft operators also have to implement the initiative, which results in 
an  administrative  burden  of  elaborating  monitoring  plans,  monitoring 
and  reporting  emissions,  paying  fees  to  third  party  verifiers  to  verify 
their monitored emissions.  

In the period up to 2020, the resulting administrative costs will be lower 
than  under  the  baseline  scenario  due  to  the  lower  share  of  flights 
covered.  Post-2020,  the  administrative  costs  for  intra-EEA  flights  will 
be  the  same  under  the  initiative,  as  under  the  baseline  scenario.  The 
administrative burden resulting from the application of GMBM to extra-
EEA  flights  cannot  yet  be  fully  estimated  due  to  the  GMBM 

80 

National 
Competent 
Authorities  

Aircraft 
Operators 

 
 
 
 
 
 
implementing rules, in particular in relation to MRV, still having to be 
developed. 

The  implementation  of  the  initiative  also  means  that  aircraft  operators 
are  responsible  for  their  emissions  under  the  EU  ETS  for  intra-EEA 
flights  and  as  of  2021  under  the  GMBM  for  extra-EEA  flights.  Under 
the EU ETS, 85% of allowances falling within the EU ETS aviation cap 
are  allocated  for  free.  Under  the  GMBM,  only  those  emissions  above 
the  CNG2020  target  must  be  offset.  They  can  be  offset  with 
international credits.   

[Due  to  the  reduced  scope  of  the  initiative  up  to  2020  and  the 
application  of  the  GMBM  to  extra-EEA  flights  post  2020,  the  costs 
resulting from the purchasing of allowances/international credits will be 
lower than under the baseline scenario.] 

[However, due to the low prices of allowances and international credits, 
the overall costs of flights per RTK will only be impacted minimally by 
this initiative. Consequently, also in the very few situations where there 
is  a  potential  risk  of  distortion  of  competition,  this  risk  is  of  a  purely 
theoretical nature.]   

All  costs  that  incurred  by  aircraft  operators  due  to  this  initiative  are 
likely to be passed through to the end-consumers.  

There  is  a  potential  that  the  options  result  in  higher  prices  for  flights 
because  of  aircraft  operators  passing-through  the  incurred  costs  to  the 
end  consumers.  However,  due  to  the  low  price  of  allowances  and 
international credits, the increase in flight prices by 2030 is considered 
to be so insignificant that it will have no impact on tourism, i.e. neither 
distort  competition  between  tourism  destinations  nor  prevent  end-
consumers from travelling.  

The  administrative  burden  of  implementing  the  options  is  higher  on 
small  airlines.  This  is  due  to  the  fact  that  larger  airlines  have  tools 
available that small airlines do not, which facilitate the performance of 
the administrative tasks resulting from the initiative. Investment in such 
tools is not profitable for smaller airlines.  

Therefore  the  initiative  foresees  the  continued  application  of  lighter 
rules to smaller airlines as regards the MRV of emissions. Moreover, it 
extends the exemption of small, non-commercial aircraft operators post 
2020.    

The  general  public  will  benefit  from  the  emission  reductions  achieved 
through the initiative, as well as the slight increase in employment. The 
initiative is expected to have no negative impact on low income groups 
due to insignificant increase in prices resulting from the measure.  

81 

Tourism (tourist 
destinations and 
consumers) 

SMEs (smaller 
airlines) 

General Public 

 
 
 
 
 
 
ANALYTICAL MODELS USED IN PREPARING THE IMPACT ASSESSMENT 

ANNEX 4  

The  quantitative  assessment  of  the  impacts  of  the  different  policy  options  is  based  on  the 
AERO Modelling System (AERO-MS)64. The AERO-MS model was selected as providing a 
mechanism  for  modelling  the  economic  and  environmental  impacts  of  policies  without  the 
need  for  assumptions  (for  example,  regarding  the  impact  of  changes  in  airline  costs  on 
demand or technology development). 
AERO-MS was also used for the analyses performed as part of the previous study in 201365. 
Since that time, the tool has been updated and now uses a base year of 2010 and it includes 
forecast years of 2020, 2030 and 2040. 

The primary requirements for this study are to produce results for the years 2020  and 2030. 
However,  there  are  benefits  in  being  able  to  present  cumulative  impacts  (e.g.  total  CO2 
emissions  saved)  over  the  period  up  to  2030.  To  improve  the  calculation  of  the  results  for 
intervening years, the analyses of the policies have also included calculations for years 2010 
and 2040. 

The  approach  to  performing  the  analysis  of  a  policy  option  includes  a  requirement  for 
specifying  the  additional  airline  costs  that  would  be  incurred.  As  both  the  EU  ETS  and 
GMBM mechanisms place additional cost burdens on the airlines directly related to the CO2 
emissions  they  produce,  which  are  themselves  directly  related  to  the  fuel  consumed,  the 
additional costs are implemented in the model as an additional cost per kg of fuel consumed. 

Because of the varying number of free allowances, offsets and purchases of EU allowances 
that  are  required  to  cover  the  actual  CO2  emissions  produced,  the  approach  that  has  been 
adopted includes an iterative approach: 

  calculate the additional fuel cost based on the CO2 emissions from the no-policy-option 

case; 

  use AERO-MS to calculate the effect of the additional fuel cost on demand and, hence, 

fuel consumption and CO2 emissions; 

  update  the  additional  fuel  cost  calculation  using  the  fuel  consumption  values  from  this 

AERO-MS calculation; 

 

recalculate the effects on fuel consumption and CO2 emissions using AERO-MS with the 
updated additional fuel cost values; 

  confirm that the changes in fuel consumption are sufficiently small. 

The calculations to date have been checked and it has been confirmed that, whilst the updates 
to the calculated additional fuel cost can be of the order of a few percent, the resulting change 
to  the  fuel  consumption  is  of  the  order  of  a  few  hundredths  of  a  percent.  It  is  therefore 
considered that this ‘two iteration’ approach gives sufficiently self-consistent results for the 
purposes of this study. 

64 EASA (2010) Research Project EASA.2009/OP15 Study on Aviation and Economic modelling (SAVE) 
65 Technical assessment of possible amendments of the EU ETS Directive for aviation – Final Report (Ricardo-
AEA/R/ED58833, 2013) and SWD(2013) 430 final, 
http://ec.europa.eu/clima/policies/transport/aviation/docs/swd_2013_430_en.pdf 

82 

 
 
 
 
                                                 
The economic and environmental impacts are obtained from the results of the second AERO-
MS  calculation  described  above.  The  impacts  on  income  to  the  EU  ETS  and  GMBM 
mechanisms  (through  the  purchases  of  allowances  and  offsets)  are  derived  from  the  fuel 
consumption  results  from  the  second  AERO-MS  calculation  and  the  additional  fuel  cost 
values used as input to it. 

The  updated  descriptions  of  the  options  for  the  EU  ETS  beyond  2020  were  provided  in 
Section  4.  The  implementation  of  those  options  in  the  analysis  involves  identifying  the 
additional  cost  to  the  airlines  of  each  option  (based  on  the  assumed  cost  of  carbon  credits) 
and  applying  it  as  an  uplift  to  the  fuel  cost.  The  costs  of  carbon  credits  from  auctions  are 
proportional to the CO2 emitted (e.g. the costs are related to a fixed price per tonne of CO2 
emitted)  and  the  relationship  between  CO2  emitted  and  fuel  consumed  is  one  of  direct 
proportionality (3.16 kg of CO2 is emitted per kg of fuel consumed). Therefore, the approach 
of applying the additional cost as if it was an additional cost per kg of fuel consumed is valid 
for the analyses that are being performed. 

The  application  of  these  additional  costs  takes  account  of  the  geographical  scope  of  the 
option. For example, when considering the analysis for the year 2020, during which only the 
EU ETS will be in force, the additional cost is only applied to flights which depart from or 
arrive at EU airports (for the option in which the EU ETS applies to all flights to and/or from 
EU airports in the period 2017 to 2020). The AERO-MS tool operates on the basis of a set of 
flight stages, which represent flights between city-pairs by particular categories of aircraft, so 
this  approach  to  limiting  the  geographical  scope  of  a  policy  option  is  feasible  in  the 
modelling. 

 To  ensure  consistency  with  other  recent  policy  developments,  notably  the  legislative 
proposal  for  the  Effort  Sharing  Regulation  and  ongoing  considerations  for  the  appropriate 
energy efficiency target (27% or 30%), the following range was applied for the EU allowance 
price assumptions.  

Carbon price ETS sectors 

2010 

2015 

2020 

2025 

2030 

With EE 27% 

With EE 30% 

11.2 

11.2 

7.5 

7.5 

15.0 

15.0 

25.0 

23.5 

42.0 

27.0 

For  the  price  assumptions  for  international  credits  a  range  was  applied  between  a  50% 
discount  of  EU  allowance  price  assumptions  and  prices  starting  with  the  current  price  of 
certified emission reduction units linearly increasing up to 50% of 2030 EU allowance prices. 

CER price 

Linear increase 

50% 

2015 

0.30 

3.75 

2020 

2025 

4.5 

7.5 

9 

12.5 

2030 

13.5 

21 

As  explained  in  Section  5,  a  sensitivity  scenario  is  also  applied  using  aviation  emission 
projections  from  the  PRIMES  models.  PRIMES  energy  model  is  not  aviation  specific.  It 
derives  its  growth  rates  on  the  basis  of  aviation  fuels  sold  in  the  EU  and  simulates  the 

83 

 
 
 
 
 
European  energy  system  and  markets  on  a  country-by-country  basis  and  across  Europe  for 
the  entire  energy  system.  The  model  provides  amongst  others  projections  of  CO2  emission 
over the 2015-2050 period in 5-years intervals. The data is based on Eurostat statistics for the 
years 2000-2010. PRIMES has been used as a model for the revision of the EU ETS and for 
establishing binding reduction targets for EU Member States for non-ETS sectors under the 
Effort Sharing Regulation for the 2021-2030 period. The main differences between PRIMES 
and  AERO-MS  are  due  to  different  growth  rates  (and  different  rates  of  energy  efficiency 
improvement).  

Due to the application of low aviation emission growth sensitivity besides the strong growth 
scenario,  as  well  as  the  application  of  ranges  for  the  carbon  price  projections,  the  risks  of 
relying on these estimates can be considered to be negligible. The real future growth rate, as 
well carbon prices can be expected to fall within the considered growth and price ranges. 

84 

 
 
 
 
 
 
STRONG GROWTH OF CLIMATE CHANGE IMPACTS FROM THE AVIATION SECTOR 

ANNEX 5 

Aviation is one of the fastest growing sources of GHG emissions, globally and within the EU, 
with  the  large  majority  of  these  emissions  coming  from  international  flights.  Aviation  also 
has  non-CO2  impacts,  such  as  emissions  of  NOX  and  water  vapour  at  high  altitudes,  which 
have been estimated to have several times the impact of aviation's CO2 emissions.66his impact 
assessment does not further consider these impacts.  

1. INTERNATIONAL PROJECTIONS 

According to the International Energy Agency, global CO2 emissions from international and 
domestic civil aviation stood at 740 million tonnes per annum in 2010, amounting to 2.5% of 
global CO2 emissions. Emissions from aviation strongly depend on economic activity, which 
in  turn  triggers  transport  demand.  Due  to  the  predicted  continued  global  economic  growth, 
aviation  emissions  are  also  expected  to  continue  increasing.  ICAO  forecasts  in  its  2016 
Environmental  Report67  that  in  comparison  to  2010,  when  annual  international  aviation 
emissions  stood  at  448Mt,  international  aviation  emissions  will  increase  by  52%  to  68% 
(estimated  annual  emissions  of  682Mt  to  755Mt)  by  2020,  between  169%  and  185% 
(estimated  annual  emissions  of  1205Mt  to  1278Mt)  by  2040  and  up  to  284%  to  300% 
(estimated  annual  emissions  of  1721Mt  to  1794Mt)  by  2050  depending  on  the  level  of 
technological  and  operational  improvements  (see  Figure  1).  Thus,  even  under  the  most 
optimistic  scenario  about  the  effectiveness  of  technical  and  operational  measures,  aviation 
CO2 emissions in 2050 are still expected to be 3.8 times higher than 2010 emissions due to 
the forecasted strong increase in aviation activities. Technical and operational measures are 
therefore on their own insufficient to achieve CNG from 2020 (see Figure V-1).  

66 See Directive 2008/101/EC; recital 19 
67 
protection/Documents/ICAO%20Environmental%20Report%202016.pdf  

ICAO  Environnemental  Report  2016,  page  17,  available  at:  http://www.icao.int/environmental-

85 

 
 
 
 
 
 
                                                 
 
Figure V-1: CO2 Emissions Trends from International Aviation, 2005 to 2050 

Source: 2016 ICAO Environmental Report  

2. CONTRIBUTION OF AVIATION ACTIVITIES TO TOTAL EU GHG EMISSIONS 

Since 1990, GHG emissions (excluding LULUCF) decreased by 24.4% in the EU, reaching 
the  lowest  level  since  1990  in  2014  with  4282  MtCO2eq.  From  1990  to  2013,  EU  GHG 
emissions  decreased  in  all  of  the  main  sectors  with  the  exception  of  transport  emissions, 
which increased by 19.4% over the same period, corresponding to almost one quarter (24.4%) 
of total EU GHG emissions in 2013. During this period, emissions from international aviation 
in the EU almost doubled.68 In 2013, GHG emissions from aviation were 16% higher than in 
2000 and accounted for 12.9% (11.6% international aviation; 1.4% domestic aviation) of all 
EU GHG emissions from transport and for 3% of the EU's total GHG emissions.69 In the EU, 
aviation is projected to significantly increase its contribution by 2050 (see Figure V-2).70  

68  European  Environmental  Agency,  "Evaluating  15  Years  of  Transport  and  Environmental  Policy"  (2015),  
available at: http://www.eea.europa.eu/publications/term-report-2015 
69 SWD(2016) 244 final 
70  European  Environmental  Agency,  "Evaluating  15  Years  of  Transport  and  Environmental  Policy"  (2015),  
available at: http://www.eea.europa.eu/publications/term-report-2015 

86 

 
 
 
 
 
 
 
 
 
                                                 
Figure  V-2:  Contribution  of  the  different  modes  of  transport  to  EU  transport  GHG 
emissions in 2013 

3. THE NEED FOR EARLY ACTION 

Scientific views are generally in  agreement that the well below 2 degrees Celsius objective 
under  the  Paris  Agreement  can  be  achieved  but  that  it  requires  early  and  significant  global 
mitigation  action.    Pursuant  to  the  Emissions  Gap  Report  2010  by  the  United  Nations 
Environment  Programme  (UNEP),  the  growth  of  global  GHG  emissions  must  be  reversed 
before 2020 and  decline thereafter, reaching at least  50 %  below 1990 levels  by 2050. The 
UNEP  Emission  Gap  Report  2015  highlighted  that  in  order  to  still  be  meet  the  well  below 
2°C objective, pre-2020 action had to be enhanced and emission reduction potentials realised 
by 2020 and 2030 so  as  to  reach net zero CO2 emissions  globally  between  2045 and 2075. 
The fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) also 
confirmed  that  the  only  pathways  that  do  hold  warming  to  below  2°C  with  a  likely  chance 
(>66%),  or  return  warming  to  below  1.5°C  by  2100  require  starting  ambitious  global 
mitigation action no later than 2020. It highlights that delays in mitigation through 2030 or 
beyond could substantially increase mitigations costs.  

87 

 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 6 

RESOLUTION A39-3: CONSOLIDATED STATEMENT OF CONTINUING ICAO POLICIES AND 
PRACTICES RELATED TO ENVIRONMENTAL PROTECTION – GLOBAL MARKET-BASED 
MEASURE (MBM) SCHEME 

Whereas  Assembly  Resolution  A38-18  decided  to  develop  a  global  market-based  measure 
(GMBM)  scheme  for  international  aviation,  for  decision  by  the  39th  Session  of  the 
Assembly; 

Recalling  that  Assembly  Resolution  A38-18  requested  the  Council,  with  the  support  of 
Member  States,  to  finalize  the  work  on  the  technical  aspects,  environmental  and  economic 
impacts  and  modalities  of  the  possible  options  for  a  GMBM  scheme,  including  on  its 
feasibility  and  practicability,  taking  into  account  the  need  for  development  of  international 
aviation,  the  proposal  of  the  aviation  industry  and  other  international  developments,  as 
appropriate, and without prejudice to the negotiations under the UNFCCC; 

Also recalling that Assembly Resolution A38-18 requested the Council, with the support of 

Member States, to identify the major issues and problems, including for Member States, and 
make  a  recommendation  on  a  GMBM  scheme  that  appropriately  addresses  them  and  key 
design elements, including a means to take into account special circumstances and respective 
capabilities, and the mechanisms for the implementation of the scheme from 2020 as part of a 
basket  of  measures  which  also  include  technologies,  operational  improvements  and 
sustainable alternative fuels to achieve ICAO’s global aspirational goals; 

Recognizing  that  ICAO  is  the  appropriate  forum  to  address  emissions  from  international 
aviation,  and  the  significant  amount  of  work  undertaken  by  the  Council,  its  Environment 
Advisory Group (EAG) and its Committee on Aviation Environmental Protection (CAEP) to 
develop a recommendation for a GMBM scheme and its design elements and implementation 
mechanisms, including the analyses of various approaches for distribution of obligations; 

Further recalling that Assembly Resolution A38-18 requested the Council, with the support 
of  Member  States,  to  organize  seminars,  workshops  on  a  GMBM  scheme  for  international 
aviation  participated  by  officials  and  experts  of  Member  States  as  well  as  relevant 
organizations; 

Recognizing the convening of two rounds of Global Aviation Dialogues (GLADs) seminars 
held in 2015 and 2016 for all regions; 

Noting  the  support  of  the  aviation  industry  for a  single  global  carbon offsetting  scheme,  as 
opposed  to  a  patchwork  of  State  and  regional  MBMs,  as  a  cost  effective  measure  to 
complement  a  broader  package  of  measures  including  technology,  operations  and 
infrastructure measures; 

Recognizing that MBMs should not be duplicative and international aviation CO2 emissions 
should be accounted for only once; 

Emphasizing that the decision by the 38th Session of the Assembly to develop a global MBM 
scheme  for  international  aviation  reflects  the  strong  support  of  Member  States  for  a  global 
solution for the international aviation industry, as opposed to a possible patchwork of State 
and regional MBMs; 

88 

 
 
 
 
Reaffirming the concern with the use of international civil aviation as a potential source for 
the mobilization of revenue for climate finance to the other sectors, and that MBMs should 
ensure the fair treatment of the international aviation sector in relation to other sectors; 

Recalling the UNFCCC and the Paris Agreement and acknowledging its principle of common 
but  differentiated  responsibilities  and  respective  capabilities,  in  light  of  different  national 
circumstances; 

Also acknowledging the principles of non-discrimination and equal and fair opportunities to 
develop international aviation set forth in the Chicago Convention; 

Welcoming the adoption of the Paris Agreement under the UNFCCC and recognizing that the 
work related to a global MBM scheme for international aviation and its implementation will 
contribute to the achievement of the goals set out in the Paris Agreement; 

Whereas the UNFCCC and the Paris Agreement provide for mechanisms, such as the Clean 
Development Mechanism (CDM) and a new market mechanism under the Paris Agreement, 
to contribute to the mitigation of GHG emissions to support sustainable development, which 
benefit developing States in particular; 

Welcoming the cooperation between the United Nations Framework Convention on Climate 
Change (UNFCCC) and ICAO on the development of CDM methodologies for aviation; 

Recognizing  that  this  Reslution  does  not  set  a  precedent  for  or  prejudge  the  outcome  of 
negotiations under the UNFCCC, the Paris Agreement, or other international agreements, nor 
represent  the  position  of  the  Parties  to  the  UNFCCC,  the  Paris  Agreement,  or  other 
international agreements; 

The Assembly: 

1. Resolves that this Resolution, together with Resolution A39-1: Consolidated statement of 
continuing  ICAO  policies  and  practices  related  to  environmental  protection  -  General 
provisions,  noise  and  local  air  quality  and  Resolution  A39-2:  Consolidated  statement  of 
continuing  ICAO  policies  and  practices  related  to  environmental  protection  –  Climate 
change, supersede Resolutions A38-17 and A38- 18 and constitute the consolidated statement 
of continuing ICAO policies and practices related to environmental protection; 

2. Acknowledges the progress achieved on all elements of the basket of measures available to 
address  CO2  emissions  from  international  aviation,  including  aircraft  technologies, 
operational improvements, sustainable alternative fuels and a GMBM scheme and any other 
measures,  and  affirms  the  preference  for  the  use  of  aircraft  technologies,  operational 
improvements and sustainable alternative fuels that provide the environmental benefits within 
the aviation sector; 

3.  Also  acknowledges  that,  despite  this  progress,  the  environmental  benefits  from  aircraft 
technologies,  operational  improvements  and  sustainable  alternative  fuels  may  not  deliver 
sufficient CO2 emissions reductions to address the growth of international air traffic, in time 
to  achieve  the  global  aspirational  goal  of  keeping  the  global  net  CO2  emissions  from 
international aviation from 2020 at the same level; 

4. Emphasizes the role of a GMBM scheme to complement a broader package of measures to 
achieve  the  global  aspirational  goal,  without  imposing  inappropriate  economic  burden  on 
international aviation; 

5.  Decides  to  implement  a  GMBM  scheme  in  the  form  of  the  Carbon  Offsetting  and 
Reduction  Scheme  for  International  Aviation  (CORSIA)  to  address  any  annual  increase  in 
total CO2 emissions from international civil aviation (i.e. civil aviation flights that depart in 

89 

 
 
 
one  country  and  arrive  in  a  different  country)  above  the  2020  levels,  taking  into  account 
special circumstances and respective capabilities; 

6. Requests the Council to continue to ensure all efforts to make further progress on aircraft 
technologies, operational improvements and sustainable alternative fuels be taken by Member 
States  and  reflected  in  their  action  plans  to  address  CO2  emissions  from  international 
aviation, and to monitor and report the progress on implementation of action plans, and that a 
methodology should be developed to ensure that an aircraft operator’s offsetting requirements 
under the  scheme  in  a  given  year can  be reduced  through  the  use  of  sustainable alternative 
fuels, so that all elements of the basket of measures are reflected; 

7.  Request  the  Council  to  continuously  monitor  the  implementation  of  all  elements  of  the 
basket of measures, and consider the necessary policies and actions to ensure that progress is 
achieved in all of the elements in a balanced way with an increasing percentage of emissions 
reductions accruing from non- MBM measures over time; 

8.  Acknowledges  special  circumstances  and  respective  capabilities  of  States,  in  particular 
developing  States,  in  terms  of  vulnerability  to  the  impacts  of  climate  change,  economic 
development  levels,  and  contributions  to  international  aviation  emissions,  among  other 
things, while minimizing market distortion; 

9. Decides the use of a phased implementation for the CORSIA to accommodate the special 
circumstances  and  respective  capabilities  of  States,  in  particular  developing  States,  while 
minimizing market distortion, as follows: 

a) Pilot phase applies from 2021 through 2023 to States that have volunteered to participate 
in  the  scheme.  States  participating  in  this  phase  may  determine  the  basis  of  their  aircraft 
operator’s offsetting requirements from paragraph 11 e) i) below; 

b)  First  phase  applies  from  2024  through  2026  to  States  that  voluntarily  participate  in  the 
pilot  phase,  as  well  as  any  other  States  that  volunteer  to  participate  in  this  phase,  with  the 
calculation of offsetting requirements in paragraph 11 a) below; 

c) All States are strongly encouraged to voluntarily participate in the pilot phase and the first 
phase, noting that developed States, which have already volunteered, are taking the lead, and 
that several other States have also volunteered; 

d) The Secretariat will make public on the ICAO website updated information on the States 
that volunteered to participate in the pilot phase and first phase; 

e) Second phase applies from 2027 through 2035 to all States that have an individual share of 
international  aviation  activities  in  RTKs  in  year  2018  above  0.5  per  cent  of  total  RTKs  or 
whose cumulative share in the list of States from the highest to the lowest amount of RTKs 
reaches 90 per cent of total RTKs, except Least Developed Countries (LDCs),  Small Island 
Developing  States  (SIDS)  and  Landlocked  Developing  Countries  (LLDCs)  unless  they 
volunteer to participate in this phase; 

f) States that are exempted or have not yet participated are strongly encouraged to voluntarily 
participate in the scheme as early as possible, in particular those States that are members of a 
regional economic integration organization. States who decide to voluntarily participate in the 
scheme, or decide to discontinue the voluntary participation from the scheme, may only do so 
from 1 January in any given year and they shall notify ICAO of their decision by no later than 
30 June of the preceding year; 

g) Starting in 2022, the Council will conduct a review of the implementation of the CORSIA 
every three years, including its impact on the growth of international aviation, which serves 

90 

 
 
 
as an important basis for the Council to consider whether it is necessary to make adjustments 
to the next phase or compliance cycle and, as appropriate, to recommend such adjustments to 
the Assembly for its decision; 

10. Decides that the CORSIA shall apply to all aircraft operators on the same routes between 
States with a view to minimizing market distortion, as follows: 

a)  all  international  flights  on  the  routes  between  States,  both  of  which  are  included  in  the 
CORSIA by paragraph 9 above, are covered by the offsetting requirements of the CORSIA; 

b) all international flights on the routes between a State that is included in the CORSIA and 
another State that is not included in the CORSIA by paragraph 9 above are exempted from 
the  offsetting  requirements  of 
the  CORSIA,  while  retaining  simplified  reporting 
requirements; and 

c) all international flights on the routes between States, both of which are not included in the 
CORSIA  by  paragraph  9  above,  are  exempted  from  the  offsetting  requirements  of  the 
CORSIA, while retaining simplified reporting requirements; 

11. Decides that the amount of CO2 emissions required to be offset by an aircraft operator in 
a given year from 2021 is calculated every year as follows: 

a) an aircraft operator’s offset requirement = [ % Sectoral × (an aircraft operator’s emissions 
covered by CORSIA in a given year × the sector’s growth factor in the given year)] + [ % 
Individual  ×  (an  aircraft  operator’s  emissions  covered  by  CORSIA  in  a  given  year  ×  that 
aircraft operator’s growth factor in the given year); 

b) where the sector’s growth factor = (total emissions covered by CORSIA in the given year 
– average of total emissions covered by CORSIA between 2019 and 2020) / total emissions 
covered by CORSIA in the given year; 

c)  where  the  aircraft  operator’s  growth  factor  =  (the  aircraft  operator’s  total  emissions 
covered by CORSIA in the given year – average of the aircraft operator’s emissions covered 
by  CORSIA  between  2019  and  2020  )  /  the  aircraft  operator’s  total  emissions  covered  by 
CORSIA in the given year; 

d) where the % Sectoral = (100% – % Individual) and; 

e) where the % Sectoral and % Individual will be applied as follows: 

i) from 2021 through 2023, 100% sectoral and 0% individual, though each participating State 
may choose during this pilot phase whether to apply this to: 

a) an aircraft operator’s emissions covered by CORSIA in a given year, as stated above, or 

b) an aircraft operator’s emissions covered by CORSIA in 2020; 

ii) from 2024 through 2026, 100 % sectoral and 0% individual; 

iii) from 2027 through 2029, 100 % sectoral and 0% individual; 

iv) from 2030 through 2032, at least 20% individual, with the Council recommending to the 
Assembly in 2028 whether and to what extent to adjust the individual percentage; 

v) from 2033 through 2035, at least 70% individual, with the Council recommending to the 
Assembly in 2028 whether and to what extent to adjust the individual percentage; 

f) the aircraft operator’s emissions and the total emissions covered by CORSIA in the given 
year do not include emissions exempted from the scheme in that year; 

91 

 
 
 
g) the scope of emissions in paragraphs 11 b) and 11 c) above will be recalculated at the start 
of each year to take into account routes to and from all States that will be added due to their 
voluntary participation or the start of a new phase or compliance cycle; 

12. Decides that a new entrant1 is exempted from the application of the CORSIA for three 
years or until the year in which its annual emissions exceed 0.1 per cent of total emissions in 
2020, whichever occurs earlier. From the subsequent year, the new entrant is included in the 
scheme and treated in the same way as the other aircraft operators. 

13. Decides that, notwithstanding with the provisions above, the CORSIA does not apply to 
low  levels  of  international  aviation  activity  with  a  view  to  avoiding  administrative  burden: 
aircraft  operators  emitting  less  than  10,000  metric  tonnes  of  CO2  emissions  from 
international aviation per year; aircraft with less than 5,700 kg of Maximum Take Off Mass 
(MTOM); or humanitarian, medical and firefighting operations; 

14.  Decides  that the  emissions that are not  covered by the scheme, as  the results of phased 
implementation  and  exemptions,  are  not  assigned  as  offsetting  requirements  of  any  aircraft 
operators included in the scheme; 

15.  Notes  the  work  of  the  Council,  with  the  technical  contribution  of  CAEP,  on:  a)  the 
monitoring, reporting and verification (MRV) system; b) recommended criteria for emissions 
units  to  be  purchased  by  aircraft  operators  that  take  into  account  developments  in  the 
UNFCCC  process;  c) and  registries  under  the CORSIA,  and  requests  the  Council,  with  the 
technical  contribution  of  CAEP,  to  complete  its  work  as  soon  as  possible  including  the 
provision of capacity building and assistance, so as to enable the full implementation of the 
CORSIA from 2020; 

16. Decides a three year compliance cycle, starting with the first cycle from 2021 to 2023, for 
aircraft  operators  to  reconcile  their  offsetting  requirements  under  the  scheme,  while  they 
report the required data to the authority designated by the aircraft operator’s State of registry 
every year; 

17. Decides on the need to provide for safeguards in the CORSIA to ensure the sustainable 
development of the international aviation sector and against inappropriate economic burden 
on  international  aviation,  and  requests  the  Council  to  decide  the  basis  and  criteria  for 
triggering such action and identify possible means to address these issues; 

1 A new entrant is defined as any aircraft operator that commences an aviation activity falling 
within  the  scope  of  the  scheme  on  or  after  its  entry  into  force  and  whose  activity  is  not  in 
whole  or  in  part  a  continuation  of  an  aviation  activity  previously  performed  by  another 
aircraft operator. 

18.  Decides  that  a  periodic  review  of  the  CORSIA  is  undertaken  by  the  Council,  for 
consideration  by  the  Assembly,  every  three  years  from  2022  for  the  purpose  referred  to  in 
paragraph  9  g)  above  and  to  contribute  to  the  sustainable  development  of  the  international 
aviation sector and the effectiveness of the scheme. This will involve, inter alia: 

a)  assessment  of:  progress  towards  achieving  the  ICAO’s  global  aspirational  goal;  the 
scheme’s  market  and  cost  impact  on  States  and  aircraft  operators  and  on  international 
aviation; and the functioning of the scheme’s design elements; 

b) consideration of the scheme’s improvements that would support the purpose of the Paris 
Agreement,  in  particular  its  long-term  temperature  goals;  and  update  the  scheme’s  design 
elements to improve implementation, increase effectiveness, and minimize market distortion, 
taking into account the consequential impact of changing the scheme’s design elements, e.g., 
to MRV requirements; and 

92 

 
 
 
c)  a  special  review  by  the  end  of  2032  on  termination  of  the  scheme,  its  extension  or  any 
other improvements of the scheme beyond 2035, including consideration of the contribution 
made  by  aircraft  technologies,  operational  improvements  and  sustainable  alternative  fuels 
towards achieving the ICAO’s environmental objectives; 

19. Determines that the CORSIA or any other scheme decided by the Assembly is to be the 
market based measure applying to CO2 emissions from international aviation; 

20.  Requests  the  following  actions  be  taken,  with  a  view  to  establishing  necessary 
mechanisms for implementation of the CORSIA from 2020: 

Regarding the implementation of the MRV system, 

a) the Council to develop, with the technical contribution of CAEP, the SARPs and related 
guidance material for the implementation of the MRV system under the CORSIA, including 
simplified MRV procedures, for adoption by the Council by 2018; 

b) all Member States whose aircraft operator undertakes international flights to develop the 
necessary  arrangements,  in  accordance  with  the  MRV  SARPs,  for  implementation  from  1 
January 2019; 

Regarding the Emissions Unit Criteria (EUC), 

c) the Council to develop, with the technical contribution of CAEP, the SARPs and related 
guidance material for Emissions Unit Criteria (EUC) to support the purchase of appropriate 
emissions  units  by  aircraft  operators  under  the  scheme,  taking  into  account  relevant 
developments  in  the  UNFCCC  and  Article  6  of  the  Paris  Agreement,  for  adoption  by  the 
Council as soon as possible but not later than 2018; 

d)  the  Council  to  establish,  with  the  technical  contribution  of  CAEP,  a  standing  technical 
advisory body on the EUC to make recommendations to the Council on the eligible emissions 
units for use by the CORSIA; 

e)  the  Council,  with  the  technical  contribution  of  CAEP,  to  periodically  review  the  EUC 
SARPs  and  related  guidance  material,  as  appropriate,  to  promote  compatibility  with  future 
relevant decisions under the Paris Agreement; 

Regarding the establishment of Registries, 

f)  the  Council  to  develop,  with  the  technical  contribution  of  CAEP,  policies  and  related 
guidance material to support the establishment of registries under the scheme, for adoption by 
the Council by 2018; 

g)  the  Council  to  establish  a  consolidated  central  registry  under  the  auspices  of  ICAO,  for 
operationalization no later than 1 January 2021; 

h)  Member  States  to  develop  necessary  arrangements  for  the  establishment  of  their  own 
registries or group registries established by groups of States, or to arrange for participation in 
other registries, in accordance with the ICAO guidance; 

Regarding the governance of the CORSIA, 

i)  the  Council  to  oversee  the  functioning  of  the  CORSIA,  with  support  provided  by  the 
standing technical advisory body and CAEP as needed; 

Regarding the regulatory framework, 

j) Member States to take necessary action to ensure that the necessary national policies and 
regulatory  framework  be  established  for  the  compliance and  enforcement  of  the  scheme  by 
2020. 

93 

 
 
 
21. Decides that emissions units generated from mechanisms established under the UNFCCC 
and  the  Paris  Agreement  are  eligible  for  use  in  CORSIA,  provided  that  they  align  with 
decisions  by  the  Council,  with  the  technical  contribution  of  CAEP,  including  on  avoiding 
double counting and on eligible vintage and timeframe; 

22.  Decides  that  ICAO  and  Member  States  take  all  necessary  actions  in  providing  the 
capacity  building  and  assistance  and  building  partnerships  for  implementation  of  the 
CORSIA from 2020, including: 

Regarding the implementation of the MRV system, 

a)  the  Council  to  take  necessary  action  to  expand  the  provision  of  capacity  building  and 
assistance for the preparation and implementation on Member States’ action plans, in order to 
accommodate  capacity  building  and  assistance  for  implementation  of  the  MRV  system  by 
Member States  from 1 January  2019, including organization of seminars and training in  all 
regions from 2017, and facilitation of financial support where needed, in particular for those 
States that volunteer to participate in the pilot phase and require support to do so; 

b)  Member  States 
implementation of the MRV system; 

to  build  partnerships  among 

themselves 

to  cooperate  on 

the 

Regarding the establishment of Registries, 

c)  the  Council  to  take  necessary  action  to  expand  the  provision  of  capacity  building  and 
assistance for the preparation and implementation on Member States’ action plans, in order to 
accommodate  capacity  building  and  assistance  for  establishment  of  registries  by  States, 
including organization of seminars and training in all regions from 2017, and facilitation of 
financial support where needed, in particular for those States that volunteer to participate in 
the pilot phase and require support to do so; 

d) Member States to build partnerships among themselves to cooperate on the establishment 
of their own registries or group registries established by groups of States, and possible pilot 
implementation; 

23. Decides that the CORSIA will use emissions units that meet the Emissions Unit Criteria 
(EUC) in paragraph 20 above; 

24.  Requests  the  Council  to  promote  the  use  of  emissions  units  generated  that  benefit 
developing States, and encourages States to develop domestic aviation-related projects; 

25.  Requests  the  Council  to  explore  further  development  of  aviation-related  methodologies 
for  use  in  offsetting  programmes,  including  mechanisms  or  other  programmes  under  the 
UNFCCC,  and  encourages  States  to  use  such  methodologies  in  taking  actions  to  reduce 
aviation  CO2  emissions,  which  could  further  enable  the  use  of  credits  generated  from  the 
implementation of such programmes by the CORSIA, without double-counting of emissions 
reduction; 

94 

 
 
 
 
 
ANNEX 7 

DEVELOPMENTS IN ICAO IN THE RUN-UP TO THE 2016 ICAO ASSEMBLY 

After the agreement at the 38th ICAO Assembly to develop a GMBM to limit CO2 emissions 
from international aviation, the ICAO Council agreed on a clear process and roadmap, with 
expected milestones and necessary governance structure, for the development of the GMBM, 
including the establishment of: 

i. 

Environmental Advisory Group (EAG) comprised of 17 ICAO Council members, which 
steered the work on a global MBM and addressed the policy aspects of the global MBM.  

ii.  Global  Market  Based  Measure  Technical  Task  Force  (GMTF)  under  the  Committee  for 
Aviation  Environmental  Protection  (CAEP),  which  provided  technical  support  working 
on two key technical elements of a global MBM: Monitoring, Reporting and Verification 
of aviation emissions and eligibility criteria for emissions units.  

The  ICAO  Council  endorsed  a  working  method  based  on  a  "strawman"  approach.    The 
"strawman",  initially  developed  by  the  ICAO  Secretariat,  proposed  a  mandatory  offsetting 
system without revenue generation aimed at achieving CNG2020. Under the proposal aircraft 
operators should report emissions from 2020 on and compensate part of them (above a certain 
level) with emission units purchased in the carbon markets.  

Between  2014  and  January  2016,  the  EAG  met  15  times  to  discuss  and  analyse  the 
"strawman"  to  better  understand  the  advantages  and  disadvantages  of  different  alternatives 
for and improvements to key design elements to address in particular Special Circumstances 
and Respective Capabilities of countries and the distribution of obligations amongst airlines.  

In parallel, the GMTF conducted seven meetings between 2014 and 2015 where it developed 
recommendations on the eligibility criteria for emissions units to be used for the global MBM 
and on an MRV system for a global MBM, which CAEP endorsed in February 2016. 

In December 2015, building on the discussions at the EAG, the ICAO President submitted a 
concrete GMBM-proposal in the form of a draft Assembly Resolution, which, in line with the 
"strawman"  approach,  suggested  an  offsetting  system  to  compensate  international  aviation 
emissions  above  2020  levels.  The  draft  resolution  proposed  addressing  differentiation 
through a route-based approach where routes to and from certain countries would be exempt, 
and some others would be phased-in over time.  

The following rounds of discussion took place in a more political setting in the first half of 
2016.  First,  the  President  set  up  a  "High-level  Group"  (HLG)  which  was  composed  by 
representatives of 18 ICAO States. The HLG met twice. This was followed by a High-level 
Meeting (11-13 May 2016) to which all 191 ICAO states were invited. Among the 60 ICAO 
Member  States 
technical, 
implementation related paragraphs. However, strongly divergent views were expressed on the 
key  design  elements,  namely  the  grouping  of  states  to  address  differentiation  and  the 
distribution of obligations among operators.  

that  participated  some  convergence  emerged  on  some 

Finally,  following  informal  meetings  during  the  summer  and  a  so  called  "Friends  of  the 
President" meeting in August 2016, the ICAO Council endorsed a proposal for a resolution to 
be  discussed  at  the  2016  Assembly.  The  proposal  kept  the  concept  of  an  offsetting  system 
aimed  at  achieving  CNG  2020,  but  it  included  important  flexibilities,  such  as  voluntary 
participation of states  during the period 2021-2026 (opt-in and opt-out) and exemptions for 
routes  to  and  from  countries  pertaining  to  certain  categories  (Least  Developed  Countries, 
Small Island Developing States and Land-locked Developing Countries) and those with lower 
aviation activity. 

95 

 
 
 
INTEGRATION OF AVIATION IN THE EU'S EMISSIONS TRADING SYSTEM 

ANNEX 8 

1.  INITIAL FULL SCOPE INCLUSION  
In view of the 2004 ICAO Assembly's unanimous decision not to develop a GMBM but to 
favour inclusion of aviation into open regional systems, the Commission proposed in 2006 to 
integrate  aviation  into  the  EU  ETS  covering  emissions  from  flights  to  and  from  all  EU 
Member  States.  Directive  2008/101/EC  amended  the  EU  ETS  Directive  2003/87/EC  and 
included aviation activities within the scope of the ETS:  

  Total emissions are covered from intra-EEA flights and extra-EEA flights.  

  The emission  cap  for aviation from 2013 onwards has  been set at 95 % of the average 

historic aviation emissions (corresponding to the period from 2004 to 2006).  

  Aircraft  operators  have  been  obliged  to  start  emissions  reporting  in  2010  and  full 

compliance – including surrendering of allowances – in 2012. 

The inclusion of aviation into the EU ETS was based on the 2006 Impact assessment71 that 
covered  in  detail  the  environmental,  economic,  and  social  impacts.  It  was  based  on  an 
extensive public consultation. It concluded that the broadest possible geographic scope of all 
departing and arriving flights would give the highest environmental benefits without neither 
significantly  affecting  the  demand  for  aviation  services  nor  the  competitive  position  of 
individual airlines. 

2.  INTERNATIONAL REACTIONS  
The  inclusion  of  aviation  into  the  EU  ETS  led  to  diplomatic  objections  from  a  number  of 
countries including China, India, and the US, which opposed the EU ETS alleging that  the EU 
would  have  no  competence  to  oblige  their  operators  to  participate  in  the  EU  ETS.72  On  2 
November  2011,  the  ICAO  Council  endorsed  a  statement  by  26  of  its  36  Member  States 
repeating parts of these declarations.73 Moreover, the Air Transport Association of America 
(ATA)  and  major  US  airlines  challenged  the  legality  of  the  EU  ETS  before  the  European 
Court of Justice (ECJ), which confirmed that the EU was entitled to extend the EU ETS to the 
full distance of flights which depart or arrive at EU airports.74  

3.  DECISION NO. 377/2013/EC 
Prior  to  the  2013  ICAO  Assembly,  the  2012  ICAO  Council  decided  to  set  up  a  High-level 
Group  on  Climate  Change  (HGCC)  that  would  develop  guidance  for  a  GMBM  for 
international  aviation  emissions  and  a  framework  for  national  and  regional  MBMs.  In 
recognition  of  this  positive  development,  and  in  order  to  provide  time  for  the  2013  ICAO 
Assembly to agree on a GMBM, the EU adopted the "stop-the-clock" decision to temporarily 
defer  the  enforcement  of  the  EU  ETS  compliance  obligations  for  flights  to  and  from  most 
third countries for 2012 unless airlines chose to remain with full scope (which a number of 

71 SEC(2006) 1684 
72 Joint Declaration signed on 30 September 2011 in New Delhi and Joint Declaration signed on 23 February 
2012 in Moscow on the inclusion of international civil aviation in the EU ETS 
73 
http://ec.europa.eu/clima/policies/transport/aviation/docs/minutes_icao_en.pdf   
74 Case C-366/10 

the  Delhi  Declaration, 

Council  Decision 

endorsing 

available 

ICAO 

2012 

at: 

96 

 
 
 
 
 
 
                                                 
airlines  chose  to  do,  including  airlines  based  outside  the  EEA),  while  maintaining  the 
application of the system for all airlines in relation to intra-EEA flights.75   

4.  THE 2013 ICAO ASSEMBLY 
The  EU's  "stop-the-clock"  decision  was  welcomed  by    many  countriesThe  temporarily 
reduced  scope  of  the  EU  ETS  for  aviation  was  instrumental  to  trigger  the  2013  ICAO 
Assembly  to  move  forward  on  the  development  of  a  GMBM.  The  2013  ICAO  Assembly 
adopted a roadmap, which had been proposed by the EU, to develop a GMBM by 2016 to be 
implemented from 2020.76  

5.  REGULATION 421/2014  
To take account of the outcome of the 2013 ICAO Assembly, Regulation (EU) No 421/2014 
was adopted by the European Parliament and the Council, amending the EU ETS Directive 
2003/87/EC.  In  order  to  sustain  the  momentum  reached  at  the  2013  ICAO  Assembly,  the 
regulation  introduces  article  28a  in  the  EU  ETS  Directive  to  temporarily  derogate  the 
application of the EU ETS to extra-EEA flights, as well as to intra-EEA flights to outermost 
regions  between  1  January  2013  and  31  December  2016  period.  It  also  requires  the 
Commission  to  report  on  the  outcome  of  the  2016  ICAO  Assembly  to  the  European 
Parliament and to the Council and consider and, if approprite, include proposals in reaction to 
the ICAO developments on the appropriate scope for coverage of emissions from extra EEA-
flights from 2017 onwards.  

The  EU  ETS  for  aviation  has  been  succesfully  implemented  in  the  period  2013-2016. 
Compliance with the system has been very close to 100% in terms of emissions. More than 
100 commercial airlines based in third countries, including from those countries who opposed 
the  full  scope  of  the  EU  ETS  in  the  past,  have  fulfilled  their  reporting  and  compliance 
obligations.Verified  CO2  emissions  from  ETS  aviation  activities  between  EEA  airports 
amounted  to  56.9  million  tonnes  of  CO2  in  2015.  Taking  into  account  an  annual  allocation 
close to 39 million allowances, it can be concluded that the EU ETS contributes to more than 
17 million tonnes of emission reductions annually.  

75 Decision No 377/2013/EU 
76 2013 ICAO Assembly Resolution A38-18, available at: http://www.icao.int/environmental-
protection/Documents/A38-17_A38-18.pdf    

97 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
ANNEX 9 

FEATURES OF THE EU ETS  

The  EU  ETS  is  a  cap  and  trade  system  where  operators  from  different  sectors  (power 
generation, industry, aviation) annually report their GHG emissions and surrender a number 
of  units  (typically,  EU  allowances)  equivalent  to  the  amount  of  emissions  they  are 
responsible for.  

Under the EU ETS, aircraft operators are responsible for the emissions generated by aviation 
activities  covered  by  the  EU  ETS  Directive.  Emissions  from  all  flights  departing  from  or 
arriving at aerodromes in the European Economic Area (EEA) are covered by the EU ETS. 
However, between 2013 and 2016 the scope has been temporarily limited to flights between 
airports located in the EEA.  

Member  States’  competent  authorities  are  responsible  for  administering  aircraft  operators. 
Each  Member  State  administers  operators  to  which  they  have  issued  the  corresponding 
operating licence as well as those aircraft operators from third countries performing aviation 
activities  in  Europe  attributed  to  them  in  accordance  with  the  Directive.  Competent 
Authorities approve monitoring plans from aircraft operators, receive their verified emissions 
reports and track compliance with their surrendering obligations. 

Aircraft operators submit before 30 March their verified emissions reports corresponding to 
the previous year. Before 30 April they must surrender the equivalent amount of allowances. 
Emissions are electronically inscribed in the Union Registry, through which allowances are 
also surrendered by the operators.  

Aircraft  operators  receive  some  allowances  free  of  charge.  Free  allocation  is  distributed 
between aircraft operators on the basis of an efficiency benchmark. They can also purchase 
allowances  from  auctions.  (See  table  below).  Aircraft  operators  can  use  specific  aviation 
allowances  and  general  allowances  from  other  sectors.  They  can  also  use  an  amount  of 
international  credits  (Certified  Emission  Reductions  from  the  Kyoto  Protocol´s  Clean 
Development Mechanism) up to 1.5% of their emissions. 

Allowances can be traded. An aircraft operator can purchase allowances from other markets 
players  and  can  sell  its  allowances  if  it  has  them  in  excess.  This  way,  the  EU  ETS 
incentivises  emission  reductions:  aircraft  operators  that  are  able  to  reduce  emissions  can 
obtain a benefit from selling their allowances, whilst those that increase their emissions will 
face higher compliance costs by having to purchase additional units. 

Aircraft  operators  not  complying  with  its  EU  ETS  obligations  face  enforcement  measures 
taken  by  Member  States’  competent  authorities.  If  aircraft  operators  do  not  annually 
surrender  the  corresponding  allowances  they  can  be  sanctioned  with  fines  amounting  €100 
per tonne of CO2 they are responsible for. 

98 

 
 
 
 
 
 
Key features of the EU ETS for aviation in the period 2013-2020 

EU ETS feature 

Description 

European  Economic  Area  (EEA)  which  includes  the  28  EU  Member  States, 
Iceland, Norway and Liechtenstein. 

Geographical 
coverage 

The  13  territories  that  are  part  of  the  EU  are  included  in  the  EU  ETS  for 
aviation:  Guadeloupe,  French  Guiana,  Martinique,  Reunion,  the  Azores, 
Madeira,  the  Canary  Islands,  Aland  Islands,  Akrotiri,  Dhekelia,  Ceuta,  Melilla 
and Gibraltar 

All other territories of Member States that are not part of the EU are outside of 
the scope of EU ETS for aviation (e.g.  Greenland or Channel Islands) 

Flights covered  All flights landing at or departing from EEA airports. 

Surrendering 
requirements 

Open or closed 
system 

All CO2 emissions released during the whole flight. 

Aviation is regulated under the same rules as the general EU ETS i.e. as an open 
system, but allowances are specific to the aviation sector.  

Aviation cap 

95% of the average 2004-2006 aviation emissions 

Allocation of 
allowances  

82% of allowances are allocated for free to operators based on a benchmark in 
line with their activity levels in 2010. 15% of allowances can be auctioned.  A 
special reserve ensures access to the market for new aircraft operators and assists 
aircraft operators with a sharp increase in number of tonne-kilometres. 

International 
credits 

Aircraft  operators  may  use  Certified  Emission  Reductions  and  Emission 
Reduction Units for up to 1.5 % of the number of allowances they are required 
to use for compliance up to 2020. 

Exclusions  

MRV approach 

Commercial  airlines  that  operate  fewer  than  243  flights  per  period  for  three 
consecutive four-month periods or flights with total annual emissions lower than 
10,000  tonnes  per  year.    Activities  performed  by  a  non-commercial  aircraft 
operator  operating  flights  with  total  annual  emissions  lower  than  1 000  tonnes 
per year. Other types of special purpose aircrafts are also excluded. A full list is 
in Annex I to the Directive. 

CO2  emissions  are  based  on  applying  an  agreed  emission  factor  (tCO2/km)  to 
fuel consumption measured by considering tank levels at specific points in time 
as well as fuel uplift at the airport. A simplified approach is available for small 
emitters with emissions considered as verified if the emissions were determined 
the  small  emitters  tool  approved  under  Regulation  (EU)  No  606/2010  and 
populated by Eurocontrol with data from its ETS support facility.  

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