COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC for increasing aviation's contribution to the Union’s economy-wide emission reduction target and appropriately implementing a global market-based measure
Date: 2021-07-14
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU emission allowance, EU environmental policy, air transport, auction sale, emission trading, environmental protection, greenhouse gas, pollution control measures, reduction of gas emissions, tradeable emission permit

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   EUROPEAN COMMISSION  Brussels, 14.7.2021  SWD(2021) 604 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC for increasing aviation's contribution to the Union’s economy-wide emission reduction target and appropriately implementing a global market-based measure {COM(2021) 552 final} - {SEC(2021) 552 final} - {SWD(2021) 555 final} - {SWD(2021) 603 final}  
 
 
Executive Summary Sheet 

Impact assessment on Revision of the EU Emissions Trading System in respect of aviation 

A. Need for action 

What is the problem and why is it a problem at EU level?  

There are three problems addressed by this initiative. First, in accordance with the Green Deal, it must be 
ensured that aviation contributes to the new 2030 GHG emission reduction target and to the 2050 climate 
neutrality objective. Secondly, the EU ETS  should be amended in  respect  of the  ICAO’s Carbon  Offset 
and  Reduction  Scheme  for  International  Aviation  (‘CORSIA’)  as  appropriate,  consistent  with  the  EU’s 
economy-wide greenhouse gas reduction commitment for 2030. Finally, allocation of emission allowances 
in respect of aviation should be reduced in order to increase effectiveness of the carbon price signal and 
remove market distortions. 

What should be achieved? 

The objective is to revise the ETS in respect of aviation in a cost-effective and coherent way in line with 
the increased climate target,  while taking into account  the need for a just transition  and the need  for all 
sectors to contribute to the EU climate efforts. 

What is the value added of action at the EU level (subsidiarity)?  

Climate  change  is  a  transboundary  problem.  As  a  carbon  market,  the  EU  ETS  incentivises  emission 
reductions by the most cost-efficient solutions first, across the activities and countries it covers, achieving 
greater efficiency by virtue of its scale. Implementing a similar measure nationally would result in smaller, 
fragmented carbon markets, risking distortions of competition and likely lead to higher overall abatement 
costs. Aviation being mainly between countries, supranational  action is  more efficient to  tackle  aviation 
emissions while ensuring equal treatment through Union law. 

B. Solutions 

What are the various options to achieve the objectives? Is there a preferred option or not? If not, 
why? 

A key element is the strengthening of the existing ETS to increase its ambition in line with the net at least 
-55%  2030  target  and  ensuring  that  aviation  contributes  to  achieving  this  target.  The  options  for 
implementing  CORSIA  as  appropriate  differ  in  the  extent  the  existing  EU  ETS  coverage  is  maintained, 
reduced or extended. The preferred option (C3CLEAN) is to maintain the current EU ETS coverage (intra-
EEA flights,  including departing flights  to  Switzerland and to  the UK)  and to  apply CORSIA offsetting 
approaches for flights that are currently not covered by the EU ETS (flights to/from other third countries 
which  participate  in  the  scheme),  while  offsetting  units  should  come  from  countries  in  the  Paris 
Agreement, which implement  CORSIA, and double-counting should be  excluded. This  option combines 
the  continuation  of  an  effective  and  demonstrated  European  policy  instrument  incentivising  emission 
reductions  while  providing  a  constructive  international  signal  that  the  EU  wants  the  CORSIA  emission 
scheme  to  succeed  and  deliver  meaningful  emission  reductions.  The  options  for  increasing  the  auction 

 
 
share in  allocating aviation allowances differ in  the pace of increase. The preferred option is  immediate 
full auctioning from the entry into force of the amendment. 

What are different stakeholders' views? Who supports which option?  

In  the  public  consultation,  91%  of  respondents  agree  that  the  aviation  sector  should  contribute  more  to 
climate actions. 88% of respondents believe that market-based measures can be effective to tackle aviation 
emissions  in  line  with  the  climate  objectives.  82%  of  respondents  to  the  public  consultation  agreed  that 
market-based  measures  be  combined  with  other  policies  such  as  support  for  innovative  aviation 
technologies, operational improvements, taxation, and the production and use of sustainable aviation fuels. 
Stakeholders  had  mixed  views  about  CORSIA  implementation  options.  For  increasing  the  auctioning 
share, stakeholders preferred most immediate phase out, while they held maintaining the status quo as the 
least  preferred  option.  Large  majority  of  the  stakeholders  considered  that  the  increase  of  auction  share 
would  increase  the  cost  of  flying,  while  the  majority  also  agreed  that  this  measure  would  contribute  to 
climate change mitigation. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise of main ones)?                                     

Price  incentives  are  essential  to  incentivize  emission  reductions  and  implement  the  ‘polluter  pays’ 
principle.  The  incentives  under  the  EU  ETS  have  a  positive  track  record  in  doing  so  and  are  orders  of 
magnitude higher than the incentive from CORSIA offsets. Accordingly, the preferred option contributes 
better to the EU’s emission reduction target, while also keeping the emission reduction domestic.  

What are the costs of the preferred option (if any, otherwise of main ones)?                                    

The  increase  of  the  auctioning  share  will  increase  the  carbon  cost  for  airlines.  As  the  cost  pass  through 
ability in aviation is relatively high, this will result in increased ticket prices. The increase is assessed to 
have minimal impact to consumer. 

What are the impacts on SMEs and competitiveness?  

Competitive distortions would arise when policies do not apply equally on routes, and where they are not 
enforced  equally.  Enforcement  has  been  crucial  for  the  success  of  the  EU  ETS  to  date.  The  preferred 
option applies the EU ETS  uniformly to  all airlines flying the same route, and so  does not  create direct 
distortions. There is a risk that airlines that have a higher proportion of flights on high carbon cost routes 
are more impacted than  airlines flying on lower  carbon cost  routes. However, this impact  is  assessed as 
minimal for industry. 

SMEs are not significantly impacted by the preferred option chosen.  

Will there be significant impacts on national budgets and administrations?  

Under  the  existing  ETS,  most  of  the  auctioning  revenues  accrue  to  Member  States,  hence  there  are 
positive impacts on national budgets. The preferred options contribute most to the generation of revenues 
within  the  EU.  The  extent  to  which  this  is  the  case  for  additional  revenues  stemming  from  increased 
resources.  
use 
auctioning 

for  EU 

revenues 

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For  the  existing  coverage  of  the  EU  ETS,  there  are  no  additional  administrative  impacts  on  national 
administrations.  The  impacts  of  the  implementation  of  CORSIA  could  be  limited  by  using  the  same 
infrastructures. 

Will there be other significant impacts?  

The  preferred  option  will  maintain  both  domestic  ambition  while  providing  a  constructive  international 
signal  that  the  EU  wants  the  global  emission  scheme  to  succeed  and  deliver  meaningful  emission 
reductions.  This  is  consistent  with  its  high  climate  ambition  and  support  for  multilateral  climate  action 
through both the Paris Agreement and other UN organisations. For CORSIA to work and to be effective, 
all strategic partners need to be on board and undertake domestic implementation. The EU will continue to 
support efforts, multilaterally in  ICAO and bilaterally with strategic partners, to incentivise participation 
and domestic implementation, as well aim for CORSIA to deliver at least on its initial ambition level and 
be further strengthened, avoiding any backsliding at the occasion of the first review planned for 2022. 

Proportionality?  

The main policy options are proportional to what is necessary to achieve the at least -55% emission 
reduction objective. They do so in a way that is as cost-efficient as possible. 

D. Follow up 

When will the policy be reviewed?  

As currently the case, a regular review will be foreseen in the ETS Directive.