Fri 27 June 2008 – A second-reading deal on the inclusion of aviation into the EU Emissions Trading Scheme (ETS) was struck yesterday between MEPs on the European Parliament’s Environment Committee (ENVI) and the co-legislating European Council, which sees movement by both sides on issues such as the starting date, capping and the level of allowances. The agreement will now be put to a plenary vote by MEPs on July 9.
Brokered by the Slovenian presidency and formally endorsed by the Council earlier today, the main elements of the compromise agreement are:
· All flights starting and/or landing in Europe (including intercontinental flights) will be included in the ETS from 2012.
· 85% of the emissions certificates will be allocated for free according to a common European benchmark, leaving 15% to be auctioned. The Council had supported a free allocation of 90% of total allowances, whereas ENVI had proposed 25% of allowances should be auctioned.
· The reduction target, or cap, will be calculated on the basis of airlines’ average annual emissions between 2004-6: in the first period (as of 2012), airline emissions will have to be cut by 3%; in the second period (2013-2020) by 5%. The percentage may be further modified as part of a general review of the scheme. The Council and the European Commission had proposed a 100% cap, i.e. no cuts, in the first period and a review thereafter, whereas Parliament had asked for a 90% cap in the first period and a downward review in line with the 20 or 30% EU overall target for emissions reduction by 2020 compared to 1990.
· Research flights are excluded from the scheme.
· Airlines flying less than an average two flights per day within/into/out of Europe or emit less than 10,000 tonnes of CO2 per year are to be excluded from the scheme.
· No multiplier is to be applied to the purchase of allowances to take into account the increased adverse effects of aviation emissions at high altitude. Green MEPs had fought hard for the multiplier.
· Airlines will be able to trade allowances in an ‘open’ market, i.e. across sectors.
· The EU has the obligation to seek an agreement on global measures to reduce greenhouse gas emissions from aviation. Bilateral agreements with countries adopting or proposing cap-and-trade schemes of their own, for example, could be a first step.
· Revenues generated from the auctioning of emissions allowances should be used to fund climate change mitigation, research on clean aircraft, anti-deforestation measures in the developing world, and low-emission transport.
Following the agreement, Dr Peter Liese, ENVI’s rapporteur on the legislation, said: “Of course, a global agreement is our final goal, but the inclusion of third-country flights starting and landing in Europe is a major step for the global fight against climate change. Other industries, like steel, would very much like to be in such a situation.”
Liese recently travelled to Washington to meet climate advisors for both US presidential candidates, John McCain and Barack Obama, to discuss the EU’s plans for cutting aviation emissions.
Parliament, said Liese, had fought for very strict provisions concerning the revenues from auctioned allowances. “Money should be used to tackle climate change and not disappear somewhere in the general budget. It is not a tax but an environmental instrument. This is why we are very engaged in this field. The agreement is not perfect, but the Council went further than on any other comparable occasion.”
Carbon market analysts Point Carbon have estimated the deal could result in airlines having to buy 80 million allowances in 2012. The current price of an EUA is trading around the 28 euro ($44) mark.
Parliament is scheduled to debate the issue on July 8 with a plenary vote by MEPs the following day.
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