EMISSIONS TRADING
The main contributors from aviation to climate change are CO2, NOx emissions and water vapour which in certain conditions can assist in the formation of contrails and cirrus clouds. Efforts by engine and aircraft manufacturers have reduced CO2 emissions for jet engine-powered aircraft by 70% per passenger km over the past 50 years. Manufacturers have committed to ACARE targets: a 50% reduction in CO2 and an 80% reduction in NOx by 2020 relative to 2000 aircraft and engines. Airlines are investing in new technology with a 25% improvement in fuel efficiency by 2020 through better flight operations.
Aviation is frequently considered to be the largest contributor to climate change. In reality, it accounts for 2% (and growing) of global CO2 emissions and 6% of all UK emissions.
Governments have looked at taxing fuel. Fuel taxation for domestic flights already exists in some countries. However, fuel taxes face legal difficulties in the context of international aviation: Article 24 of the Chicago Convention prohibits duties on fuel in transit, and most bilateral Air Service Agreements prohibit taxes on fuel uplifted in either contracting state.
Under the UN’s Kyoto Protocol, the EU is required to cut its CO2 emissions from 1990 levels by 8% by 2012. Phase 1 of the EU Emissions Trading Scheme (ETS), established under EU Directive 2003/87/EC, commenced in 2005 covering energy production, iron and steel production, mineral, pulp and paper. The European Parliament and EU Governments have decided that aviation will be included in the EU ETS from 2012, enabling the aviation sector to take responsibility for its carbon emissions in the most cost effective way. This will affect ALL flights in, out and within the EU, including those operated by non-EU airlines.
Airline emissions will be capped at 97% of their average 2004-2006 levels in 2012 and at 95% from 2013. Airlines will receive 85% of their emissions allowance for free in 2012 and will have to buy, at auction, the other 15%. The auctioning level beyond 2012 is being negotiated as part of the EU Climate and Energy Package. Allowances can be bought and sold across the EU. Airlines can buy credits from other industries but can only sell to other airlines. This will be crippling for many airlines particularly with high fuel prices.
Emissions Trading is a devolved matter. In England and Wales, ETS will be regulated by the Environment Agency. It is expected to be regulated in Scotland by the Scottish Environment and Protection Agency and in Northern Ireland by the Northern Ireland Environment Agency.
