How does the EU emissions trading system affect airlines?

Up to date, the EU ETS has had no significant effect on air passenger numbers. Instead, air transport taxes show a negative impact on air passenger numbers. Passenger- and route specific variables instead of dummies reduce the policy impacts.

Did the EU emissions trading scheme work?

The EU ETS has proven to be an effective tool in driving emissions reductions cost-effectively. Installations covered by the ETS reduced emissions by about 35% between 2005 and 2019.

Is emissions trading the same as cap-and-trade?

Emissions trading, also known as ‘cap and trade’, is a cost-effective way of reducing greenhouse gas emissions. To incentivise firms to reduce their emissions, a government sets a cap on the maximum level of emissions and creates permits, or allowances, for each unit of emissions allowed under the cap.

How can the EU emissions trading system drive the aviation sector decarbonisation?

The two key elements in the revision of the EU ETS for aviation are: 1) the implementation of CORSIA and the treatment of international flights, and 2) the reduction of free allocation to airlines.

Is aviation covered by EU ETS?

Aviation was brought into the EU’s emission trading system (ETS) in 2012, covering all flights to and from EU airports. Following significant international and industry pressure, the scope was reduced to cover intra-EU flights only (known as “stop the clock”).

Why did the EU ETS fail?

The EU ETS has been criticized for several failings, including: over-allocation of permits, massive windfall profits for energy generator companies, price volatility, and in general for failing to meet its goals.

Did EU ETS fail?

The EU Emissions Trading System (ETS) has failed to reduce emissions. Companies have consistently received generous allocations of permits to pollute, meaning they have no obligation to cut their carbon dioxide emissions.

Does EU ETS cover aviation?

For aviation, the EU ETS only covers CO2 emissions. Additional instruments, such as a NOx charge and the optimisation of flight paths and schedules, should be adopted to address non-CO2 effects. The EU ETS and CORSIA both aim to regulate a portion of international aviation emissions, and therefore could overlap.

When was aviation added to EU ETS?

2008
Aviation activities were included in the EU ETS by Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community.