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European Union: Emissions Trading Scheme and Airlines

(July 2, 2008) A plan on emissions trading, known as the Emissions Trading Scheme (ETS), has been in force in the European Union since 1995. Based on Directive 2003/87/EC, ETS aims to reduce greenhouse gas emissions and is the biggest multi-country, multi-sector gas emission trading scheme not only in Europe, but also worldwide. The plan includes close to 10,500 installations in the 27 EU Member States as well as Iceland, Liechtenstein, and Norway. The Community Independent Transaction Log (CITL) registers the issuance, transfer, cancellation, retirement, and banking of allowances that occur in the registry. Each Member State also has its own national registry. (Emission Trading Scheme (EU ETS), EUROPA [portal site of the EU] Environment Web site, (last visited July 8, 2008).)

Until recently, the aviation sector was outside the scope of the Directive. The EU, in an effort to meet its goals of reducing greenhouse gas emissions by 20 percent by 2020, drafted a new proposal requiring airlines to be included in the ETS as of 2012. Consequently, airlines must ensure compliance with the legal requirements set forth in the Directive, that is, emissions reduction of a three percent reduction by 2012 and of five percent from 2013 and beyond. The scope of the proposal extends to all airline carriers, including non-European ones, flying into and out of the European Union.

On July 8, 2008, the European Parliament endorsed the proposed legislation by 640 votes in favor to 30 against. The endorsement was welcomed by the EU Environment Commissioner, Stavros Dimas, who stated that the approval “will enable the aviation sector to make a fair contribution to Europe's climate change targets as many other sectors are already doing.” On the other hand, airlines were highly critical of the proposal, because of the negative impact it may have on their competitiveness. (MEPS Give Final Blessing to Airline Emissions Deal, EUOBSERVER, July 8, 2008, available at