December 27, 2023
(press release)
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The EU’s Emissions Trading System (EU ETS) covers aviation. But what does that mean for the climate and airlines? What is the EU’s Emissions Trading System (EU ETS) and why is it relevant to aviation? The European Union’s Emission Trading System (EU ETS) is a market-based mechanism established by the European Union to reduce greenhouse gas emissions, and it represents one of the key instruments in the EU’s efforts to combat climate change and achieve its emissions reduction targets. The main goal of the EU ETS is to encourage industries to reduce their emissions efficiently by setting a cap on the total amount of greenhouse gases covered installations can emit. The EU ETS covers emissions from electricity and heat generation, energy-intensive industries, aviation, shipping from 2024 and buildings and road transport from 2027. Given the significant climate impact of aviation and the huge carbon impact of flying, the polluter pays principle is particularly important. However, given the global nature of air travel and how it necessarily cuts across geographical and governance jurisdictions, making polluter pays is more challenging than it appears at first sight. When did aviation enter the EU ETS? How has the EU ETS for aviation changed? What is the scope of the reformed EU ETS for aviation? How long will airlines continue to receive free allowances under the EU ETS?
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