ETS regulation for airlines

The EU has decided to include aviation in the European Emissions Trading Scheme (EU ETS). From 2012, operators will have to surrender one allowance per tonne of CO2 emitted on a flight to and from (and within) the EU. This covers passenger, cargo and non-commercial flights and applies no matter where an operator is based - non-EU carriers will also need to comply with the scheme. Non-complying operators face a penalty of €100 per missing allowance on top of the obligation to procure and surrender missing allowances. They may even be banned from operating in the EU.

The compliance period for aviation will start in 2012. The benchmark for free allowances will use transport data from 2010. By then, operators need to have reliable systems to generate this data; the related monitoring plans will have to be submitted in by 31 August 2009 latest. This baseline data will determine the number of free allowances for 9 years (2012-2020), making it worth up to several billion Euro for some airlines. Emissions will also need to be reported by 2010, two years before trading starts. Monitoring plans for emissions data have to be submitted to the authorities in advance, also by 31 August 2009. Both the 2010 transport data and emission reports must be verified by an accredited independent verifier. Verifiers are being selected already now to ensure the aircraft operator is able to meet the requirements. Verification usually starts four to five months before the deadline to submit emission reports, i.e. March 31 each year starting from 2011.

It has appeared aircraft operators need clarification on many issues. PwC is working for and with the EU Member States to develop guidance for completing Monitoring Plans which also explains the Monitoring and Reporting Guidelines. The European Commission issued templates for such plans which Member States will have to use. Both documents can be found through your Competent Authority or the European Commission's website. You may find these links useful:


How PwC can help you

With emission trading specialists in 40 countries worldwide, PwC is the biggest and most talked-to climate change practice. We advise on corporate strategy and public policy in relation to climate change, carbon markets and offsets. PwC is a leading independent carbon verifier, with a network of accreditated verifiers in all EU Member States. We act as verifier for more than 300 companies in different sectors across Europe, applying the rigour and approach used in financial audits to deliver a consistent high standard of work to our clients. PwC works with both buyers and sellers of carbon credits in all the main carbon markets, offering a full range of transaction services, including financial advice, tax structuring, auctions and carbon due diligence. PwC also has a global network of specialists in the taxation of emissions trading throughout Europe. Our Transportation & Logistics industry practice provides industry-focused assurance, tax and advisory services. We can help our aviation clients effectively manage performance improvement, sustainability, operational risk management, tax, audit, finance and other business challenges. Through our global network, we can draw upon the in-depth industry experience of specialists in every country your company operates in. Our people can help you deal with the challenges of today, and they understand the implications for tomorrow .