The International Air Transport Association (IATA) has criticised proposed changes to the EU’s Emissions Trading System (ETS), announced by the European Commission on Friday (17 July).
Among the changes, the Commission plans to expand the scope of the ETS – a carbon pricing scheme based on emissions caps and allowances – to cover all flights departing from airports in the European Economic Area (EEA) and landing in “third countries” within 5,000 kilometres from 2029. The scheme currently applies only to flights within the EEA and to the UK and Switzerland.
The ETS will remain in “close alignment” with ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with the EU resisting pressure to abandon its own system in favour of the global scheme. The Commission said the proposed expansion of the ETS takes into account findings from its impact assessment on CORSIA’s environmental integrity, which concluded the scheme “has not been sufficiently strengthened yet”.
The proposal also introduces a deduction mechanism for costs incurred under CORSIA on international routes to avoid double carbon pricing.
The Commission said it will conduct a new assessment of CORSIA’s implementation in 2032. If the scheme proves to be “ambitious, efficient and successful” at that time, the scope of the EU ETS will then be reduced to flights within the EEA, flights departing to the UK and Switzerland, flights to and from Gibraltar, and flights to and from “other countries taking advantage of ETS as a service”.
However, if CORSIA “still does not deliver” by 2032, the Commission said it may consider extending the ETS to cover all flights departing the region, including long-haul international services.
IATA has expressed “deep frustration” at the proposed expansion of the ETS, which it said “was discredited over a decade ago”.
In a statement, IATA director general Willie Walsh said: “The EU is repeating a historic error. The consequences will be harmful – sowing acrimony over extraterritoriality, slowing global decarbonisation, and sapping European competitiveness – with European travellers and businesses paying the price.
“Instead of expanding the EU ETS beyond Europe’s borders, the EU should focus on making CORSIA – the agreed global mechanism – even more successful.”
Walsh added that IATA will engage with European policymakers "towards a more effective approach".
The ETS places an emissions cap on airlines operating within the EEA. Under the package of changes, the planned reduction of free carbon allowances for aviation would be slowed, with the phase-out extended from this year to 2038. This free allocation would also be “more closely linked to investments in decarbonisation in Europe”, with national ETS revenues reinvested in ETS sectors. The Commission said this approach “encourages and rewards those that invest in the clean transition – and incentivises those who struggle to catch up”.
European Commission president Ursula von der Leyen said the adjustments to the EU’s carbon market reflect “changing global realities” and are intended to “keep the clean transition on track, bring relief to our industry, and support decarbonisation”.
In its announcement, the Commission said the EU ETS has generated more than €270 billion for decarbonisation efforts since its launch in 2005.