Allocation to the aviation sector

On 14 July 2021, the European Commission adopted a series of legislative proposals setting out how it intends to achieve climate neutrality in the EU by 2050, including the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030. The package proposes to revise several pieces of EU climate legislation, including the EU ETS, Effort Sharing Regulation, transport and land use legislation, setting out in real terms the ways in which the Commission intends to reach EU climate targets under the European Green Deal.

The annual cap on aviation allowances for phase 3 of the EU ETS (2013-20) was originally 210,349,264 allowances (plus 116,524 allowances from 2014 to account for Croatia's integration). These allowances were to be distributed as follows:

The allowances are distributed as follows:

• 82% granted for free to aircraft operators
• 15% are auctioned
• 3% in a special reserve for distribution to fast-growing aircraft operators and new entrants.

The actual allocation of allowances is scaled down from 2013 to 2023, to take account of the temporary reduction of the scope of the EU ETS to flights between airports in the European Economic Area. Equal treatment is maintained for all nationalities of airlines operating these flights.

Free allowances are allocated to around 500 aircraft operators who applied for free allocation by reporting independently verified tonne-kilometre data for 2010.

Allocations are based on airline efficiency in transporting passengers and cargo, calculated on the basis of a benchmark value established in European Commission and EEA Joint Committee decisions. From 2012 to 2020, an airline receives 0.6422 allowances per 1,000 tonne-kilometres flown. The benchmark was calculated by dividing the total annual amount of free allowances by the sum of airlines' verified tonne-kilometre data that aircraft operators sent.

Member States oversee free allocation of allowances to aircraft operators assigned to them. Free allocations were determined by multiplying the benchmark by the verified 2010 tonne-kilometre data of each eligible aircraft operator who has submitted their application.

The allocation of free allowances has been reduced from 2012 to 2023 in line with the temporary reduction of the scope of the EU ETS for aviation. The three amendments to the EU ETS for this 11 year period have been intended to sustain momentum in the International Civil Aviation Organization (ICAO) negotiations on a global market-based measure for emissions reduction in the sector. A resolution was adopted by the 2016 ICAO Assembly for a global market-based measure – the 'Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), that should apply from 2020.

From 2021 onwards, the same linear reduction factor that applies to stationary installations, 2.2% annually, will start applying to these allocations to aircraft operators.

The original cap on aviation allowances was 95% of 2004-6 emissions levels, as specified in the EU Directive including aviation in the EU ETS (221,420,279 tonnes). This baseline was set out in a 2011 decision of the EEA Joint Committee, based on data from the European Organisation for the Safety of Air Navigation (Eurocontrol), actual fuel consumption information from aircraft operators and additional calculations for fuel consumption from the use of Auxiliary Power Units (APUs) to provide power to aircraft at airports.

Following the reduction in scope, the total amount of allowances issued has been around 38 million allowances, while verified CO₂ emissions from aviation activities carried out between airports in the EEA have increased from 53.5 million tonnes CO₂ in 2013 to 64.2 million tonnes in 2017. This means that, while intra-EEA aviation emissions have been continuing to increase, the inclusion of intra-European flights in the EU ETS has delivered around 100 million tonnes of CO₂ reductions/offsets between 2012 and 2018.

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