NEWS Alert

New EU Emissions Trading Scheme Regulation Provides Needed Clarity

On April 16, 2014, the European Parliament and Council published Regulation No. 421/2014, which clarifies the geographical scope of the European Union’s Emissions Trading Scheme (ETS). The EU ETS, established to reduce the effects of emissions on climate change, requires that aircraft operators with flights in the EU or European Economic Area (EEA) submit reports of their carbon dioxide emissions and then obtain and surrender “emissions certificates” based on the amount of their total emissions.  Aircraft operators first became subject to ETS in 2012, and there has been fierce opposition to the inclusion of aviation from major U.S. air carriers, as well as other affected parties.

Pressure from those opposed to EU ETS inclusion of aviation resulted in a one-year “stop the clock” provision for 2012 that effectively reduced the geographic scope of the program to only intra-EU/EEA flights (those both originating and arriving in an EU or EEA country).   With the expiration of that provision and lack of timely action by the European Parliament on various proposals to extend “stop the clock,” make other modifications, or completely exclude aviation from ETS, air operators faced uncertainty as to what needed to be reported for 2013.  

Regulation No. 421/2014 has now clarified that ETS will cover only intra-EU/EEA flights for the period of 2013-2016, meaning that flights operated outside of EU/EEA borders are exempt. The Regulation also completely exempts non-commercial, small operators with annual emissions lower than 1,000 tC02 per year (based on the original full geographic scope of the EU ETS program) from reporting in those years.

The Regulation also clarifies the requirements regarding Switzerland, Croatia, and other countries and territories about which there has been confusion in terms of EU ETS applicability.   And, due to the lack of timely action on the program revision, the submission deadline for annual emissions reports for 2013 was changed to March 31, 2015, the same as the deadline for 2014. Similarly, the deadline for surrendering emissions certificates based on reported 2013 emissions was changed to April 30, 2015, the same as the deadline for 2014 certificate surrenders.

Operators who report emissions to Germany, the UK, the Walloon Region, and Ireland and have already submitted a full scope 2013 emissions report do not need to update their report. Those that report their emissions to any other national authority and have already submitted a full scope emissions report, must submit an updated verification opinion statement if they emitted more than 1,000 tCO2 in 2013.

An electronic version of Regulation No. 421/2014 can be foundhere.

For more information, please contactLori Wicks or Donald Mayer at (202) 457-7790.

The Wicks Group • 733 10th St, NW, Suite 3002, Washington, DC 20001 • T: +1.202.457.7790 • F: +1.202.457.7799 • /