For many operators—and particularly those in business aviation—the European Union's Emissions Trading System (ETS) is the poster child for good intentions gone terribly awry. The EU's goal was to stimulate adoption of a worldwide system for curbing aircraft emissions. And while there has been some movement in that direction, what has been created is a convoluted market in carbon credits that favors small airlines, severely penalizes business jets and has raised the specter of an international trade war. Resolution may come this year. Or not.
ETS was to be an interim measure to goad the International Civil Aviation Organization (ICAO) into mitigating aviation's contribution to greenhouses gases, but now in its first year of implementation it has been met with a mix of derision and anger both outside and within the EU.
While harsh on business aviation, the principal insult of the carbon trading program is its “extra-territorial” provision. This calls for visiting airlines and business aircraft to be accountable for their CO2 emissions not just in EU member-country airspace, but all the way from their points of origin and return.
The program requires operators to purchase carbon credits at the end of each year of flights to and from Europe to offset their aggregate CO2 emissions in metric tons for the previous 12 months, with the provision of some free allowances
Among critics of the policy is the General Aviation Manufacturers Association (GAMA) whose senior vice president for international and environmental affairs, Ed Smith, says the association “has come out very clearly in opposition to the extra-territorial reach of the ETS directive. This is the objection that the rest of the world has, as well. China and India outright forbade their airlines to comply.”
So did Russia. Meanwhile, U.S. Congress last year passed a law giving the Transportation Department the authority to forbid American operators from complying with ETS if it determines this is in the public interest. President Barack Obama signed it in December.
The way the ETS program was set up, at the end of 2013 and thereafter, operators would apply their baseline data from 2012 operations to a formula calculating how much CO2 they emitted during the year, which would then determine how many credits they would have to buy, or the free allowances for which they could qualify the following year.