The issue of so-called “free” allowances is the other sticking point with business aviation, as airlines and private operators are not treated equally. Under ETS there is a maximum allowance of CO2, below which are free credits, or allowances. When emissions exceed that cap, the operator must purchase offsetting credits on the international carbon-trading market.
This “di minimis threshold” was established for commercial operators of 10,000 metric tons per year, or alternately, if they make fewer than 243 flights for three consecutive four-month periods, or about one roundtrip per day.
However, Kurt Edwards, director general of the International Business Aviation Council (IBAC), notes that no di minimis thresholds apply to private operators. Rather, the EU devised a formula whereby business aircraft operators could theoretically earn up to 97% of their baseline allowances.
But, as Edwards puts it, “the criteria for whether those are useful to business aviation is dissuasive, as it is based on 'ton-kilometers' of your payload: passengers or weight, if carrying cargo. Some business aviation operators that explored this option received only 4-5% of the potential 97%. . . . So, it effectively renders the entitlement to the free credits useless for business aviation operators.”
Then, as European Business Aviation Association (EBAA) President Brian Humphries notes, “The administrative cost of being in the system exceeds the cost of carbon trading, an expensive bureaucratic process for a small emitter.” And because of the expense, time and complexity of applying for the small percentages of free allowances they can harvest, Humphries claims many business jet operators eschew the system and simply pay the full carbon trading cost for their emissions.
“It's all to do with the calculation methodology,” he says. “Airlines get 80-90% of their allowances free, and we get hardly anything.”
Smith adds, “There are some concessions for small operators in the compliance mechanism which were welcome, but not enough to counterweigh the heavy administrative burden required to comply with it.”
The main ETS concession allows small emitters to use Eurocontrol's en route navigation services charging data by which they extrapolate the necessary numbers rather than engage in the full record-keeping and verification called for in ETS regulations.
Nevertheless, Smith maintains that ETS makes no sense when applied to business aircraft since “the environmental benefit is so small it is out of all proportion to the administrative cost.”