Understand and implement the EU Emissions Trading Scheme

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Communication as regards EU ETS Aviation – post 2013 OACI Assembly

The years 2012 and 2013 have seen signification activity as regards European Emissions Trading Scheme related to aviation especially with the EU Decision 377/2013/EU « Stop the clock » of 16th April 2013 and the modification of the EU ETS Directive 2003/87/EC aiming at integrating the A38-18 ICAO resolution conclusions in the scheme proposed by the European Commission (EC) on 16th October 2013.

In this framework, French civil aviation competent authority would like to sincerely thank the aircraft operators (AOs) who complied with the EU ETS requirements on behalf of 2012 emissions.

The OACI resolution foresees to develop a global market based measure (MBM) to limit C02 emissions from international aviation. This system is expected to be defined in 2016 during the next ICAO Assembly and to be implemented as of 2020.

The key features of the revised EU ETS system for aviation resulting from the EC proposal would be as follows :

Geographical scope :

2013 emissions, flights between aerodromes in the European Economic Area (EEA) remain fully covered, as under the original Directive and Decision n° 377/2013/EU.

From 2014 to 2020 emissions, flights to and from countries outside the EEA would benefit from a general exemption for those emissions that take place outside EEA airspace. Only emissions from the part of flights taking place within the EEA airspace would be included.

Exemption

An annual threshold of 1,000 tC02 below which a non commercial aircraft operator would be exempted from the scheme.

2013 Requirements are deferred

Under the proposal, the deadlines for reporting 2013 emissions and for surrendering corresponding allowances would be extended respectively to 31 March 2015 instead of 31 March 2014 (for reporting) and to 30 April 2015 instead of 30 April 2014 (for surrendering).

Notwithstanding, please note that at this stage, it is just a proposal which is therefore not legally binding. It is currently going through the European legislative process. The EC is hoping that the proposal will be agreed by April 2014.

Therefore, Aircraft Operators who would like to, could prepare and submit their annual emissions report based on the full scope (Annex 1 of the Directive).

Nonetheless, given this whole framework, French civil aviation competent authority would not punish AOs who would not submit their 2013 emissions report by 31st March 2014 nor surrender the corresponding allowances by 30th April 2014.

The ETS unit (ets.aviation@aviation-civile.gouv.fr) is at your disposal should you need any help and will keep you informed as regards the evolution of this legislative process.

Main concepts

The European Directive 2008/101/EC amending directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance has been applied since 2nd February 2009. Its transposition in the French law has been fully completed.

All IFR flights (with an MOTW bigger than 5,7t) to or from the European Economic Area are included in the scope of the Directive. Some flights are exempted from the scheme, for instance, humanitarian ones : the Commission has published a decision detailing these exemptions (Decision 2009/450/EC on the interpretation of the aviation activities). Operators flying with a commercial Air Operator Certificate (AOC) and emitting less than 10 000 tonnes of CO2 per year or performing less than 243 flight during three consecutives four-month periods, are exempted from the EU ETS.

For the aviation sector, there are two distinct periods defined by the Directive :

• 1^st period (phase II) : 2012
• 2^nd period (phase III) : 2013-2020

For 2012, the aviation sector allowances’ cap has been set at 97% of the historical emissions (the mean between emissions of 2004, 2005 and 2006). For the next period, the cap has been set at 95%.

The total of emission allowances corresponding to this cap are split in this way :

• 85% (in 2012) or 82% (from 2013) of the emission allowances are allocated freely each year, proportionnally based on the total activity data (in tonnes-kilometres) reported by each operator in 2010. The Arrêté concerning the allocation of free allowances for aircraft operators has been published in December 2011.
• 15% are put up for auction.
• 3% (from 2013) are placed in a special reserve for « new entrants » or « fast-growing » operators.

Montoring and reporting annual emissions

Before each monitoring period (31^st August of the year before the emissions year), the aircraft operators have to submit to the DGAC an annual emissions monitoring plan explaining the processes put in place in order to calculate their emissions. This plan has to be approved by the French Competent Authority, the DGAC. You can check the list published by the European Commission to determine your administering Member State.

The annual emissions monitoring plan has to be updated before each new period. In case of substantial changes in procedures, the AEMP also may have to be updated within a period, and submitted to the Competent Authority for an approval of the update.

After each monitoring year, aircraft operators have to submit to their Competent Authority an annual emissions report before the 31st March of the following year. This report must be verified by an independent verifier before submission.

The monitoring plans and the reports must be completed using standard templates which can be found at the bottom of this page.
These documents have to be submitted to the following email address :

ets.aviation@aviation-civile.gouv.fr

Or, failing that, by postal mail to the following address :
DTA-SDD-ETS
50 rue Henry Farman
75720 PARIS CEDEX 15
FRANCE

You can consider that your monitoring plan or report has been submitted successfully only if you receive a message from the EU ETS unit acknowledging receipt of your files.

For further questions or requests, do not hesitate to send an e-mail message to the aforementioned address.

Independent verifiers

Before submitting its annual emissions report, an aircraft operator has firstly to have it verified by a verifier accredited according to the applicable French regulation. The exact role of the verifier is explained in this guidance document written by the European Commission (PDF – 1635 Ko).

The List of the accredited verifiers – 31-01-2013 (PDF – 68 Ko) enumerates all the companies accredited to verify reports.

Simplified procedures

For small non-commercial emitters who emit less than 25 000 tonnes of CO2 per year (less than 10 000 tonnes per year for 2012), or perform less than 243 flight during three consecutives four-month periods, a simplified method can be used to calculate their emissions.

This simplified method allows operators to fill up the monitoring plan more easily, and to use a useful calculation tool provided by Eurocontrol : the ETS Support Facility. This tool can pre populate the report template of the AO based on Eurocontrol’s flights data, and can be used for 2012 emissions reports. You can get more information about it at the following address :
www.eurocontrol.int/articles/ets-support-facility

The ETS Support Facility bases its calculation on a tool which estimates emissions using the flight distance and aircraft type : the Small Emitters’ Tool. It is the only tool approved by the Commission for this purpose, and can be used independently from the ETS Support Facility, also that involves more work from the operator. More information about it is given at the following address :
www.eurocontrol.int/articles/small-emitters-tool.

Using the simplified procedure also results in simplified verification process. The quick guide to verification of small emitters (PDF-363 Ko) published by the European Commission briefly explains the differences in verification depending on which tool you use.

Account in the European registry

Each aircraft operator shall submit to the DGAC a verified emissions report by 31^st March of the year following the emissions year. By 30^th April of the same year, the AO shall then transfer from its account in the European registry to the Member State’s account a quantity of allowances corresponding to its verified emissions.

Therefore, opening an account with the French national administrator of the European Registry (Caisse des dépôts et consignations – CDC) is a necessary step in this process. This account allows the operator to sell or buy allowances to or from other operators, or to participate in the auctions set up by EEA Member States.

To open its aircraft operator account, an operator has to fill up a form, and submit all the required documents according to the Regulation 1193/2011/EU concerning the Union registry.
The e-mail address to use to contact the CDC is the following :

REGISTREFRANCAIS-GES@caissedesdepots.fr

And the postal address is :

Caisse des dépôts et consignations
15, quai Anatole France
75356 Paris 07 SP
France

The CDC is the unique interlocutor for all registry-related issues, such as account opening documents, account administration or auction.

The account opening and account holding rates for 2012 have been published through the following decree : arrêté du 21 décembre 2012 (in French).

The « Stop the clock » Decision

The Decision 377/2013/EU leaves to the aircraft operators a derogation possibility regarding 2010-2012 air traffic to or from aerodromes in countries outside the European Union that are not members of EFTA, dependencies and territories of EEA Member States or countries having signed a Treaty of Accession with the Union.

This decision implies that, subject to what is said below, no enforcement action would be taken by the Competent Authority against aircraft operators that do not report or surrender emissions with respect to said traffic for the years 2010 to 2012. The condition for making use of this derogation is that free allowances allocated for 2012 to aircraft operators in respect of the said air traffic shall either not be issued or be returned.

The FAQ of the European Commission about the « Stop the Clock » proposal answers most questions triggered by this proposal.

A simplified diagram showing which flights are to be reported when using the derogation is available below :
Perimeter_of_the_stop_the_clock.pdf (PDF – 489 Ko).
Specific countries and territories not included in the scope of the derogation are listed in the annex of this document.

More information about it is available on the European Commission’s dedicated webpage : ec.europa.eu/clima/news/articles/news_2012112001_en.htm

Please note that this decision has no effects on 2013 flights requirements. The scope of the EU ETS is therefore not modified in 2013. However, it may be if an acceptable agreement on a Market-Based Measures framework were to be signed during the next ICAO assembly, in late September 2013.

Impact of the decision on the aviation allowances auctions

2012 aviation allowances auctions have been put off due to the « Stop the Clock » decision.
The percentage of aviation allowances to be auctioned remains at 15% as laid down in the Directive 2003/87/EC. Therefore it is currently recalculated, as the total number of allowances on the market is to be proportionally reduced. The aviation allowances auctions are planned to resume before the end of 2013.

Special reserve (optional)

From 2013, 3% of the total of allowances for the aviation sector are set aside in a special reserve for operators :

• who start performing an aviation activity after 2010 (« new entrants »), or
• whose tonne-kilometre data increases by an average of more than
  18 % annually between 2010 and 2014, amounting to more than 93.88% cumulated from 2010 to 2014 (« fast-growing » operators).

The free allowances « new entrants » can get from this special reserve are proportional to the 2014 tonne-kilometre data they reported. For « fast-growing » operators, only the tonnes-kilometre data reported over the 18% annual growth limit are taken into account to calculate the free allowances they can get from the special reserve.

Main dates

Past :

• 1st January 2010 : Beginning of the emissions data monitoring and tonne-kilometres data monitoring.
• 31st March 2011 : Deadline to submit a verified emissions report and a verified tonnes-kilometres report and to ask for free allowances for the period 2012 and for the period 2013-2020 (linked to the tonne-kilometre report submission).
• 2012 : First monitoring year leading to the surrendering of allowances.
• January 2012 : Aircraft operators account in the European registries system can be opened, and first allocation of free allowances.
• 31st August 2012 : Theoretical deadline to submit updates of emissions monitoring plans for the phase III (period 2013-2020).
• 2013 : Begining of the phase III (period 2013-2020).
• 31 March 2013 : Deadline to submit a verified emissions report for 2012 emissions.
• 30 April 2013 : Deadline to surrender emission allowances covering 2012 emissions.
• 30 September 2013 : Deadline to submit a tonnes-kilometres monitoring plan for new entrants and fast growing aircraft operators.

To come :

• 2014 : Monitoring year of tonnes-kilometres data for new entrants and fast growing operators.
• 31 March 2014 : Deadline to submit verified emissions reports for 2013 emissions.
• 30 April 2014 : Deadline to return emission allowances covering 2013 emissions.
• 31 March 2015 : Deadline to submit verified emissions reports for 2014 emissions.
• 30 April 2015 : Deadline to return emission allowances covering 2014 emissions.
• 30 June 2015 : Deadline to request free allowances from the special reserve, along with a verified 2014 tonnes-kilometres report.

Templates of the monitoring plans and reports

Phase II :

• Annual Emissions Monitoring Plan Template (2012) – (XLS – 269 Ko)
• Example of a completed annual emissions monitoring plan
• Example of an annual emissions data flow – (PDF – 50 Ko)
• Guidance by the Commission to understand and fill the monitoring plan – (PDF – 687 Ko)
• Annual Emissions Report Template (2012) (XLS – 172 Ko)

Phase III :

• Annual Emissions Monitoring Plan Template (2013-2020) (XLS – 393 Ko)
• Guidance Document on how to monitor and report your emissions in phase III (PDF – 543 Ko)
• Annual Emissions Report Template (To be published)
• Tonnes-Kilometres Monitoring Plan Template (2013-2020) (XLS – 378 Ko)