Still Up In The Air

On 16 October 2013, the European Commission (EC) brought out a proposal which would extend the European Union greenhouse gas (GHG) Emissions Trading System (ETS) to cover GHG emissions from the aviation sector occurring or associated with flights in European regional airspace. The proposal is a demonstration of the EC’s continued desire to push forward the ETS generally, with its ultimate aim potentially being to link the ETS with compatible carbon market systems existing and emerging around the world in the coming years.

The ETS is a market-based GHG cap-and-trade regime that covers certain industrial sectors in the European Economic Area (EEA) countries. The program sets an emissions “cap” on the total amount of GHG that can be emitted by covered entities during an applicable compliance period. Such covered entities are allocated or purchase through auction emission allowances up to their individual allowance budget cap. Every year each regulated company must