Aircraft operators participating in the EU ETS are required to surrender allowances corresponding to their annual CO2 emissions. These allowances can be obtained from a variety of sources. Currently, the European Commission is working on establishing regulations for the cancellation of carbon offset units under CORSIA for EU-based aircraft operators.
Free allocation of EU ETS allowances
From 2026 onwards, free allocation has been fully phased out, with the exception of SAF allowances. A complete transition to full auctioning of aviation allowances is now in effect.
These changes are part of the EU's broader efforts to align the aviation sector with its climate goals, including the overall objective of reducing greenhouse gas emissions and achieving carbon neutrality by 2050.
Fuels Eligible for ETS (FEETS) support
Twenty million allowances are set aside exclusively for compensation of the price difference between sustainable aviation fuels and conventional aviation fuel between 2024 – 2030. These so-called eligible aviation fuels are sustainable aviation fuels that are eligible for support if they comply with requirements laid down in the MRR and REDII. This additional allocation for eligible aviation fuels is called FEETS (Fuels Eligible for ETS) support. Allowances are distributed according a ‘first come first serve’ principle. Calculation of the FEETS support will be in accordance with an implementing regulation detailing the calculation methodology and is carried out by the competent authority.
Aircraft operators may request each year retrospectively FEETS support aligned with the amount of eligible aviation fuels they have reported in their annual emissions report. Detailed rules for the yearly calculation of price differences between eligible aviation fuels and fossil kerosene and for the EU ETS allocation of allowances for the use of eligible aviation fuels can be found here.
EU ETS allowances can be acquired through participation in auctions, such as those held at the Leipzig Energy Exchange (EEX). This participation is voluntary. Furthermore, a fundamental aspect of emissions trading, known as a "cap and trade" system, allows allowances to be traded among individual emitters. Companies across different sectors covered by emissions trading can also trade emissions allowances. Beyond companies subject to emissions trading, all legal entities and individuals can engage in allowance trading. Various financial intermediaries offer a range of services in practice, and local banks may provide assistance in this regard as well.
Please visit our webpage for more information on obtaining emission allowances.
CORSIA carbon offset units
CORSIA carbon offset units (Eligible Emissions Units, or EEUs) are certified carbon credits that aircraft operators use to compensate for CO2 emissions from international flights. These units originate from ICAO-approved emission reduction projects and are traded on the carbon market, where operators can purchase them as needed. Unlike some emissions trading systems, CORSIA does not provide free allowances or offset units—all units must be acquired through market transactions.
Cancellation of CORSIA carbon offset units
Under CORSIA, aircraft operators must cancel carbon offset units at the end of each compliance period. By 30 November in each year, the NEa calculates and informs operators how many units they need to cancel. The NEa will also calculate the total CO2 offsetting requirement for the 2024–2026 period and notify operators by November 2027. The legal rules for calculating offsetting requirements under CORSIA are set out in Implementing Regulation 2024/1879.
If the total CO2 offset requirement for 2024–2026 is more than zero, operators must submit a verified emissions-unit cancellation report by 30 April 2028. To do this, operators must cancel their emissions units in a registry approved by an emissions-unit programme and ensure that the registry publishes the details of the cancelled units on its public website for the relevant CORSIA period by 31 January 2028. Further details on how to report and verify an emissions-unit cancellation report can be found in the legal text.
The European Commission has not yet released the legal text that will specify which offset units EU-based aircraft operators may use to meet their emissions-offsetting requirements. Please use the following link to stay updated: Aviation emissions – detailed eligibility requirements for units to be used by EU-based airlines for offsetting.