Fit for 55 Changes to the EU Emissions Trading System for Aviation

Effective from January 1, 2024, the EU is implementing several changes to the emissions trading system for aviation as part of its Fit for 55 initiative. Below, you'll find a comprehensive overview of these changes for Aviation.

Extension of 'Stop the Clock' Derogation

The 'stop the clock' derogation, which temporarily exempts extra-EEA flights from surrendering emission rights, has been extended for an additional three years. This extension is presumed to be the final one. However, it is important to note that the exemption for surrendering rights for extra EEA flights may not always apply. The validity of this derogation now depends on the implementation of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) in each respective country.

Updated Exemptions for Outermost Regions

Previous Derogation: Until 2030, the EU ETS granted a derogation for flights between the European mainland and the peripheral areas, also known as the outermost regions. This derogation applied to all flights between these areas, providing certain exemptions for surrendering allowances.

Updated Derogation: There have been revisions to this derogation. Effective from 1 January 2024, the exemption is now limited to flights between the mainland and peripheral areas (outermost regions) within the same Member State. This means that flights between the outermost regions themselves, and from flights from and to outermost regions in different member states will no longer be eligible for this derogation.

Below are some examples of flights that are included per 1 January 2024:

Example route	EU ETS 2012-2023	EU ETS 2024-2030
Amsterdam <> La Palma	Excluded	Included
Barcelona <> La Palma	Excluded	Excluded
La Palma <> Amsterdam	Excluded	Included

Phasing out free allowances for the Aviation sector by 2026

Updated Allocation Method: Starting from 2024, the distribution of free allowances will no longer be based on the 2010 tonne-kilometer data. Instead, it will now be determined by the emissions of active aircraft operators in 2023, taking into account routes no longer exempted and the linear reduction factor.

Phasing out Free Allowances: It's important to note that this change is part of the phased approach towards phasing out free allowances for the aviation sector by 2026. As we move forward, it is essential for aircraft operators to include new routes in their monitoring methodology and align reporting accordingly.

To ensure accurate calculation of your free allocation, it's crucial to include the newly included routes in your 2023 emissions report. This adjustment is necessary due to the removal of exemptions for certain routes starting from January 1, 2024. The European Commission request that Aircraft Operators (AOs) incorporate these routes into their 2023 emissions report. By doing so, they can calculate more precise free allocation s post year-end closure. The Commission will provide an updated emissions report template to assist you in this process.

In recognition of the introduction of new routes no longer exempt, the overall allocation level will experience a slight increase. This adjustment takes into consideration the removal of exemptions and is subsequently offset by the linear reduction factor beginning in 2024. Any new routes that are no longer exempted starting in 2024, and that have been reported in your 2023 emissions report, will not be factored into the total emissions requiring allowances for the 2023 reporting period. In cases where such routes are not included in the 2023 year-end closure report, the European Commission will utilize data from Eurocontrol for these calculations.

Following the conclusion of the 2023 reporting period (March 31st, 2024), the Commission will compute free allocation for individual aircraft operators based on their proportion of verified emissions from the overall reported aviation emissions for 2023. All aircraft operators with obligations under the EU ETS in 2023, provided they have submitted their reports, can expect to receive their free allocation for both 2024 and 2025 by June 30th of each respective year.

New dates receiving and surrendering emissions allowances

Starting in 2024, free emission allowances will be deposited by June 30^th, and allowances must be surrendered by September 30^th each year.

Sustainable Aviation Fuels (SAF) Allocation

Starting in 2026, a comprehensive transition to full auctioning of aviation allowances will take place. Notably, 20 million allowances will be set aside exclusively for the utilization of sustainable aviation fuels (SAF) between 2024 - 2030, while an additional 5 million allowances will be allocated for the Innovation Fund.

Aircraft Operators may request 'SAF allowances' aligned with the amount of SAF they've reported in their annual emissions report. To provide a structured framework, supplementary legislation is anticipated in 2024. This legislation is expected to outline the guidelines governing the process of SAF allocation requests. More information will be provided at a later date.

Implementing the Global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) within the EU ETS Framework

In 2019 the EU Emissions Trading System (EU ETS) was extended to encompass the monitoring and reporting of emissions falling within the CORSIA scope for EU aircraft operators. Building on this, the most recent update to the EU ETS Directive saw the formal integration of CORSIA's offsetting component.

The first offsetting credits cancellation is due by January 31st, 2025, encompassing the offsetting obligations for the emission years 2021, 2022, and 2023. Well in advance, by November 30^th, 2024, definitive offsetting requirements will be communicated to aircraft operators.

Additional legislation will be formulated in 2024 to define the intricacies of offsetting calculations. This legislation will also clarify the types of offsetting credits deemed acceptable and establish the requisites for EU aircraft operators concerning the reporting and verification of the offset credits that have been cancelled. We will ensure you remain updated regarding your CORSIA obligations.

Non-CO2 Effects Monitoring and Reporting

Commencing January 1st, 2025, aircraft operators under the purview of the EU ETS will have the added responsibility of monitoring and reporting their non-CO2 emissions, which encompass oxides of nitrogen (NO_x), soot particles, oxidised sulphur species, and water vapour. To facilitate this process, a specialized regulation for monitoring and reporting non CO2 effects is expected to be established in the year 2024.

It's important to note that, until at least 2028, there is no requirement to submit EU-ETS allowances for the reported non-CO2 emissions. A thorough review will be conducted at that juncture to reassess the situation.

We are committed to keeping you informed and helping you navigate these changes effectively. If you need any further clarification or assistance, please don't hesitate to reach out to info@emissieautoriteit.nl.