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FuelPlus, which has the airline solution to meet these deadlines, is providing background on this complex process. Airlines must be aware of the upcoming deadlines and how the process will work.

Background

The European Parliament approved the EU Emissions Trading Scheme (ETS) in 2003 as a climate policy instrument. The initiative is designed to cover large industrial CO2 sources and includes currently over 40% of all greenhouse gas emissions in the EU. On July 8, 2008 the European Parliament voted in favor of including aviation in the EU Emissions Trading Scheme (EU ETS).

How does it affect airlines?

By 1 January 2010 airlines must have set up systems and processes to gather tonne-kilometre and emission data in order to legally comply with the EU ETS. All flights which arrive at or depart from an airport situated in the territory of an EU Member State will be included in ETS.

Smaller commercial aircraft operators are exempted.

• Less than 243 flights per period for 3 consecutive 4-month periods
• Less than 10,000 tons of annual emissions

Calculation of allowances for aviation

Historical aviation emissions are calculated as the average of the years 2004-2006. For 2012, the total quantity that airlines will be allowed to emit is fixed at 97% of the historical emissions. This percentage will be reduced further to 95% for the trading period starting 2013.

For 2012, 15% of allowances are auctioned, 3% of allowances are allocated as special reserve for new market entrants and fast growing operators and 82% of allowances are issued as free allowances to aircraft operators. Any amount above the free allocated figure will have to be purchased or traded by each airline.

Background on annual emissions allowances

Each aircraft operator will need to apply for free allowances. Allowances are issued based on tonne-kilometre data, which must be submitted as part of the application (Tonne-kilometre (TKM) = great circle distance (km) x payload (t)).

For 2012 as well as for the next trading period, the tonne-kilometre data of 2010 will be used. The Commission calculates a benchmark using TKM data of all applications (benchmark = free allowances / sum (tonne-kilometre)).

The aircraft operators will then receive free allowances as per submitted and verified tonne-kilometre data.

Airline monitoring & reporting of CO2 emissions

Each aircraft operator needs to report the emissions during each calendar year from January 1, 2010 for the aircraft that it operates after the end of that year. The emissions are monitored by calculation using the formula: Fuel consumption x Emission factor. Fuel consumption is expressed as fuel consumed in mass units (tons) during the reporting period. Fuel consumed shall be monitored for each flight and for each type of fuel and shall include fuel consumed by the auxiliary power unit (APU).

Actual fuel consumption for each flight shall be used wherever possible. If actual fuel consumption is not available, a standardized method shall be used to estimate fuel consumption based on best available information.

Verification of data

Reports on tonne-kilometre and emissions prepared by aircraft operators must be verified according to specific criteria before submission. The verification is done by accredited verifiers.

Surrender of allowances

By 30 April of each year, each aircraft operator surrenders a number of allowances equal to the total emissions during the preceding year. The surrendered allowances are subsequently cancelled.

Activity schedule