Carbon leakage in the aviation sector 2025
Follow-up Legal Feasibility Assessment of Selected Carbon-Leakage Prevention Measures in EU Aviation
Full Scope EU ETS for aviation. Instruments to prevent carbon leakage
Carbon leakage refers to the risk of emissions shifting outside of areas where there are climate policies in order to avoid paying the extra costs of complying with these policies. For aviation this means passengers choosing transfers at hubs near EU borders, such as Istanbul, Doha and Dubai, to avoid paying the cost of complying with EU climate measures on the full route.
But, how real is this risk? Are there solutions?
T&E commissioned CE Delft to assess this risk - including the impacts of an extended EU Emissions Trading System (ETS) scope - and Lexavia Aviation Consultants to analyse the legal feasibility of three measures to limit the risk of aviation carbon leakage.
The analysis shows:
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Previous studies have overstated the overall problem. By using inflated definitions of leakage, some industry reports counted emissions still covered by EU policies, wrongly labelling them as ‘leaked’.
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The risk of carbon leakage is minimal. At most, only 3% of the emissions savings as a result of the Fit for 55 measures will be lost (out of a total of 38.4 MtCO2 emissions savings expected in the aviation sector by 2035 from RefuelEU and the EU ETS), meaning EU measures remain overwhelmingly effective.
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Risk is concentrated on a few long-haul routes. Flights to South East Asia via nearby hubs such as Istanbul may see the possibility for diversion.
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Expanding the EU ETS to cover all departing flights only leads to minimal increases in ticket prices of between 2% and 6% in 2030. When placed in the context of the ticket price, non-EU hubs like Istanbul only see a small cost advantage of between 1% and 4%. It is therefore likely that these cost increases will only lead to route change decisions for a fraction of passengers.
T&E has analysed the following policy measures:
Targeted SAF allowances which would lower costs on specific high-risk routes to reduce incentives to reroute via non-EU hubs. This is a legally robust and proportionate policy option and can be implemented in the existing ETS framework.
Targeted airport-pair carbon pricing would apply higher charges on flights via non-EU hubs to correct cost advantages. If based on transparent evidence, narrowly targeted and integrated into the ETS, it is legally feasible.
A SAF-BAM would impose SAF certificates on non-EU carriers, would impose heavy administrative burdens and carries high diplomatic risks of being perceived as extraterritorial or discriminatory.
Therefore T&E recommends:
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A robust methodology to define routes at risk of carbon leakage is designed by the European Commission
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Any policy measure is **targeted specifically at high-risk routes"" and integrated into existing EU legislation, such as targeted SAF allowances or targeted carbon pricing. This decreases risk of international retaliation and increases operational feasibility.
Read the brieging HERE
