The EU ETS is a cap and trade system under which airlines (as well as industry and energy sectors) need to buy allowances to pay for their CO2 emissions. Unlike other sectors, aviation emissions have continued to grow significantly, despite being included in the EU’s carbon market since 2012. This is partly due to the fact that airlines continue to receive millions in free allowances.
In July 2021, the Commission proposed to revise the aviation ETS by phasing out free allowances, reducing the total amount of allowances available and the speed by which these reduces over time. However, the proposal remained limited to intra-EEA flights and failed to address non-CO2 emissions, which represent two thirds of aviation’s climate impact. This means that the majority of European aviation’s climate impact would remain unaddressed. Long-haul polluting flights would be exempt from the EU ETS and only covered by ICAO’s offsetting scheme (Corsia), which has been proven to be a useless tool to address aviation emissions.