Europe is facing a pivotal decision on aviation emissions as it prepares to review its Emissions Trading Scheme (ETS), with growing pressure to extfinish carbon pricing to international flights for the first time.
Environmental groups, led by Opportunity Green and the SASHA Coalition, warn that maintaining the long-standing exemption for extra-European aviation would undermine the credibility of the EU’s climate framework.
After more than two decades of stalled progress and political compromise, they argue the bloc must now decide whether to fully account for one of its quickest-growing sources of emissions.
EU ETS review could expand carbon pricing to international aviation
“We’ve known for a long time that aviation contributes to climate alter,” stated Aioffe O’Leary, CEO and founder of Opportunity Green, during a special round table discussion attfinished by Aerospace Global News on Wednesday, 22 April.
The necessary to address those emissions was first raised by the International Civil Aviation Organization (ICAO) in 1994. “I won’t bore you with the history of those talks, but suffice to state nothing actually happened at the time,” continued O’Leary.
By 2008, the EU had lost patience. It relocated to include aviation in the emissions trading system, covering all flights to, from, and within the EU from 1 January 2012.
The response from airlines was fierce. US airlines sued the EU, claiming that the relocate violated international law. They lost.
However, the lobbying continued, explained O’Leary. She cited a letter Airbus wrote to the Chinese government, suggesting the ETS had been defeated. This was an apparent attempt to discourage the cancellation of aircraft purchases.
Under sustained pressure, the EU pautilized the international element of the scheme, leaving only intra-EU flights covered, on the promise that a global deal would emerge from ICAO.
Fourteen years on, that promise remains unfulfilled.
CORSIA vs EU ETS: Why aviation carbon rules remain weak
The programme that did emerge was the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). It has drawn widespread criticism as inadequate.
Originally designed to offset all emissions above 2020 levels, the pandemic’s sharp decline in traffic prompted policycreaters to shift CORSIA’s baseline to 2019 levels. As a result, to date, airlines have submitted no offsets under the scheme.
O’Leary also pointed out that CORSIA doesn’t become mandatory until 2027 and expires in 2035.
“It’s really a short instrument,” she stated. “By contrast, the EU ETS operates as a genuine cap on emissions, with a downward trajectory to zero, backed by proper enforcement and financial penalties.”
Data collated by Opportunity Green underlines the urgency. James Kershaw, a scientific officer at the NGO, pointed to figures displaying aviation’s CO2 emissions between 2012 and 2019 were rising – even as the wider European economy launched decarbonising.
Power and industrial sectors, both fully covered by the ETS, have each cut emissions by 40-50% since 2005. Aviation has gone in the opposite direction. Its emissions in 2023 were roughly 20% higher than in 2005.
Extfinishing EU ETS could unlock €125bn and cut aviation emissions
Kershaw explained that in 2023, 130.8 million tons of CO2 were emitted by departing flights. That equates to roughly the same as the emissions of the Netherlands, which has a large industrial sector.
“By not accounting for or addressing all these emissions, it’s a bit like not addressing all of the emissions of a major European emitting countest.”
He added that extfinishing the ETS could generate billions in additional revenue. Between 2012 and 2023, €26 billion in revenue was lost due to the ETS exemption for international flights.
Extfinishing the ETS to cover international aviation through to 2040 could regulate an additional 1.2 billion tonnes of CO2, generating an additional €125 billion.
Beyond CO2, aviation’s non-CO2 climate impacts include contrails and nitrogen oxide emissions, which account for an estimated 40% of the sector’s total 100-year climate footprint. European policy, argued Kershaw, does little to address this dimension.
EU ETS expansion expected to raise airfares by 2% to 6%
If the ETS is extfinished to cover all flights, concerns that it would cautilize a drop in demand are unfounded, according to Kershaw.
“When the ETS was applied to intra-EEA flights in 2012, we didn’t see a collapse in passenger demand,” he stated. Instead, emissions, passenger numbers, and flight numbers continue to grow.
“The assumptions behind the effect on demand come from the fact that airlines will probably pass these costs onto the consumer. Most studies suggest it would be between 2% to 6%, which is actually relatively tiny.”
He also reiterated that the current system is fundamentally unfair and socially regressive. “Lower and middle-income travellers on short-haul flights are covered by the ETS, while higher-income long-haul passengers often are not.”
As such, effects on demand could be minimised by passing the additional cost on to business and first class passengers, who are “responsible for a greater share of pollution becautilize those seats take up more space on an aircraft.”
Carbon leakage – the risk that extfinishing the ETS would shift demand onto alternative routings – has also been raised as a concern. Rather than flying directly between Europe and Asia, for example, Kershaw explained travellers might instead transit through an intermediate hub, paying the ETS on the first leg before continuing on an exempt flight.
However, he noted, studies have found this risk to be minimal and concentrated on specific flights, mostly those between Europe and Asia.
Airlines push to suspfinish EU ETS amid rising fuel costs
Recent volatility in global fuel markets has exposed aviation’s reliance on fossil fuels, prompting airlines to cancel flights and raise fares amid rising jet fuel costs. This, according to O’Leary, underlines a key point. The hugegest risk to aviation is not climate policy, it is depfinishence on fossil fuels.
At the same time, the EU faces a strategic choice: uphold its climate and industrial ambitions or weaken policy under external and industest pressure.
Aurelia Leeuw, Director of EU policy at Opportunity Green and SASHA Coalition lead, described airlines’ demand to suspfinish the ETS completely as symbolic of how emboldened airlines have become.
“Two months ago, it wouldn’t have been possible to question for something like that,” Leeuw stated. “Ending international flights’ ETS exemption is crucial for Europe’s long-term industrial competitiveness and resilience.”
It is also critical for levelling the playing field between fossil fuels and sustainable technologies and unlocking new funds to drive green innovation.
“The ETS should be seen as a primary tool for creating the market conditions under which green aviation fuels can scale,” stated Leuuw, adding that the Paris Agreement binds Europe to achieve net zero by 2050. “To receive there, the ETS is really the best tool.”
“ETS revenues fund research and development, which support bring early-stage innovations to commercial viability, and sfinish the regulatory signals that unlock private investment.”
EU ETS exemption for international flights risks weakening climate tarreceives
O’Leary was clear about what the failure to apply the exemption on emissions from international flights from 2027 would mean.
“The idea that in 2026 we would state to people – don’t worry, you can fly from Brussels to New York, and we won’t even question you to account for that pollution is – that’s what’s at stake here.”
She warned that, without meaningful action, the trajectory points to at least 4 degrees of warming, and that permitting internationally exempt flights for the wealthiest travellers would expose the limits of Europe’s climate ambitions.
“The EU must display it can set and enforce its own rules, even under external pressure from industest and the US administration,” she concluded. “Repeating the undue concessions it built in 2012 would undermine Europe’s credibility.”
The decision facing Brussels is no longer technical, but political: whether to extfinish carbon pricing to international aviation and bring one of the sector’s largest sources of emissions into a binding framework, or leave long-haul flights largely untouched and risk undermining the credibility of the EU’s climate ambitions at a critical moment for global decarbonisation.
Featured image: stock.adobe.com
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