EU ETS (EU Emissions Trading System)

Verification of greenhouse gas emissions

Introducing EU Emissions Trading System (EU ETS)
With the introduction of the EU Emissions Trading System (EU ETS) in 2005, verification of greenhouse gas emissions has become mandatory for those who fall within the scheme listed in Annex I of the directive - http://ec.europa.eu/environment/climat/emission/implementation_en.htm

Phase I of the scheme (2005-2008) included the large energy providers and high energy consumers.  Phase II (2008 - 2012) has been expanded to include other industries and high emitters, and most recently aviation.

Directive (2008/101/EC) was published on 13 January 2009 amending the Emissions Trading Directive to also include emissions from aviation –
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:008:0003:0021:EN:PDF

The EU ETS is a cap and trade scheme, in which the included organisations trade allowances.  It is a requirement to submit one allowance per tonne of CO2 emitted.  Airlines will be eligible for a free allocation of allowances (each allowance represents one tonne of greenhouse gas emissions) based on 2010 (baseline) data.  A free allocation will only be granted if the baseline data, in the format of a tonne-km report for 2010, is externally verified.

In order to demonstrate compliance with the Directive and to trade allowances, all aircraft operators must submit a verified annual emissions report by 31st March of the following year from 2010 onwards.

Before trading commences and aviation is formally included within the EU ETS, there are two pre-compliance or practice years (2010 and 2011).  The directive mandates that during these years emissions data should be monitored, reported and verified in accordance with the directive.  During these first two pre-compliance years, the surrender of allowances is not required.

Starting in 2012, operators will be required to surrender one allowance for each tonne of CO2 they emit during the reporting year.  At the end of the year if an operator does not have enough allowances to cover their annual CO2 emissions they will need to buy more to avoid any penalties.

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