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EU emissions trading system for aviation (EU ETS)

The goal of the EU emissions trading system for aviation is to reduce carbon dioxide emissions cost-effectively. It gives airlines an opportunity to trade emission allowances and decide how they reduce their emissions. The Finnish Transport and Communications Agency Traficom is responsible for implementing aviation emissions trading in Finland

Emissions trading in aviation started on 1 January 2012. It applies to all flights departing from and arriving at airports in the European Economic Area, unless they have been excluded from the scope of emissions trading on special grounds. In 2013–2023, however, emissions trading will only apply to flights between airports in the European Economic Area.

During the first emissions trading period that started in 2012, the total number of aviation emission allowances was 97% of the average of emissions in 2004–2006. The total number of allowances was reduced during the second emissions trading period that started in 2013 to 95% of the average of emissions in 2004–2006 for each emissions trading year. In emissions trading, one emission allowance is equivalent to one tonne of carbon dioxide. During the third emissions trading period that started in 2021, the total number of emission allowances will be reduced annually with a linear reduction factor of 2.2%.

Emission allowances are auctioned and allocated for free

Of the total number of aviation emission allowances, 82% will be granted for free to aircraft operators with the help of a comparison conducted on the EU level, based on the verified tonne-kilometres reported by the aircraft operators. The free emission allowances for 2013–2023 have been allocated based on the tonne-kilometres of 2010, and they are entered annually on the aircraft operator’s emissions allowance account in accordance with the decision of Traficom (External link). Three per cent of emission allowances are allocated for free out of a special reserve for new aircraft operators and aircraft operators with fast-growing traffic. The remaining 15% of the aviation emission allowances are auctioned.

Aircraft operators whose emissions are higher than the number of free emission allowances granted to them can purchase emission allowances through auctions and from other aircraft operators or institutions within the scope of emissions trading. By purchasing emission allowances, the aircraft operator ensures that it can surrender enough emission allowances to cover its emissions. If the emissions of the aircraft operator are lower than the amount covered by its emission allowances, it can sell its extra allowances to other parties.

Obligations of aircraft operators

Aircraft operators must monitor their emissions and surrender a number of emission allowances that corresponds to their emissions during the previous calendar year annually by the end of April. More details on the obligations of aircraft operators can be found on the page on monitoring, reporting and verifying emissions (External link). These obligations also apply to aircraft operators within the scope of the international aviation emissions reduction system CORSIA (External link).

The role of the Energy Authority

The Finnish Energy Authority (External link) implements the official measures related to organising the auctions of emission allowances and entering the revenue from the auctions into the state budget. In addition, the Energy Authority is responsible for recording the free emission allowances in aviation annually on the aircraft operator’s emission allowance account, cancelling the surrendered aviation emission allowances as well as emissions reduction units and certified emissions reductions, and transferring the units to the state’s depreciation account.