Introduction

European Union Emissions trading scheme

Several countries have agreed to start cutting back CO2 emissions by industry so as to lower carbon dioxide (CO2) production and thus reduce the greenhouse effect. With a view to achieving this goal, trading of allowances that permit emissions of certain quantities of CO2 - 'CO2 emissions trading' - was introduced in EU member states starting 2005, by means of directive 2003/87/EG.

Companies will have to emit less and less CO2 because the number of emission allowances in the market will be reduced over time. Companies required to offset their emissions through emission allowances will have to choose between investing in better technology and purchasing more emission allowances because an emission reduction is not possible. A consequence of this approach is that companies will seek the most efficient way of offsetting their emissions, i.e. either by investing so as to emit less, or by buying emission allowances from another party that has surplus emission allowances.

Companies obliged to participate in emissions trading will receive emission allowances (1) free of charge from the government based on their past emissions and (2) by trading. An emissions trading participant will get an account in the CO2 Emissions Trading Register. The free emission allowances awarded by the government will be credited to this account. Additionally, companies may obtain emission allowances by trading with other companies or through intermediaries. The possibility to trade CO2 emission allowances has also been opened up to private parties and organisations not under obligation to participate in the trading scheme.

The buyer and seller will agree arrangements with each other regarding the quantity of emission allowances, the price and the time of transfer. It will be up to the trading parties to take care of the financial side of the transaction. The emission allowance transaction will be entered in the CO2 Emissions Trading Register.

Directive for greenhouse gas trading (2003/87/EC) for aviation

On 24 October 2008, the European Council approved an amendment to the directive covering trading in greenhouse gas emission allowances (2003/87/EC) so as to include aviation activities under the scope of the directive. This amendment has been made in the form of Directive 2008/101/EG. The directive 2008/101/EG was published on 13 January 2009 in the Official Journal of the EU and will be incorporated into Belgian law in the course of 2009.

How does the directive affect aircraft operators?

The directive introduces an emissions trading system for aircraft operators. It requires the surrender of emission allowances for all CO2 emitted during the calendar year (starting from 2012) by flights covered by the directive. The emissions must be determined using a monitoring system, which is developed in accordance with the monitoring and reporting guidelines (MRG). Emissions must be reported after each calendar year (before 1 April of the following year) and the number of emission allowances corresponding with the reported emitted quantity of CO2 must be surrendered before 1 May.
Each existing operator may apply for free emission allowances.

All information about the EU emssions trading scheme and Directive 2008/101/EC can be found on the Commissions website:
 http://ec.europa.eu/environment/climat/aviation_en.htm