Aviation focus, September 2012, Volume II Issue II
September 2012Published by Evolution Markets and Climate Connect [Volume II, Issue II] Aviation CLIMATE focus CONNECTENVIRONMENTAL NEWS FROM AVIATIONImportant: EU Regulatory Updates1. US Senate Panel: Bill passed to block EU law2. European Commission releases Update to EU-ETS Directive 2003/87/EC - notable change is raising the Small Emitter Thresholds from 10,000 t/Co2 annually to 25,000 t/Co2 annually3. EU releases new Monitoring and Reporting Regulation for Aircraft Operators – MRR Guidance Document No. 24. UK and France releases requirements and guidance for new Phase III AE Monitoring Plan5. Alert: France issues second notice to assigned operators to submit 2011 emission report6. New document released - Small Emitter Guidance emission template – Phase II & IIIEUA and CER Price Development EUA/CERs/Fuel Price Index (Source: Evolution Markets) Jet Fuel Price as on August 31, 2012: $134.0/barrel (Source: IATA)
September 2012 Aviation focusExclusive CommunicationOn Europe-Australia Carbon Market linkage announced Que: What does linking mean for Australian businesses’ access to international units?on August 28, 2012 Ans: Linking will provide Australian businesses with secure access to a broader pool of international emissions units. European allowancesQue: What are the objectives of linking EU and Australia’s Emission will be added as an eligible international unit that can be used in thetrading system? Australian scheme and Australian businesses will be able to useAns: A link between emissions trading systems between EU and eligible international units for up to 50 per cent of their total liabilityAustralia enables participants (including aviation) in one system to until 2020. To facilitate the negotiation of a full link, the Australian Governmentuse units from another system for compliance purposes. Linking is removing the price floor, as well as introducing an additional sub-emissions trading systems provides a number of benefits including limit on the use of Kyoto Protocol eligible international units such thatreducing the cost of cutting carbon pollution, increasing market firms will be able to use these units to meet up to 12.5 per cent ofliquidity and supporting global cooperation on climate change. their annual liabilities within the 50 per cent overall limit on the use of eligible international units. This limit will ensure that the linkQue: What is included in the linking arrangement between Australia operates effectively and provides long term price certainty forand the European Commission? businesses investing in low emissions technologies.Ans: The arrangement includes the European Commission seeking amandate to negotiate a treaty on behalf of the European Union by Que: Why is the Australian Government removing the price floor?mid-2015 for the full linking of the emission trading systems from July Ans: Removing the price floor will simplify the pathway towards full2018 (the Australian Government has an existing mandate to linking, and was an element of the linking package agreed betweennegotiate a treaty). As an interim arrangement, a partial link will be Australia and the European Commission. By connecting Australianestablished to allow Australian businesses to buy and use European and European carbon markets, linking will ensure a single price forUnion Emissions Allowances (European allowances) for compliance Australian and European carbon units. This provides investors withunder the Australian scheme from July 2015, until the full link comes long term certainty on the price of carbon pollution, which largelyinto effect no later than July 2018. To facilitate these arrangements removes the need for a price floor in the flexible price period.and simplify the path towards full linking arrangements, theAustralian Government will not proceed with the implementation of Que: What is the likely impact of linking on Australian airlines?its price floor and will limit the use of Kyoto Protocol eligible Ans: The Australian Government introduced its Clean Energyinternational units under the Australian scheme. In addition, Australia legislation last year, which created a carbon price system (CPS)will set its price ceiling with reference to the expected 2015-16 price effective from 1 July 2012. This will have a cost impact to the airlinesof European allowances. as well along with the EU ETS compliance (Airlines flying on EU’s International routes). For e.g. Qantas will have an estimated costQue: Why link the Australian and European systems? impact of approximately $75.7 million for Qantas mainline andAns: Linking the Australian and EU systems benefits both parties and Qantas Link in the financial year ending 30 June 2013 (excludingprovides an example of how, through international cooperation and Jetstar).the use of markets, countries can work together to reduce carbonpollution. The linking means that Australian airlines will now be eligible to meetThe arrangement represents the first step towards linking the their obligations through purchase of European allowances and offsetestablished carbon market in Europe with developing carbon markets certificates from 2015 onwards. Removal of floor price in thein the Asia Pacific. Together, the linked Australian and European Australian scheme means that airlines will be able to purchaseemissions trading systems will be the world’s largest carbon market international offsets at around A$10, which is lower than the earlierand a major driver of the global transition to a low carbon economy. floor price of A$15. Aviation industry welcomed the move as it willBy connecting markets that would otherwise be isolated, linking will streamline an earlier complicated process of compliance to twocreate a more liquid carbon market that reduces carbon pollution at a separate emission reduction systems.lower cost. A more liquid carbon market will offer a more stablecarbon price signal. It also provides businesses with more Que: What is the likely impact of linking on other airlines?opportunities to trade, as businesses with excess units will have Ans: The linking means from 2015 Australian companies will beaccess to more buyers and businesses that need more units can allowed to start buying European allowances which is expected topurchase them from a wider range of sellers. drive the prices up. However, this is an opportunity as well for airlines and entities which can generate allowances and then sell them in theQue: What will a full link between the Australian and European linked prices. Australia is expected to act as an additional demandsystems mean? center for international offsets.Ans: A full link will further integrate Australian and European carbonmarkets by allowing businesses to use carbon units from Australia or This could be considered as a move towards achieving the objectiveEurope for compliance under either system. The European to have global common Carbon measurement mechanism for theCommission and Australia have identified a number of policy matters Aviation Industry; linking Australia and EU ETS means lower cost ofto be considered before full linking is established including: abatement of carbon pollution and simply integrating the efforts Measurement, reporting and verification arrangements; involved to fight a common global concern of Climate Change. The types and quantities of third party units that can be accepted into either system; The role of land-based domestic offsets from Australia’s Carbon Farming Initiative in the linked system; Note: Adapted from the FAQs published by EU and Australian Authorities Any implications for supporting the competitiveness of European and Australian industries, in particular for sectors 2 exposed to a risk of carbon leakage and comparable market oversight arrangements.
September 2012 Aviation focusNews & UpdatesEU ETS, Australia carbon scheme to link by 2018, EU ETS Aviation amendments to reduce compliance cost offloor price dropped small operatorsClimate Connect News, 28 August 2012, London: The EU andAustralia have formally agreed on the principles of linking thecarbon emissions trading schemes in the two regions. TheAustralian carbon pricing scheme will undergo significantchanges in order to facilitate the linkage. The cap-and-tradescheme, set for implementation from July 2015, will not have afloor price. Additionally, to incorporate the supply of EUAs intothe Australian scheme, a sub-limit for Kyoto certificates will beimplemented which will restrict the use of CERs, ERUs and RUsto 12.5% of an obligated companies’ emissions reduction target.The Australian scheme, however, would continue to have aceiling price, expected to remain in force till June 2018. Thisceiling price, which was earlier A$22.1 per tonne aboveinternational carbon prices, will now be based on expected2015-16 price of European units. Climate Connect News, 21 August 2012, London: The recentThe Australian Minister for Climate Change and Energy amendments in the EU ETS Aviation regulations are expected to bringEfficiency, Mr Greg Combet said, "Starting today, Australian significant relief to small aircraft operators with annual emissions of lessliable entities can purchase EU allowances for future compliance than 25,000 tonnes. The European Union has raised the threshold forin Australia." small aircraft operators from 10,000 tonnes to 25,000 tonnes. While the minimum threshold limit for inclusion in the ETS is still 10,000 tonnes perCommenting on the development, Climate Connects Chief year, the new threshold will apply to the monitoring and reportingAnalyst, Mr Nitin Tanwar said "This is the first time carbon requirements.markets of two continents will be linked and a new demandcenter for EUAs will be created; though, for the CDM market its With the increase in the threshold, a large number of the aircraftbad news as CER demand in Australia will be significantly operators will see their administrative costs reduce significantly. Thereduced from the initial estimate of 76 million tonnes per year." amendments have been adopted due to the high administrative costsAdditionally, European installations will be able to use associated with the monitoring, reporting and verification procedures forAustralian units for compliance as soon as full linking comes into small operators.operation, from July 2018 at the latest. An interim link betweenthe two schemes will be established from 01 July 2015 which The amendment has also reduced and simplified the calculation andwill be converted into a full link latest by July 2018. verification complexities of fuel density measurements. A large number of such operators could have found it difficult to comply with the EU“The European Union is the first regional emissions trading regulations as they would have had no or minimal experience in emissionsystem and spans the largest part of the European continent. monitoring.We now look forward to the first full inter-continental linking ofemission trading systems. This would be a significant The amendments have been made after concerns that the complianceachievement for both Europe and Australia. It is further cost for small and private aircraft operators would be significantly higherevidence of strong international cooperation on climate change than that of the large airlines. The EU is already under considerableand will build further momentum towards establishing a robust pressure to restrict the ETS to European airlines.international carbon market," Ms Hedegaard said. For more information about this article, please contact: info@climate-The European Commission and Australia will work to agree connect.co.ukregistry arrangements for the interim link by mid 2013. TheAustralian Government has agreed to enter into negotiations ona full-linking agreement, and the European Commission willseek a mandate to do so in coming months.3For more information about this article, pleasecontact: email@example.com
September 2012 Aviation focusCOMAC, Boeing open research centre in China to work on Updated emissions monitoring plan issued by EU forjet biofuel aircraft operatorsClimate Connect News, 17 August 2012, London: Chinese state-owned aerospace manufacturer Commercial Aircraft Corp. of China(COMAC) and Boeing have opened the Boeing-COMAC AviationEnergy Conservation and Emissions Reductions Technology Center, inorder to jointly support the growth of commercial aviation industry.The research will be concentrated on exploring scope of refining thewaste cooking oil into sustainable aviation biofuel. Climate Connect News, 8 August 2012, London: The EuropeanThe Boeing-COMAC Technology Centers first research project aims to Union has released a new Annual Emissions Monitoring (AEM) planidentify contaminants in waste cooking oil which is commonly known template for airlines covered under the Aviation Emissions Tradingin China as "gutter oil," and processes to treat and clean it for use as Scheme (ETS). The EU released the new AEM plan in the updatedjet fuel. Waste cooking oil has shown the potential for sustainable Monitoring and Reporting Regulations which were passed on 21aviation biofuel production and can be an alternative to petroleum- June 2012 and entered into force on 1 August 2012.based fuel as the annual consumption of cooking oil in China isapproximately 29 million tons while the oil consumption in its The new excel version of AEM plan is similar to the previousaviation sector is around 20 million tons of jet fuel. So the research & version except the addition of some new requirements regardingdevelopment to look for the ways to convert discarded "gutter oil" procedures for data management and control activities. As ainto jet fuel can enhance regional biofuel supplies with increased result, the aircraft operators can use most of the information theyaffordability of biofuel. had provided in the previous version. National Competent Authorities in the administering states for respective airlines haveThe Boeing-COMAC Technology Center, located in COMACs new issued guidance documents and sample AEM plans.Beijing Aeronautical Science and Technology Research Institute(BASTRI), will work with China-based universities and research The new AEM plan requires the small aircraft operators to reportinstitutions to expand knowledge in areas such as sustainable risk assessment but Article 54(3) of the MRR exempts smallaviation biofuels and air traffic management that improve emitters from submitting a risk assessment when submitting thecommercial aviations efficiency and reduce carbon emissions. AEM plan for approval. Thus the small aircraft operators can choose not to provide the risk assessment information at the timeChina is one of the worlds fastest-growing aviation markets. As per of submission of the AEM plan.estimate, the passenger traffic in China will surpass 300 million thisyear and will reach 1.5 billion passengers in 2030. So there exists a It should be noted that the revised AEM plan will not be used forvery big market for aviation biofuel as all the airlines are trying to emissions in 2012. It will be used for emissions by the aircraftreduce fuel costs as well as the carbon emissions from aircrafts. operators between 2013 and 2020. Thus the 2012 emissions will be reported on the basis of the current AEM plan. The updatedExperts believe this R&D in aviation biofuel will accelerate the global AEM plan does not need to be verified. It has to be submitted topush for clean jet fuels and support commercial aviations growth by the Competent Authority for approval.reducing its carbon footprint.For more information about this article, please contact: For more information about this article, please contact:firstname.lastname@example.org email@example.com 4
September 2012Other News Updates Upcoming Events & Conferences USA Industry Events & Conferences The Aviation Biofuels Development Coalition of Environmental groups approached Obama to stop Airline Emission Trading protest – A groups of 11 environmental Conference groups, is calling on President Obama to stop Congress from 02-03 Conventions Pavilion at Rio+20 Rio October, 2012 protesting a requirement that U.S. airlines trade carbon emissions 13-22 June 2012 Embassy Row Hotel on flights to and from European countries. Washington DC,(Rio de Janeiro), Brazil Rio de Janeiro US Company & Deals DHL Express Posts Record Increase in CO2 Efficiency – DHL The Rio Conventions The Aviation Biofuels Development Conference is custom built to Express achieved record improvements of CO2 efficiency with meet the specific challenges facedPavilion at Rio+20 is fuel in the alternative aviation a results up 21 per cent in 2011 compared to 2010 for its Express collaborative outreach market to address the cutting edge topics such as: division in Asia-Pacific. activity of the Secretariats Develop Long term Partnerships & Alliances Policy Focus of the Rio Conventions United Airlines Sustainability Report: Airline 2.3% Less Fuel (UNFCCC, UNCCD and Understand the Feedstock and Technology options Efficient than in 2010 - In 2010 the company used 0.155 gallons of fuel per revenue ton mile, and in 2011 this figure increased Infrastructure and supply chain)developmentl o b a l CBD , the G to 0.159. Scale up and Commercializationo n m e n t F a c i l i t y E n vi r For more details ( G E F) , a n d 2 5 o th e r Airbus wins $7-billion Philippine Air order - Airbus won a $7- international, national and local partners. It aims to billion (U.S.) order from Philippine Airlines, beating Boeing. ICAO “Assistance for Action – Aviation and Climate Philippine Air plans to buy up to 100 new jets in total within the promote and strengthen synergies between the Rio next five to seven years as it restructures operations to become Change” Seminar Conventions at implementation levels by providing a a low-cost carrier and regain dominance of the local market coordinated platform for awareness-raising and from arch-rival Cebu Air Inc. 23-24 October, 2012 information-sharing about the linkages in science, policy ICAO Headquarters and practice between biodiversity, climate change and Fuel Efficiency Montreal, Canada combating desertification/land degradation. Virgin Atlantic - After posting £80M loss, Virgin Atlantic aims to trim fuel costs with new technology platform, aims 30% cut in carbon emissions by 2020 using OSyS tool. For more details The Seminar will provide States and other stakeholders with an Biofuel ATW Eco-Aviation Conference Lufthansa looking at palm-based biofuel to reduce carbon opportunity to exchange views and information on the assistance 20-21 June 2012 footprint - A total number of 1,187 flights had been carried out required to develop and implement policies and actions related Washington, USA using 1,157 tonnes of biofuel blend and saved 1,471 tonnes of to international aviation and climate change. carbon dioxide emission. For more details ATWs 5th Annual Eco- United Airlines has joined the Sustainable Aviation Fuel Users Aviation Conference Group, an industry working group that aims to accelerate the will look at the strategies development and commercialization of aviation biofuels. and technologies being implemented by the air 07-09 November, 2012 Airbus inked a deal with the Beijing-based Tsinghua University transport industry as it& to propel the commercialization of aviation biofuels. Melbourne Convention strive to create a greener, Exhibition Centre China Eastern Airlines joins Airbus Clean Jet-Fuel Network s u Melbourne, Australia e . stainable f u tur Plans. Attendees to this event i nclude high-level Carbon Emissions Carbon Expo Australasia 2012 will be a high-level market in executives in the airline industry and those interested event FedEx raises the target to reduce by 30% aircraft emissions by that brings Australian business the air transport industry. supplying eco-solutions to leaders and their international 2020. counterparts together –the financial premiumof higher fuel Sessions will cover this will be a impact networking event as well as a source for the latest information more efficient and higher taxes; the drive towards concerning carbon Green Fund to help cut carbon emissions in Chinas Civil infrastructure and operations; a holistic industry reduction initiatives, and the provision of low-carbon economy Aviation Industry. products & services throughout Australasia. For more details 5
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