The document discusses the European Union's Emission Trading Scheme and its implications for Indian airlines. The EU ETS aims to reduce greenhouse gas emissions through capping emissions and allowing trading of allowances. It includes aviation emissions starting in 2012. Indian airlines that fly routes to and from Europe must monitor and report their emissions. They will receive some allowances for free in 2012 based on past traffic, and may need to buy more allowances if emissions exceed the cap, or sell allowances if emissions are lower than allocated. Compliance with the EU ETS presents new responsibilities for covered Indian carriers.

1. Panagiotis Karamanos & Michael O’Connor*
Environmental Experts, in EU-India Collaboration
“Institutional Capacity Building for the Civil Aviation Sector in India,”
from Athens International Airport
June 24, 2011
*This document represents the views of the above authors only
Climate Change and the European Union’s
Emission Trading Scheme
The Challenge for Indian Airlines

2. 1. European Union’s approach to climate change
2. Aviation and the Emission Trading Scheme
3. Responsibilities of Indian airlines
Discussion

3. European Union’s response
 Ratification of Kyoto Protocol by all EU Member States in
2002
 EU target: 8% reduction distributed amongst its Member
States (e.g. Germany -21%, UK -12.5%, Greece +25%)
 Generally aggressive position on climate change compared
to other developed nations as shown by 2020 targets:
 Reduce GHG emissions by at least 20% vs. 1990
 Increase share of renewable energy to 20%
 Increase energy efficiency by 20%
 Comprehensive policy and instruments to back up 2020
targets including the world’s largest Emission Trading
Scheme (ETS) for GHGs

4. EU Emission Trading Scheme
 Established through Directive 2003/87/EC
 Covers 10,000+ installations (>20MW) ~50% of EU’s CO2
 Member States set National Emission Caps and allocate
allowances for free and increasingly by auction
 Participants exceeding their allowed emission quota may
purchase allowances from other, cleaner participants,
purchase approved emission reduction credits through
Clean Development Mechanisms or Joint Implementation
projects, or pay a fine
 1st Trading Period: 2005-2007 completed
 2nd Trading Period: 2008-2012 in progress
 Annual monitoring, verification & reporting of emissions

5. CO2 Emissions by Sector
2%
2%
11%
15%
33%
24%
13%
Road Aviation Chemicals & Cement
Land Use Change & Forestry Light, Electricity, Heat Other Energy& Industry
Other Transportation

6. Multiple contributors & stakeholders
 Airport operators 5% of the 2% share (i.e. 0.1% of the
emissions) is attributable to airports
 Greater airport community (handling, cargo, retail, etc.)
 Passengers (business, tourism)
 International Civil Aviation Authority (ICAO) and local Civil
Aviation Authorities
 Airlines
 Aircraft manufacturers
 Engine manufacturers

7. What are airports doing about climate change?
Airport Carbon Accreditation
“ACI EUROPE and its members
commit to reduce carbon
emissions from airport
operations fully within their own
control with the ultimate target
to become carbon neutral.”

8. Level 1: Mapping Ankara, Antalya, Bologna, Budapest,
Chisinau, Cork, Dublin, Dubrovnik,
Farnborough, Istanbul, Izmir, Portuguese
Airports, Prague, Shannon, Toulouse-Blagnac
Airport
Level 2: Reduction Athens International Airport, Brussels,
Charles de Gaulle, Frankfurt, Hamburg,
Kristiansand, Manchester, Orly
Level 3: Optimisation Amsterdam, Heathrow, Gothenburg, Munich,
Zurich
Level 3+: Neutrality Göteborg Landvetter, Linate, Malpensa, Oslo,
Stockholm, Trondheim, Umea
Levels of accreditation & participants

9. Athens International Airport
 Accredited at Level 1 (Mapping) in 2009
 Upgraded to Level 2 (Reduction) in 2010
 Emission reduction target:
25% reduction in CO2 emissions (Scope 1 and 2)
by 2020 using 2005 as a baseline year
 Climate Change Corporate Action Plan since 2008:
 Conversion of vehicles to LPG / purchase of hybrid vehicles
 Investment in energy-saving technology (hardware & software)
 50% recycling rate target for 2012 / use of recycled materials
 Vravrona wetlands protection programme
 8MW photovoltaic park under construction

10. Multiple contributors & stakeholders
 Airport operators 5% of the 2% share (i.e. 0.1% of the
emissions) is attributable to airports
 Greater airport community (handling, cargo, retail, etc.)
 Passengers (business, tourism)
 International Civil Aviation Authority (ICAO) and local Civil
Aviation Authorities
 Airlines
 Aircraft manufacturers
 Engine manufacturers

11. What about aircraft emissions?
 In 2009 the States belonging to the International Civil
Aviation Organisation (ICAO) agreed to the following:
 a global goal of 2% annual improvement up to 2050
 further explore more ambitious emission reductions including carbon-
neutral growth
 development of a global CO2 standard for aircraft
 development of a framework for market-based measures, such as
emissions trading, in international aviation
 further financial and technical assistance to States
 submission of States’ action plans which outline their policies and
actions as well as annual reporting of aviation fuel consumption.

12. What about airlines?
 IATA’s (International Air Transport Association) 4-pillar
strategy calls for improvements in:
 Technology (airframe design and materials, engine efficiency,
alternative fuels, etc.)
 Operational Efficiency (aircraft and ground operations)
 Infrastructure (Air Traffic Management, airport capacity)
 Economic Instruments (emissions trading, emissions charges)
 Challenge: to be environmentally effective and
economically feasible

13. Inclusion of aviation in EU ETS
 EU is implementing the first ETS to address aviation
 Aviation included in EU ETS through Directive 2008/101/EC
 All (European and foreign carrier) flights landing at or
taking off from airports in EU Member States
 De minimis: airlines with less than 1 round-trip flight to /
from the EU per day are exempt as well as some types of
flights (training, military, research, etc.)
 Inclusion starts in 2012 and continues through next period:
2013-2020

14. Inclusion of aviation in EU ETS
 Benchmark set at average of 2004-2006 emissions in
order to account for considerable growth in aviation since
1990
 Emissions cap: 97% of benchmark in 2012 decreasing to
95% in 2013
 Allowances allocation (2012): 85% free/15% auctioned
 Allocation is determined by an airlines’ share of tonne-
kilometers 2 years earlier, e.g. 2010 share for 2012
 Participants exceeding their allowed emission quota may:
 purchase allowances from other participants (airlines and thermal
installations)
 purchase approved emission reduction credits
 or pay a fine

15. Indian carriers & EU Administering
Member State
UK
Air India, Jet Airways India
France
Go Airlines, Indigo, Jet Lite
India Ltd
Cyprus
Kingfisher Airlines

16. Requirements for Indian airlines
 For those Indian airlines flying into / out of European
airports meeting the criteria for inclusion in the EU ETS
must have already:
 submitted an annual emissions and tonne-kilometer
monitoring plan in August 2009 for approval by the
relevant EU Member State
 started monitoring emissions and tonne-kilometer data
since January 2010
 submitted externally verified emissions and tonne-
kilometer data for 2010 by March 2011 (and every
March thereafter)
 receive free allowances based on benchmark calculation
in February 2012

17. 2012 and beyond
Source: VerifAvia

18. A simplified example
of how the EU ETS works

19. How are 2012 allowances allocated?
Average 2004-2006 emissions: 200,000 tonnes
2012 Cap: 194.000
Free allowances: 165.000
Auctioned allowances: 29.000

20. How will the 165,000 free allowances
be allocated between airlines?
2010 Tonne-Kilometers = Σ (Payload x Distance)
Calculate Tonne-Kilometers of Air Greece: 500,000 TK (50 %)
Calculate Tonne-Kilometers of CleanAir: 300,000 TK (30 %)
Calculate Tonne-Kilometers of PropellAir: 200,000 TK (20 %)
TOTAL Tonne-Kilometers: 1,000,000 TK
2012 Free Allowances: 165,000
Air Greece: 82,500
CleanAir: 49,500
PropellAir: 33,000

21. How much did my airline emit in 2012?
Airline Fuel
Consumption
(tonnes CO2)
Emissions
Air Greece 26,190 82,500
CleanAir 12,000 37,800
PropellAir 15,000 47,250
Emissions = Mass of Fuel
Consumed
x 3.15 tonnes CO2 per
tonne Fuel

22. Does my airline have enough allowances for 2012?
Airline Emissions Allowances Status
Air Greece 82,500 82,500 OK
CleanAir 37,800 49,500 Sell
PropellAir 47,250 33,000 Buy/Invest

23. Concluding Remarks
 Inclusion of aviation in EU ETS is a reality
 Rules are relatively clear
 EU ETS is somewhat flexible
 Several Indian airlines are required to
participate
 Actual impact to be evaluated in 2013 and
beyond