Revealing and comparing the gaps in carbon pricing policy for the aviation sector
Emissions covered by the European Union’s Emissions Trading System (EU ETS) in 2023 increased by 10% in the EU aviation sector compared to 2022 levels, at a time when sectoral climate impacts should be decreasing dramatically.
From 2026, flights departing from and landing in Europe will be required to pay for all their CO2 emissions under the EU’s carbon market, the EU ETS. Over the past decade that price was paid for barely half of the CO2 emissions from flights within Europe. Except when flying to the UK and Switzerland, flights departing in the European Economic Area (EEA) to outside its borders are fully exempted from paying this EU carbon price.
Such international flights are covered by the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This mechanism does not cover all CO2 emissions, but only those that exceed a high baseline, and utilises often unreliable carbon credits to offset them.
In addition to carbon dioxide, aeroplanes also harm the climate through other non-CO2 emissions including water vapour, nitrogen oxides (NOx), sulphur dioxide (SO2), and soot particles. These emissions lead to atmospheric processes such as ozone formation and contrails.
It has been established that non-CO2 aviation effects can represent as much as 75% of aviation’s climate impact. Yet, the carbon price paid by airlines under the EU ETS today does not reflect this environmental footprint since these significant non-CO2 aviation emissions are still outside the mechanism’s scope.
Approximately only 20% of CO2 emissions from flights to and/or from the EU were priced under the EU ETS in the last decade, representing at best only 7% of the climate impact from the EU aviation sector. This resembles the tip of the iceberg, for a sector responsible for 4% of the EU’s total CO2 emissions.
As a matter of urgency, policymakers must be more stringent in how they regulate the aviation sector. The industry must finally take steps to mitigate its disastrous ecological consequences and better align itself with its own Long-Term Aspirational Goal (LTAG) of carbon neutrality by 2050.
While initial actions are underway at the European level to finally monitor non-CO2 effects, policies that properly address international emissions – responsible for 61% of the EU’s aviation emissions – must also be initiated, as the European Parliament, NGOs and other stakeholders have long requested.
To advise this process, Carbon Market Watch commissioned environmental consultants Ricardo to produce a study comparing the functioning of the EU ETS and CORSIA, and their respective climate ambitions. In this policy briefing, we present the study’s main findings and formulate policy recommendations.
