Introduction to EU Emissions Trading

In response to the 1997 Kyoto climate agreement, Europe introduced the EU Emissions Trading System (EU-ETS) in 2005. It's designed to cost-effectively reduce greenhouse gas emissions, covering around 40% of emissions in the European Union and the European Economic Area (EEA). The EU-ETS establishes emission caps and facilitates the trading of emission allowances (CO2 certificates) to encourage emissions reductions.


CORSIA: Pioneering Climate Action in International Aviation

In recent years, the aviation industry has witnessed a concerning surge in climate-altering emissions due to its rapid expansion. In response, the International Civil Aviation Organization (ICAO) embarked on a mission in October 2016 to stabilize global CO2 emissions from international air travel starting in 2020. This ambitious global initiative is known as CORSIA, which stands for the Carbon Offsetting and Reduction Scheme for International Aviation.


To secure the future of aviation while mitigating emissions, CORSIA employs a multifaceted approach. This encompasses advancements in aircraft technology (e.g., turbine and aerodynamic improvements), operational enhancements (such as optimized routing), and the exploration of sustainable aviation fuels. Moreover, CORSIA sets forth mechanisms to offset CO2 emissions from international flights using recognized project credits and emission allowances from existing emissions trading systems. The overarching aim is to attain carbon-neutral growth in international air travel from 2020 onwards.

Introduction to EU Emissions Trading

  • How EU-ETS Operates

    Aircraft operators within the EU-ETS are required to annually surrender emission allowances equivalent to their CO2 emissions. 


    Regulations are based on EU Directive 2003/87/EC, with implementation at the national level. 


    Operators determine their participation based on flight numbers and emissions. They must open an account in the EU registry, submit monitoring plans, and compile emissions reports, which are subject to verification by independent bodies.

  • Independent Verification

    Verification bodies play a crucial role in assessing emissions reports. Their verification process ensures data accuracy, providing confirmation and identifying any non-conformities.

  • Emission Allowance

    Emission allowances for aircraft operators are determined using historical data until 2023. These allowances are a key aspect of the trading system.

  • Reporting

    Operators calculate their EU-ETS obligations based on flight counts. Certain flights, such as those for government, humanitarian, or research purposes, are excluded from these calculations.

  • Annual Deadlines

    Emission reports must be verified by March 31st of the following year. Additionally, emission allowances must be submitted by April 31st, aligning with the confirmed emissions of the previous year.


    Monitoring plans are flexible and may require adjustments based on changes or recommendations from verification bodies. Improvement reports may be necessary to address non-conformities.

CORSIA: Pioneering Climate Action in International Aviation

  • CORSIA's Mandate: Who Must Participate?

    CORSIA's reach extends to all aircraft operators engaged in international flights utilizing aircraft with a maximum take-off mass (MTOW) exceeding 5,700 kg and emitting more than 10,000 tonnes of CO2 annually.


    Within the European Union (EU), CORSIA's requirements were incorporated into the European Emissions Trading System through a delegated regulation by the EU Commission (EU 2019/1603, July 18, 2019). This applies to aircraft operators holding air operator certificates issued within European Economic Area (EEA) states, including outermost regions, overseas territories, and protected areas, who exceeded the 10,000-tonne emissions threshold since January 1, 2019. CORSIA also encompasses various flight types connecting airports in different EEA countries, airports in EEA countries with those in other states, and international flights linking EEA airports with outermost regions, overseas territories, or protected areas within EEA countries. Certain flight types, including state-mandated, humanitarian, medical, military, and fire-fighting flights, are exempted from CORSIA's scope.

  • The Framework of CORSIA: Understanding the Regulations

    To realize CORSIA's goal of achieving carbon-neutral growth from 2020, ICAO established a framework known as the Standards and Recommended Practices (SARP).


    These standards, endorsed by the ICAO Council on June 27th, 2018, and effective since January 1st, 2019, encompass administrative requirements, monitoring, reporting, and verification (MRV) rules, and the calculation of compensation obligations. The Environmental Technical Manual (ETM), which offers guidance on adhering to CORSIA requirements, complements the SARP, though it is not legally binding. CORSIA also includes five vital CORSIA Implementation Elements, including CORSIA Chapter 3 States and the CORSIA CO2 Estimation and Reporting Tool (ICAO CORSIA CERT).

  • Navigating CORSIA's Mechanisms

    CORSIA mandates that all aircraft operators from ICAO member states, regardless of their country's participation in CORSIA, monitor their CO2 emissions since January 1st, 2019. 


    This monitoring process is based on a pre-approved monitoring plan, which serves as the sectoral baseline. The baseline aids in calculating the average total CO2 emissions to be offset through CORSIA in a given year post-2020. These monitoring plans must contain details on aircraft operator identification, fleet and operational data, emission calculation methods for international flights, and data management and control measures.


    CORSIA operates in two stages. In Stage 1 (until 2026), compensation is determined based on the growth of the entire aviation industry, offsetting emissions exceeding the 2019 baseline average from 2021 to 2026. This compensation can be achieved through sustainable fuels or offsetting by deleting emission credits (offsets). CORSIA follows specific rules for offset deletion, distinguishing it from the European Emissions Trading System. In Stage 2 (starting from 2027), compensation calculation hinges on individual operator emissions growth.


    Surveillance and monitoring requirements vary for aircraft operators based inside and outside the EEA states. Operators outside the EU consult the Environmental Technical Manual for monitoring and reporting procedures, while EU-based operators adhere to the Implementing Regulation (EU) 2012/601. The updated regulation, (EU) 2018/2066, since 2021, aligns monitoring and reporting under CORSIA and the EU-ETS.

  • CORSIA Monitoring and Compensation in Brief

    CORSIA offers two monitoring options: ICAO CERT or approved fuel tracking methods. 


    CORSIA offers two monitoring options: utilizing the ICAO CORSIA CERT or employing one of five recognized methods for tracking fuel use based on emission thresholds. Operators can reduce their compensation requirements by using sustainable fuels permitted in CORSIA, subject to specified criteria. Verified emissions reports and verification reports have set deadlines for submission, with national authorities forwarding emissions reports to ICAO within three months after the submission deadline.


    Participation in CORSIA requires aircraft operators to meet compensation requirements by deleting eligible emission units, following evaluation by the ICAO Council. These units are acquired through market purchases, with quality criteria defined in CORSIA SARP, including additionality, avoidance of double counting, and adherence to local, regional, and national rules. CORSIA also allows operators to reduce compensation requirements by claiming emission reductions from approved sustainable fuels. The first emission unit deletion by aircraft operators is set for no later than January 31, 2025, following verification by competent state authorities.

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