EU ETS fears slow down aviation verification process

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Companies providing verification services to aircraft operators ahead of their mandatory inclusion in the European Union's emissions trading scheme in 2012 are urging them to select a verifier and get things moving as soon as possible.

But uncertainty over the way in which small emitters calculate their emissions, a legal challenge mounted by the US Air Transport Association aimed at exempting US carriers from the system, and dissatisfaction among European airlines that 2010 is being used as the benchmark year without taking into account the impact of April's volcanic ash cloud, could be leading some operators to put off the inevitable.

Under EU ETS legislation, aircraft operators are required to submit independently verified tonne per kilometre data along with an emissions report for the whole of 2010 by the end of March 2011. Once these figures have been verified an independent technical review needs to be carried out by an auditor uninvolved in the original verification process.

bombardier learjet 40xr, bombardier
 © Bombardier
Small aircraft operators and business aviation leaders are urging Eurocontrol to expedite its new ETS support facility

"Our advice is do not leave verification until 1 January 2011. People may have been collecting the wrong information and that only leaves two to three months to put it right," says Shaun Bainbridge, director of UK-based verification provider CICS. "We recommend that airlines start the verification process in September/October. We can come on site and verify emissions up to that point - that way, if it's in a complete mess we have time to fix it."

Neil Duffy, an ETS administrator at verifier ICM ETS, points out that there is a shortage of verification providers, adding: "The later people leave it the harder it will be to find someone. Now is the latest you should be doing it."

Julien Dufour, managing director of Verif­Avia, says that most medium and small-sized airlines and business aviation operators have not yet selected a verifier. However, he does not see this as a problem for the latter because the process for small emitters is more "straightforward". Commercial operators with fewer than 243 flights in three consecutive four-month periods, or which emit less than 10,000t of carbon dioxide annually, can calculate their emissions using Eurocontrol's small emitters' tool, which was recently approved for use by the EC.

However, while the EC's approval is seen as a step in the right direction by business aviation operators, they are keen for Eurocontrol to finalise the ETS support facility it is working on to replace the small emitters' tool, and even more keen to see the requirement for a full onsite independent verification visit waived. The approved small emitters' tool requires operators to enter data on an aircraft by aircraft basis, whereas the ETS support facility would enable emissions from an entire fleet to be calculated in one go.

There were fears earlier this year about a potential lack of funding for the ETS support facility, but it is understood that the majority of EU member states have declared their willingness to continue to provide funds. The software behind the support facility is being finalised by Eurocontrol. European Business Aviation Association chief operating officer Pedro Vicente Azua is hoping it will be ready "in the coming weeks so that operators can use it before the end of the year". However, he adds that the new, simplified tool will "lose its commercial interest for small emitters" if operators are still required to go through the full independent verification process, which includes an onsite visit by an auditor.

VerifAvia's Dufour is confident the French competent authority will waive the site visit requirement for small emitters, which he sees as unnecessary. He says "there is not really anything to verify" other than "to make sure the data is recorded correctly from the Eurocontrol tool. This could be done remotely - there is no need for a site visit for small emitters. It's a waste - it's an onsite visit for the sake of an onsite visit." He adds that VerifAvia has developed a "simplified verification methodology" for operators that fall into this category.

An onsite visit is still necessary while the Eurocontrol small emitters' tool is the only way for smaller operators to calculate their emissions, says Duffy, but he believes the requirement could be waived when the ETS support facility becomes available for use. However, he points out that there is "no official evidence" to suggest that a waiver will be forthcoming.

The level of preparedness among aircraft operators for their inclusion in EU ETS varies by region, says Bainbridge. CICS acts as a verifier for operators that report to the UK Environment Agency. These are operators that make more flights to the UK than to any other point in the EU. Between 800 and 900 operators are in this category. They range from large commercial airlines to individuals who own a single private jet. "Only 250 of those are based [in the UK] - 350 are in the States and the rest are scattered all over the world," he says.

US operators are less prepared than operators based elsewhere, says Bainbridge: "The official line is that they will comply, even though they believe that at the end they won't be in the ETS." While the large commercial US airlines have prepared well for ETS, Bainbridge says "the others are being a bit tardy". US operators are awaiting the outcome of a legal challenge launched by the ATA and three of its members - American, Continental and United Airlines - which argues that the inclusion of international aviation in the EU ETS is contrary to international law.

verifavia, eu ets verification

The challenge is set for the European Court of Justice in Luxembourg, but it is unclear when a ruling will be made. Michael Juergen Werner, head of the Brussels practice at international law firm Norton Rose, says that "while the timing is uncertain, no ruling is expected from Luxembourg before early to mid-2011". ICM's Duffy is less optimistic the issue will be resolved ahead of the start date for ETS: "Many are leaving it quite late - some are hoping the American challenge will hold up but I've heard a decision is not expected for two years."

There is also controversy over the fact that 2010 is being used as the benchmark year for aviation emissions even though carriers operating in Europe were grounded for a week in April when much of the continent's airspace was shut by the volcanic ash cloud. Emissions that would have been recorded in that week will not be counted and there are fears that this could affect the number of free carbon credits available to those operators most severely affected. For this reason, airlines including Germany's Lufthansa are seeking a year-long delay to the start date for the EU ETS.

DEAF EARS

Werner says these complaints are falling on deaf ears. "The EC has rejected the attempts of airlines to argue for a delay to the start of the EU ETS as a result of the volcanic eruptions," he says. "The EC takes the view that any distributional impacts between airlines are likely to be small as most operators have been impacted by the flight restrictions and the increase in business seen in the weeks following the disruption, with many airlines carrying high amounts of passengers and freight as travel patterns returned to normal, will balance out the effects of the cancelled flights."

It is clear aircraft operators have many questions and fears about their inclusion in the emissions trading system, but the message from verification providers is simple and universal: the sooner they engage in the preparatory process, the easier it will be to meet the 31 March deadline for submitting the required data. "There is no leeway on that," warns Bainbridge. "There are severe penalties if you don't get it in on time."