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Business aircraft operators struggle with EU ETS process

The deadline looms for aircraft operators flying to and from the European Union to submit their carbon emissions data for 2011. However, although the verified reports are due on 31 March, confusion remains within business aviation over how best to deal with the complexities of the EU's Emissions Trading System (EU ETS).

Under EU ETS legislation, which came into effect on 1 January, operators flying to and from the EU are required to submit independently verified tonne-per-kilometre data, along with an emissions report for the previous year.

In the business sector, many smaller companies do not have the resources to dedicate staff to the time-consuming monitoring, reporting and verification (MRV) process. Not surprisingly, four out of five have struggled with the administrative burden of complying, according to recent research by UK-based consultants SustainAvia.

This year, operators were burdened with the added obligation of applying for a trading account to allow carbon-credit purchases. "The application procedure is an involved process which, like the reporting system, is proving to be burdensome and difficult for some operators," says Peter Alberry-King, general manager of Aviation Emissions Solutions.

Fabio Gamba, chief executive of the European Business Aviation Association (EBAA), points out that the double whammy of form-filling is already having an impact on members' operating costs.

SustainAvia estimates verification costs about €1,000 ($1,300), but Gamba argues it is at least five times higher. Aircraft operators do not have to start surrendering allowances for their carbon dioxide emissions until 2013, "but the costs of MRV are already here", warns Gamba.

Many business aircraft operators are eligible to use Eurocontrol's Small Emitters Tool (SET), which the European Commission has approved as a simplified method to determine fuel consumption and CO² emissions for each flight. Small emitters can also obtain draft reports from Eurocontrol's ETS support facility. Andrew Watt, head of environment for Eurocontrol, explains: "We can tell operators, 'this is the traffic we think you had in 2011 under the EU ETS, these are the flights we think should be excluded, and here's our estimate of the resulting emissions that you should be reporting'."

However, the SET has suffered a bumpy start. Until recently, only operators with fewer than 243 flights in three consecutive four-month periods or annual CO² emissions of less than 10,000t were permitted to use the SET. In December, following intensive lobbying by the EBAA, the Commission raised the latter threshold to 25,000t. Gamba says they would like it raised even higher, to 50,000t, but some argue this is unlikely to happen as 50,000t would exceed the threshold applied to other industries covered by the EU ETS.

SustainAvia has also been critical of the SET, arguing that it fails to take into account weather, air traffic control-related deviations or payload. In other words, it estimates emissions rather than calculating them on the basis of actual fuel burn. "What we retain from interviews with business aircraft operators is that they would prefer to monitor the actual fuel consumption," the report states, adding that the SET is considered a "black box".

Watt says improvements have been made to the SET in recent months, but he admits the tool was not as accurate as some people initially expected because of a lack of available data on certain aircraft. This has led to Eurocontrol working with the EBAA to gather more fuel burn information from its members.

However, critics maintain the SET will not ease the burden on business aircraft operators unless it can be tied to the formal reporting process. While the tool may help operators to understand which flights are covered by the EU ETS, they still have to go through the MRV process and audit, thereby incurring the same costs.

Gamba goes further by saying the EU ETS "blatantly discriminates" against business aviation operators because they must acquire some 96% of their historical CO² emissions in permits, compared with 15% for airlines.

He claims some business aircraft operators are choosing to purchase permits for 100% of their emissions, rather than spending time and money calculating which are covered by the scheme.

These concerns over the EU ETS are reflected at a global and political level, although most commercial airlines complain about the cost of carbon permits, rather than administration issues. Twenty-six non-EU nations met in Moscow last month and agreed to take retaliatory measures against the unilateral scheme, which they believe breaks international law.

Yet the European Commission is standing firm in the face of criticism from the sector and governments including China and the USA, plus the threat of an international trade war. It says the EU ETS will be reviewed as planned in 2014, not before.

It has also resisted calls from many quarters to suspend the directive while the International Civil Aviation Organisation looks at options for regulating carbon emissions on a global basis. However, these calls do not seem to emanate from the business sector.

Gamba says EBAA members seem to accept the premise of the EU ETS, criticising only its timing and execution. "We never got the feeling that they were opposed to the principle of market-based measures," says Gamba. "It's just that it shouldn't be a one-size-fits-all approach."

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