Europe-based business aviation operators, looking at compulsory inclusion in the emissions trading scheme in 2012, are facing the possible elimination of an administratively simplified scheme designed for small operators.
At a meeting on 6 May, the European Commission may decide to withdraw funding from the Eurocontrol ETS support facility, a system that can be used to calculate the emissions of aircraft using flight tracking data from Eurocontrol's central flow management unit.
Airlines are complaining that this ETS support facility is not a function that they should be obliged to support through air navigation service user charges. If their voice is heard, and if subsequently an alternative form of funding for the ETS support facility is not found, small emitters will have to work within the ETS using the more complex emissions accounting system that large companies such as airlines are required to use.
The European Business Aviation Association says that the administrative burden is so massive for such small emissions that the cost of compliance may be up to 40 times the cost of buying the emissions offsets.
To present its emissions trading case, the EBAA has published a brochure The EU Emission Trading Scheme: a call for improved efficacy and viability. Its case is laid out in fine detail, together with a clear statement of its belief that "market-based measures [like the ETS] have an important short-term role in mitigating the impact of aviation of the environment".
Why only short term? Because, says EBAA president Brian Humphries, by 2020 European business aviation growth will have become carbon neutral, and by 2050 its carbon dioxide emissions will be half what they were in 2005.
Humphries says the loss of the ETS support facility would be a disaster for small operators, loading them with disproportionate costs without improving the performance of the ETS itself, and therefore with no benefit to the environment. Yet advice from within the EC at present, says Humphries, suggests that business operators may have to suffer the expensive bureaucracy as now defined to assemble the data that would enable them to demonstrate that it is suffocatingly bureaucratic, expensive and ineffective.
After all, says Humphries, the European business aviation sector generates 8% of traffic in the continent but less than 1% of emissions, arguing: "We're nice guys to have around."
The task of the EC has not been made easier, says Humphries, by the fact that the head of the department that deals with the international carbon market for the aviation and maritime sectors has changed four times in as many years. This also makes it difficult for industry organisations that wish to help the department to develop practical regulatory processes.
Meanwhile, the ETS support facility is in the process of being assessed to determine how accurate its tools are. If it proves to be highly accurate, the system could allow the emissions threshold for operators that use it to verify their carbon dioxide output to be raised, with only the very high emitters being required to account more precisely for their fuel use/emissions. The facility was developed by Eurocontrol under the codename Pagoda.
The EBAA cites the accuracy levels that ground-based emitters are required to achieve: ±5% up to 50,000t of CO2 annually, and ±2% up to 500,000t. Under the draft guidelines issued by the European Commission, aviation operators emitting more than 10,000t of carbon a year have to subscribe to what the EBAA terms "the full panoply" of the monitoring, reporting and verification (MRV) administration, which the association claims was "originally designed for installations emitting millions of tonnes of carbon a year".
The EC has told the EBAA that the only acceptable higher threshold would be 25,000t of CO2 a year. The EBAA says the resultant administrative costs could be €40,000 ($54,500) per company a year, which is "a cost most operators would be unable to bear in the current depressed and highly competitive market".
Humphries claims that the Eurocontrol system meets Tier 1 MRV accuracy requirements (up to 50,000t) and "subject to the ongoing validation is most likely sufficiently accurate even up to Tier 2" (500,000t). The latter is the threshold he wants to see applied to define the division between small and large emitters for the purposes of simplified MRV.
He says: "If the Commission fails to adopt a simple yet accurate method such as Pagoda in favour of a system that seems to have been designed to fill the pockets of consultants offering MRV services, it is hard to see how ETS will ever be extended to other transport modes."
The whole system hinges on the 6 May decision about whether Eurocontrol will continue to fund the ETS support facility, or if not where future funding will come from. Its continued existence is important not only to business aviation, but to the European aviation ETS as a whole, because it is one of the main emissions verification systems.
Humphries argues that the ETS could collapse under its own weight in its first year of operation - 2012 unless it is simplified for small operators. He predicts administrative "chaos" that could derail the system. The EBAA says, for example, that 38% of operators on the UK list are not registered for ETS reporting, which they are supposed to be by 2011, the year in which the system will be validated.
According to Eurocontrol data, there are more than 250 EU operators with only one aircraft while 80% have fewer than five. A further look at the data shows that there are more than 2,500 business aircraft registered in the 27 EU member states and operational in Europe, and that does not include the many foreign-registered business aircraft based here.
Then there are the overseas-based aircraft that fly regularly into Europe - particularly from the USA, where there are more than 15,000 turbine-powered business aircraft, many of which will need to demonstrate some level of compliance within the scheme.
It is this bureaucratic nightmare that EU member states will have to supervise to ensure ETS compliance in this extremely diverse community that, as an industry, will be among the really small carbon traders. The UK estimates that it alone will be required to monitor at least 700 mainly offshore-based non-commercial operators, all with minimal carbon output.
Humphries invites the European Commission to consider the complexities involved. For example charter operators may be allocated to one member state one year and to another the next because they do not operate to a schedule, responding only to customer demand, which necessarily varies by destination and frequency.
Secondly, each member state will have to create an account for each operator even if they only have one aircraft and fly in only once or twice a year.
Thirdly, each operator and member state will have to ensure that the emission data received has been properly verified under the MRV requirements that, if the Eurocontrol ETS support facility figures are not accepted, will be so burdensome that the system will fail.
SAME RULES FOR EVERYBODY
The problem with the ETS, according to the EBAA, is that it has made its rules with big emitters in mind, then applied the same rules and the same complex MRV administrative burden to small emitters. Humphries insists that the business aviation community wants to play its full part in a manageable ETS.
The operators will pay for their emissions just as big carriers do, but without facing the disproportionate amount of expensive bureaucracy at airline and European Commission level that would be generated by the MRV system designed for the big carriers.
Another problem for small operators required to take part in the ETS is that the emissions credit auction system - the system for buying emissions credits which the whole ETS is based on - has also been designed with big traders in mind.
The EBAA wants to see the auction marketplace made accessible to small emitters to enable them to trade direct instead of having to use brokers, which would put up the cost of participation in a fundamental component of the ETS.
The EBAA argues that, since aviation as a whole contributes 2% of greenhouse gas emissions, and business aviation only 0.04%, applying overbearing bureaucracy to that minute sector is unjustified and unworkable when a simple alternative is available.
ACCESS FOR SMALL EMITTERS
At present small aviation emitters do not provide fair access to emissions credit auctions because of the high minimum size of tradeable units. The European Business Aviation Association supports a number of amendments to make the market more accessible for small operators, enabling them to participate in the ETS, and wants the European Commission to require that member states:
Hold easily-accessible auctions open to all recognised aviation emitters regardless of size.
Set aside an allocation of auctioned permits to be protected for small aviation emitters, in multiples of 1t, not the usual 100t.
Recognise that proportionality between the purchased amount and the price is critical for small emitters.
Reduce the minimum required amount of credits to be able to access the system, to take into account small emitters.
The EBAA also calls for access to pre-auction sales to be open to all operators who can show they are listed on the European Commission's Emissions Trading Scheme operator list, and registration should be through a straightforward process limited to demonstration that the operator accessing the auction is bona fide.
Payment should be able to be made by credit card to further reduce costly administrative overheads and burdens, and to eliminate the exposure of member state agencies for which establishing the creditworthiness of small foreign emitters could be difficult or impossible to achieve.