The aviation sector, while a vital economic driver and enabler of global connectivity, faces mounting scrutiny for its substantial environmental impact. A recent comparative study has brought into sharp focus the limitations and strengths of two critical carbon pricing mechanisms: the European Union Emissions Trading System (EU ETS) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This blog delves into the findings of the study and highlights the policy adjustments needed to bridge the gaps, setting the stage for meaningful climate action.
Aviation’s Environmental Challenge
Aviation is responsible for 4% of the EU’s total CO2 emissions, and its environmental impact extends far beyond carbon dioxide. Non-CO2 emissions like water vapor, nitrogen oxides (NOx), sulphur dioxide (SO2), and soot particles contribute to atmospheric processes such as ozone formation and contrails, amplifying the sector’s climate footprint. Alarmingly, these non-CO2 effects can account for up to 75% of aviation’s total climate impact, yet current policies inadequately address these emissions.
The urgency of the situation is underscored by recent data: CO2 emissions from the EU aviation sector covered under the EU ETS surged by 10% in 2023, signaling a misalignment between climate action goals and on-ground realities.
The EU ETS: Leading but Limited
The EU ETS stands as a cornerstone of the EU’s climate policy, aiming to cap and reduce greenhouse gas emissions through a market-driven approach. However, its application within the aviation sector exposes notable gaps:
- Scope Limitations: Until now, the EU ETS has only covered CO2 emissions from intra-European flights, excluding international departures and arrivals. This represents a mere 20% of aviation-related CO2 emissions, or just 7% of the total climate impact from EU aviation.
- Non-CO2 Emissions Omission: The scheme does not yet incorporate pricing for the sector’s substantial non-CO2 emissions, leaving a significant portion of aviation’s climate impact unaddressed.
- Policy Advancements: From 2026, flights within Europe will need to account for all CO2 emissions, a step forward in expanding the scheme’s reach. Additionally, discussions are underway to begin monitoring non-CO2 effects, a critical step in aligning the EU ETS with scientific evidence of aviation’s broader climate impacts.
CORSIA: A Global Framework, But Is It Enough?
CORSIA, the ICAO-led carbon offsetting initiative, was designed as an international mechanism to manage aviation emissions. While it has global coverage, it has several critical flaws:
- High Baseline: CORSIA only requires airlines to offset CO2 emissions that exceed 2019 levels, essentially exempting a significant portion of emissions from accountability.
- Reliance on Carbon Credits: Many of the offsets used in CORSIA rely on carbon credits, which are often criticized for lacking reliability and transparency. Without stringent verification, these credits risk undermining the mechanism’s effectiveness.
- Limited Ambition: Unlike the EU ETS, CORSIA does not include provisions to price non-CO2 emissions, which significantly diminishes its climate mitigation potential.
Key Differences: EU ETS vs. CORSIA
| Feature | EU ETS | CORSIA |
|---|---|---|
| Geographical Coverage | Intra-European flights | International flights |
| Carbon Pricing Approach | Cap-and-trade system | Offset-based system |
| Emissions Covered | CO2 (partial), non-CO2 (future potential) | CO2 (above 2019 levels) |
| Environmental Integrity | Robust monitoring and reporting | Variable carbon credit quality |
While the EU ETS offers a more rigorous approach to emissions pricing and reporting, its current scope limitations make it insufficient to tackle aviation’s total climate impact. CORSIA, meanwhile, provides international reach but suffers from weak enforcement and a lack of ambition.
Recommendations for Closing the Gap
The Ricardo study commissioned by Carbon Market Watch offers valuable insights into enhancing both mechanisms. Here’s how policymakers can bridge the gaps:
- Expand EU ETS Scope to International Flights
The exclusion of international flights from the EU ETS creates a significant regulatory gap, given that 61% of the EU’s aviation emissions stem from these journeys. Expanding the system to cover these emissions would address the lion’s share of the sector’s climate impact. - Incorporate Non-CO2 Emissions
Both EU ETS and CORSIA must evolve to price the full climate impact of aviation. Incorporating non-CO2 effects into the EU ETS would better reflect the sector’s environmental footprint and incentivize airlines to adopt cleaner technologies and fuels. - Enhance the Integrity of Carbon Credits
For CORSIA to remain a credible tool, stricter standards for carbon credits must be enforced. Credits should come from verified projects with demonstrable climate benefits, ensuring that offsetting truly compensates for aviation emissions. - Global Coordination for Consistency
To avoid market distortion, a harmonized approach between EU ETS and CORSIA is essential. Coordination can help align objectives, streamline compliance, and create a level playing field for airlines globally. - Promote Sustainable Aviation Fuels (SAFs)
Both mechanisms must integrate stronger incentives for the adoption of sustainable aviation fuels (SAFs), which have the potential to significantly reduce emissions compared to traditional jet fuels.
The Road Ahead
As the aviation sector charts its path toward achieving carbon neutrality by 2050 under its Long-Term Aspirational Goal (LTAG), robust policies and proactive industry actions will be paramount. The EU ETS and CORSIA each offer unique strengths, but neither is sufficient on its own to tackle aviation’s complex climate challenge. By addressing the gaps in scope, ambition, and enforcement, these mechanisms can complement each other to drive meaningful progress.
Conclusion
The turbulence of the climate crisis demands immediate, coordinated action from policymakers, industry leaders, and regulatory bodies. While the EU ETS sets a strong regional precedent, CORSIA’s global reach underscores the importance of international collaboration. Together, they represent critical tools in aviation’s decarbonization toolkit, but their effectiveness hinges on strategic improvements and sustained commitment.
By embracing innovation, tightening policies, and scaling up the adoption of green technologies, the aviation industry can transform itself from a significant polluter to a pioneer of sustainable progress. The journey may be challenging, but it is one that the sector—and the planet—cannot afford to delay.