This article appears in Issue 6: the Summer 2012 edition of the Aircraft IT Operations eJournal. For your own free subscription to the eJournal – click on ‘SUBSCRIBE FOR FREE’ for full details.

The EU Emission Trading Scheme is soon to enter its second trading period (2013–2020) but, says Guido Harling, lead auditor of ETSverification GmbH, for airlines, the work starts now.

Introduction 

The European Union’s (EU) emissions trading scheme (ETS) was launched for aviation in 2010. The directives will, for the first time, compel airlines to commence trading certificates in 2013 in respect of the ‘completed’ emission year, i.e. the first certificates will refer to 2012 emissions.

Right now, the first trading period which spans the years 2010, 2011 and 2012 (even though real trading starts in 2013) is almost over. Soon we will be entering the second trading period that spans the period from 2013 until 2020 and this article sets out to shed some light on the changes for this period and the ramifications of trading; plus, of course, the IT tools and techniques you can employ to mitigate the impact.

Aviation trading period and ETS phase

As airlines and aircraft operators, we speak about the first and the second trading periods for aviation. However, the overall ETS (which includes both stationary emitters and aviation) refers to that period (2013–2020) as ETS phase III.

What’s new in aviation ETS stage 2 – the topics:

New Monitoring Plans for 2013–2020

Since all aviation ETS monitoring plans are only approved and valid until December 31st 2012, aircraft operators (AO) will be required to submit new monitoring plans for the next trading period (2013–2020). For this trading period new monitoring and reporting requirements have been established by the European Commission (EC), as laid down in the Monitoring and Reporting Regulations (MRR). For the aviation sector the changes, as compared to the monitoring thus far, are fairly limited. Nevertheless, all annual emissions monitoring plans (AE MPs) need to be revised and adapted to the new requirements before January 1st 2013.

The monitoring plans for tonne-kilometre (TK) data do not need a revision, as the related monitoring requirements remain unchanged.

Access to the European Union Registry and the Aircraft Operator Holding Account (AOHA)

The European Union Registry for aircraft operators is now available. The Union Registry is the mechanism by which EU ETS allowances will be held, traded and surrendered for compliance purposes. Aircraft operators who undertake flights from 2012 onwards will be required to open an AOHA in the Union Registry in order to surrender certificates by April 30th 2013.

In June 2012, the operator account/registry structure underwent fundamental changes. All tasks that have, until now, been the responsibility of national registries have been taken over by a central EU-wide registry that has been developed by the European Commission and will be run by the Commission. The accounts, however, will continue to be administered by the individual member states. Therefore getting access to the free emission certificates requires a two-step process (EU registry access and local member state account access)

New states (Switzerland and Croatia) joining the EU ETS

The Swiss Federal Office for Civil Aviation (FOCA) and the EU are currently conducting negotiations on the possible linking of their local ETS to the EU ETS. If an agreement is reached, the linking will take place in 2014. The acquisition of TK data to establish a benchmark for the allocation of free certificates will start on January 2013 provided that the negotiations with the EU on the ETS can be concluded. If not, the Federal Council will postpone the collection of TK data.

Similarly Croatia will be part of the EU ETS by 1 January 2014, due to the country’s planned accession to the EU on 1 July 2013. The scope of the aviation part of the EU ETS will therefore in the future cover some additional flights: the domestic flights within Croatia, as well as those between Croatia and non-EEA countries. Therefore, aircraft operators performing domestic flights within Croatia and flights between Croatia and non-EEA countries have the possibility to monitor the tonne-kilometre data for the additional flights in 2012 and to apply for additional free allowances by 31 March 2013.

EUROCONTROL’s ETS Support Facility (SF) is open for Aircraft Operators

The ETS SF is a support function established and operated by EUROCONTROL to provide aircraft operators with information about the airfields they have flown to or from in the area of applicability of the EU ETS. This will help aircraft operators with data collection and support the creation of their emissions monitoring and reporting obligations. The ETS SF can also be used by third parties, such as verifiers and service companies that aircraft operators have authorised to receive their data.

What airlines will need to have done in preparation to demonstrate that they are ready for stage 2 by end of September 2012

In this section we deliberately speak about end of September because this is the first deadline that is approaching. Keeping this in mind – this section can be summarized very briefly almost in telegraphic style.

• Be ready for the new monitoring plans The template will be published by end of July and the various tools (the FMS for Germany and ETSSWAP for the UK) will be available for data input at month end. As stated before the new plans will have to be returned to the competent authority (CA) by September 30th 2012.
• Open your registry account (Every aircraft operator impacted by EU ETS will need to have an account). The registry account is needed to receive free emission certificates (if the AO had submitted a TKm report and received an allocation notice). Also AO’s need the account to buy the missing emission certificates for covering or offsetting the actual emissions produced in 2012. Start now (if you haven’t already) since the process is tedious because it will require an account with your local member state first and secondly an access to the EU registry. Find an overview of the EU registry page here: http://ec.europa.eu/clima/policies/ets/registries/index_en.htm
• Submit your monitoring plans to Croatia and possibly to Switzerland For both countries AO’s with flights in and out of these countries can apply for an allocation of free emission certificates by submitting a TKm report. The prerequisite for both, the TKm report and the AE report to be verified, is that the AO has an approved monitoring plan.
• Request access to the Eurocontrol ETS SF The access to the data from Eurocontrol will ease the AO’s effort for the annual creation of the emissions report. Even though Eurocontrol is a non-profit organization the access is not for free. Nonetheless for operators we estimate that having more than 1000 ETS relevant flights per year will justify the charge and present a benefit in savings for report creation. Find the link below: http://www.eurocontrol.int/articles/ets-support-facility

How this will impact your IT requirements and which solutions are beneficial to give you a head start

There are two key messages which we have to get across here:

First: utilize smart IT

Aircraft operators should utilize smart IT solutions and taking third party advice on what to do will give aircraft operators a head start. Here is why: the ETS directives are becoming increasingly data hungry and will put an administrative burden on all impacted aircraft operators. In fact all reporting for aviation ETS requires detailed information on the individual flight level data. Only dedicated IT systems that interface with your flight planning and OPS data can handle these tasks. Consider also that all ETS relevant data will have to be archived for 10 years and it becomes even more obvious. Despite the high quantity and quality of data required for ETS data reporting, and the associated problems with this, IT systems employed for ETS have in many cases helped airlines. This is because ETS has driven airlines to further reduce fuel usage, increasing fuel efficiency and thus lowering their operating costs. ETS will force a level of data recording that was not there in the past, triggering improved fuel efficiency at the same time as reducing emissions.

Add to that the new upcoming requirements of trading, where airlines are asked to keeping emission certificates in inventory, creating reliable forecasts and procuring of additional certificates. These requirements will stretch the capabilities of any home-grown system to its limits. The good news is that third smart party solutions can be found for these purposes.

Second: take expert advice

This leads to our second message – unless you have an entire department that takes care of your ETS issues it is probably good advice to seek the help of third party experts. Just as in the area of IT, the matrix of possible solutions or avenues you can select in order to comply with the ETS directives is huge; especially when it comes to optimal ways on how to procure certificates.