Panagiotis Karamanos

1
Climate Change and the European Unions
Emission Trading Scheme The Challenge for
Indian Airlines

• Panagiotis Karamanos Michael OConnor
• Environmental Experts, in EU-India Collaboration
• Institutional Capacity Building for the Civil
  Aviation Sector in India,
• from Athens International Airport
• June 24, 2011
• This document represents the views of the above
  authors only

2
Discussion

1. European Unions approach to climate change
2. Aviation and the Emission Trading Scheme
3. Responsibilities of Indian airlines

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European Unions response

• Ratification of Kyoto Protocol by all EU Member
  States in 2002
• EU target 8 reduction distributed amongst its
  Member States (e.g. Germany -21, UK -12.5,
  Greece 25)
• Generally aggressive position on climate change
  compared to other developed nations as shown by
  2020 targets
• Reduce GHG emissions by at least 20 vs. 1990
• Increase share of renewable energy to 20
• Increase energy efficiency by 20
• Comprehensive policy and instruments to back up
  2020 targets including the worlds largest
  Emission Trading Scheme (ETS) for GHGs

4
EU Emission Trading Scheme

• Established through Directive 2003/87/EC
• Covers 10,000 installations (gt20MW) 50 of EUs
  CO2
• Member States set National Emission Caps and
  allocate allowances for free and increasingly by
  auction
• Participants exceeding their allowed emission
  quota may purchase allowances from other, cleaner
  participants, purchase approved emission
  reduction credits through Clean Development
  Mechanisms or Joint Implementation projects, or
  pay a fine
• 1st Trading Period 2005-2007 completed
• 2nd Trading Period 2008-2012 in progress
• Annual monitoring, verification reporting of
  emissions

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Multiple contributors stakeholders

• Airport operators 5 of the 2 share (i.e.
  0.1 of the
• emissions) is attributable to airports
• Greater airport community (handling, cargo,
  retail, etc.)
• Passengers (business, tourism)
• International Civil Aviation Authority (ICAO) and
  local Civil Aviation Authorities
• Airlines
• Aircraft manufacturers
• Engine manufacturers

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What are airports doing about climate
change? Airport Carbon Accreditation
ACI EUROPE and its members commit to reduce
carbon emissions from airport operations fully
within their own control with the ultimate target
to become carbon neutral.
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Levels of accreditation participants
Level 1 Mapping Ankara, Antalya, Bologna, Budapest, Chisinau, Cork, Dublin, Dubrovnik, Farnborough, Istanbul, Izmir, Portuguese Airports, Prague, Shannon, Toulouse-Blagnac Airport
Level 2 Reduction Athens International Airport, Brussels, Charles de Gaulle, Frankfurt, Hamburg, Kristiansand, Manchester, Orly
Level 3 Optimisation Amsterdam, Heathrow, Gothenburg, Munich, Zurich
Level 3 Neutrality Göteborg Landvetter, Linate, Malpensa, Oslo, Stockholm, Trondheim, Umea
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Athens International Airport

• Accredited at Level 1 (Mapping) in 2009
• Upgraded to Level 2 (Reduction) in 2010
• Emission reduction target
• 25 reduction in CO2 emissions (Scope 1 and 2)
• by 2020 using 2005 as a baseline year
• Climate Change Corporate Action Plan since 2008
• Conversion of vehicles to LPG / purchase of
  hybrid vehicles
• Investment in energy-saving technology (hardware
  software)
• 50 recycling rate target for 2012 / use of
  recycled materials
• Vravrona wetlands protection programme
• 8MW photovoltaic park under construction

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Multiple contributors stakeholders

• Airport operators 5 of the 2 share (i.e.
  0.1 of the
• emissions) is attributable to airports
• Greater airport community (handling, cargo,
  retail, etc.)
• Passengers (business, tourism)
• International Civil Aviation Authority (ICAO) and
  local Civil Aviation Authorities
• Airlines
• Aircraft manufacturers
• Engine manufacturers

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What about aircraft emissions?

• In 2009 the States belonging to the International
  Civil Aviation Organisation (ICAO) agreed to the
  following
• a global goal of 2 annual improvement up to 2050
• further explore more ambitious emission
  reductions including carbon-neutral growth
• development of a global CO2 standard for aircraft
• development of a framework for market-based
  measures, such as emissions trading, in
  international aviation
• further financial and technical assistance to
  States
• submission of States action plans which outline
  their policies and actions as well as annual
  reporting of aviation fuel consumption.

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What about airlines?

• IATAs (International Air Transport Association)
  4-pillar strategy calls for improvements in
• Technology (airframe design and materials, engine
  efficiency, alternative fuels, etc.)
• Operational Efficiency (aircraft and ground
  operations)
• Infrastructure (Air Traffic Management, airport
  capacity)
• Economic Instruments (emissions trading,
  emissions charges)
• Challenge to be environmentally effective and
  economically feasible

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Inclusion of aviation in EU ETS

• EU is implementing the first ETS to address
  aviation
• Aviation included in EU ETS through Directive
  2008/101/EC
• All (European and foreign carrier) flights
  landing at or taking off from airports in EU
  Member States
• De minimis airlines with less than 1 round-trip
  flight to / from the EU per day are exempt as
  well as some types of flights (training,
  military, research, etc.)
• Inclusion starts in 2012 and continues through
  next period 2013-2020

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Inclusion of aviation in EU ETS

• Benchmark set at average of 2004-2006 emissions
  in order to account for considerable growth in
  aviation since 1990
• Emissions cap 97 of benchmark in 2012
  decreasing to 95 in 2013
• Allowances allocation (2012) 85 free/15
  auctioned
• Allocation is determined by an airlines share of
  tonne-kilometers 2 years earlier, e.g. 2010 share
  for 2012
• Participants exceeding their allowed emission
  quota may
• purchase allowances from other participants
  (airlines and thermal installations)
• purchase approved emission reduction credits
• or pay a fine

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Indian carriers EU Administering Member State
UK Air India, Jet Airways India
France Go Airlines, Indigo, Jet Lite India Ltd
Cyprus Kingfisher Airlines
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Requirements for Indian airlines

• For those Indian airlines flying into / out of
  European airports meeting the criteria for
  inclusion in the EU ETS must have already
• submitted an annual emissions and
  tonne-kilometer monitoring plan in August 2009
  for approval by the relevant EU Member State
• started monitoring emissions and tonne-kilometer
  data since January 2010
• submitted externally verified emissions and
  tonne-kilometer data for 2010 by March 2011 (and
  every March thereafter)
• receive free allowances based on benchmark
  calculation in February 2012

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2012 and beyond
Source VerifAvia
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A simplified example of how the EU ETS works
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How are 2012 allowances allocated?
Average 2004-2006 emissions 200,000 tonnes 2012
Cap 194.000 Free allowances 165.000 Auctioned
allowances 29.000
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How will the 165,000 free allowances be allocated
between airlines?
2010 Tonne-Kilometers S (Payload x
Distance) Calculate Tonne-Kilometers of Air
Greece 500,000 TK (50 ) Calculate
Tonne-Kilometers of CleanAir 300,000 TK (30 )
Calculate Tonne-Kilometers of PropellAir
200,000 TK (20 ) TOTAL Tonne-Kilometers 1,000
,000 TK 2012 Free Allowances 165,000 Air
Greece 82,500 CleanAir 49,500 PropellAir
33,000
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How much did my airline emit in 2012?
Emissions Mass of Fuel Consumed x 3.15 tonnes CO2 per tonne Fuel
Airline Fuel Consumption (tonnes CO2) Emissions
Air Greece 26,190 82,500
CleanAir 12,000 37,800
PropellAir 15,000 47,250
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Does my airline have enough allowances for 2012?
Airline Emissions Allowances Status
Air Greece 82,500 82,500 OK
CleanAir 37,800 49,500 Sell
PropellAir 47,250 33,000 Buy/Invest
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Concluding Remarks

• Inclusion of aviation in EU ETS is a reality
• Rules are relatively clear
• EU ETS is somewhat flexible
• Several Indian airlines are required to
  participate
• Actual impact to be evaluated in 2013 and beyond