The European Commission has recently introduced major updates to its Emissions Trading System (EU ETS) for the aviation sector. These changes, announced on September 23, 2024, are part of the EU’s broader strategy to align with its climate neutrality targets by 2050, and they come into effect on January 1, 2025. For aircraft operators, the updates introduce new obligations for the monitoring, reporting, and verification (MRV) of both CO2 emissions and, for the first time, non-CO2 aviation effects.
Here’s an overview of the key regulatory updates and what aircraft operators need to prepare for.
1. The Inclusion of Non-CO2 Aviation Effects
One of the most significant updates is the introduction of non-CO2 aviation effects in emissions reporting. Studies have shown that these effects—such as contrails, NOx emissions, and water vapor—contribute significantly to global warming, with some estimates suggesting that their impact could be double that of CO2 alone.
Starting in 2025, aircraft operators will be required to monitor and report these non-CO2 effects using the CO2 equivalent (CO2e) metric. This reporting will cover:
- Flights within the European Economic Area (EEA) and routes to the UK and Switzerland in 2025 and 2026.
- The reporting obligation expands in 2027 to cover all flights.
To calculate the non-CO2 effects, operators will use Global Warming Potential (GWP) metrics over time horizons of 20, 50, and 100 years, providing a detailed assessment of their climate impact. The Commission has introduced the Non-CO2 Aviation Effects Tracking System (NEATS), a tool designed to help aircraft operators automate and streamline the process of calculating these effects.
2. Enhanced Monitoring and Reporting Requirements
Alongside CO2 emissions, the updated regulation emphasizes the completeness and accuracy of reporting. Aircraft operators will now be required to:
- Submit a monitoring plan that includes both CO2 and non-CO2 effects, ensuring compliance with the latest EU ETS requirements.
- Ensure complete data monitoring across all emission sources and source streams. This data must be collected, analyzed, and stored in a manner that ensures transparency and ease of verification.
- Annual reports must now include a detailed account of non-CO2 effects, in addition to CO2 emissions.
For smaller operators (emitting less than 3,000 tonnes of CO2 annually), there are simplified reporting tools available, such as those provided by Eurocontrol. However, all operators must ensure their systems are up to date and able to capture the required data.
3. Focus on Sustainable and Zero-Rated Fuels
In line with the EU’s ambition to reduce its reliance on fossil fuels, the regulation provides clear guidance on the treatment of alternative aviation fuels. The use of Renewable Fuels of Non-Biological Origin (RFNBOs), Recycled Carbon Fuels (RCFs), and synthetic low-carbon fuels is encouraged through zero-rated emissions.
- Aircraft operators will need to monitor and report the use of alternative fuels, ensuring that sustainability criteria are met.
- Fuels that meet these criteria can be reported with zero-rated emissions, allowing operators to reduce their carbon footprint under the EU ETS.
- The sustainability of biofuels, RFNBOs, and synthetic low-carbon fuels must be demonstrated using purchase records or linked databases, such as the Union Database.
This shift will require aircraft operators to adopt a more granular approach to fuel management and reporting, as mixed fuels containing both fossil and renewable components will need to be broken down and reported accurately.
4. Preparing for 2025: What Aircraft Operators Should Do Now
With the new requirements set to take effect in January 2025, aircraft operators must begin preparing now to ensure compliance. Here are the critical steps operators should take:
- Review and update monitoring plans: Ensure that your current monitoring systems can capture both CO2 and non-CO2 effects and that your data collection processes meet the stringent accuracy requirements.
- Integrate new tools: Consider integrating NEATS or other third-party solutions into your operations to automate the monitoring and reporting process for non-CO2 aviation effects.
- Assess fuel use and sustainability criteria: Evaluate the sustainability of your fuel sources and ensure that you can meet the requirements for zero-rated emissions reporting.
- Stay informed: The regulatory landscape is rapidly evolving. Engage with industry experts to stay ahead of changes and ensure that your operations remain compliant.
How VURDHAAN Can Help
Navigating the complexities of the EU’s emissions reporting framework can be challenging. At VURDHAAN, we specialize in helping aviation operators develop compliant and cost-effective solutions to meet their sustainability goals. Our services include:
- Emissions Monitoring and Reporting: We can help you develop and implement a comprehensive monitoring plan that aligns with the latest EU ETS requirements.
- Fuel and Sustainability Advisory: Our team provides expert advice on how to integrate alternative fuels into your operations and take advantage of zero-rated emissions under the EU ETS.
- Regulatory Compliance Support: We offer end-to-end support to ensure that your operations meet all regulatory obligations, from data collection and reporting to verification and certification.