European Union s Emissions Trading Scheme Wednesday, Oct 20, 2:00 3:00 Leo McStravick Gulfstream Aerospace Atlanta, GA October 20, 2010
Background History Implemented in 2005 in response to the Kyoto protocols to reduce carbon emissions in heavy industries (coal fired power plants, cement factories, steel mills, manufacturing, etc.) Decision to include aviation sector in 2008. Aims to incrementally reduce emissions from a baseline level of the average emissions in 2004-2006 Operators based outside the EU assigned to administering EU states on the basis of most frequent destination. Operators should have submitted emissions monitoring plan and ton/kilometer plan (voluntary) by end of 2009 one time cost to operators assigned to the UK for submission of plans are $1185 for emissions and $1295 for ton/kilometer 2
EU Member States NOTE: although not members of the EU, Norway, Iceland and Liechtenstein are participants in the ETS also included are Caribbean and other islands that are considered part of EU countries
Aviation Emissions Categories Small emitters = less than 10,000 metric tons of CO 2 per year or less than 243 flights to / from or within EU in 3 consecutive 4 month period 10,000 metric tons of CO 2 = 6,984,127 lbs of JetA burned Commercial (Part 135 operators) who are small emitters are exempt from participating in the EU ETS Private (Part 91 operators) are required to participate
Reporting Emissions and Ton/kilometer data Reports are due by 31 March of 2011 for the year 2010 CO 2 reports may use the small emitters tool to estimate emissions this is an Excel file available online that will provide data based on trip length use the following link to download the tool: http://www.eurocontrol.int/environment/public/standard_page/sm all_emitters.html Ton/kilometer data submission is voluntary, but must be reported if the operator wishes to receive free emissions allowances NOTE: ton/kilometer data for the year 2010 will form the basis for all free allowances distributed in the years 2012-2020
Using the Small Emitters Tool ICAO Designators NOTE: a list of ICAO aircraft designators can be found at http://www.icao.int/anb/ais/8643/index.cfm G550/G500/G-V G450/G350/G400/G300 G-IV G-III G-II G250 G200 G150 G100 GLF5 GLF4 GLF3 GLF2 G250 GALX G150 ASTR
Small Emitters Tool Accurate? 25,293 lbs 79,675 lbs For this trip from KSAV to EGGW, the Universal flight plan and actual fuel burn was 20,985 lbs, resulting in 66,103 lbs CO 2 emitted difference of 13,572 lbs or 6.17 metric tons of CO2 from Small Emitter s Tool estimated fuel burn is 20% more than actual
Small Emitters Tool Accurate? Operators should compare the fuel consumption predicted by the Small Emitter s Tool with actual fuel burn on flights to/from and within the EU. If a significant difference is evident, then Keep accurate records for each EU flight with the flight crew noting actual fuel burn in the trip log Notify EUROCONTROL of the inaccuracy so that the tool may be refined send data to: ets.info@eurocontrol.int
Verification of Reports CO 2 and ton/kilometer reports are required to be verified by an independent third party auditor prior to submission to the operator s assigned authority, and auditors must approved by the authority s Environmental Agency as authorized to audit aviation emissions Operators have begun to receive solicitations for this service prices quoted may vary, but generally will fall in the range of $1500 for both reports Recent developments have revealed that independent verification of each individual operator may not be required the latest news regarding the EUROCONTROL ETS Support Facility indicates that the verification may be performed by a single auditor for all small emitters the process would only involve comparing each operator s annual report with the data provided by EUROCONTROL operators would have the option to identify errors and provide corrections to the data if supported by substantiation
ETS Support Facility The Support Facility would be a function of EUROCONTROL that would use flight plan data to compile a report of CO 2 emissions for each operator (cost to operator not specified) Emissions could be calculated and reported to operators in much the same way that Air Navigation fees are billed The emissions report could be submitted to both the operator and a third party for verification if the data is confirmed as accurate (or corrected with substantiated figures) then the report would be submitted to the operator s administering state Note that EUROCONTROL data could not be used for ton/kilometer reports since payloads are not part of a flight plan
Emissions Allowances and Trading NOTE: 1 EU Allowance (EUA) = 1 metric ton of CO 2 Reports submitted for the years 2010 and 2011 will not result in a requirement to surrender emissions allowances Trading of emissions allowances will begin in the year 2012 Allocable emissions for 2012 will be 95% of the total average emissions of the years 2004 through 2006 with allocable emissions distributed to member EU states Member states will then award free allowances to operators based upon ton/kilometer data (efficiency most payload carried per amount of fuel burned)
Emissions Allowances and Trading Business aviation operators will receive their allocation of allowances by 31 December 2011 for the year 2012, but can expect few free allowances due to low payloads per trip Operators will have to purchase emission allowances (EUAs) on the European Carbon Market in order to meet the yearly requirements due on 30 April of the year following the trading year. The cost of EUAs varies with market demand current prices are approximately 15 per CO 2 metric ton for December delivery however Swiss bank UBS predicts EUAs prices to rise to 40 per CO 2 metric ton by 2013 due to economic recovery
Cost to Operators - Example
Cost to Operators - Example Example: 1 round trip from a Savannah, GA to London Stansted in a Gulfstream G450 with a payload of 1200 lbs cruising at M.80 average fuel burn per trip leg = 21,000 lbs 21,000 X 3.15 (carbon factor for JetA) = 66,150 lbs CO 2 emitted per leg 2 X 66,150 = 132,300 lbs CO 2 = 60 metric tons of CO 2 for the round trip 60 X 15 = 900 or approximately $1,233 ( 1 = $ 1.37)
Typical Total Cost to Operators through 2010 NOTE: figures are approximations using current exchange rates and apply to operators administered by the U.K. fees may vary by EU nation Emissions report (one time fee) $1185 Ton/kilometer report (one time fee) 1295 Annual fee (for 2010)* 1343 Verification of reports (if required) 1500 CO 2 allowances for 5 European trips 6165 TOTAL $11,488 *the fee for 2011 will be $4029 the UK Aviation Greenhouse Gas Emissions Trading Scheme Regulations for 2010 became effective on 31 August 2010, thus the days remaining in 2010 from the effective date are 122 (⅓ of a year), consequently only ⅓ of the annual fee will be charged for 2010. Also proposed additional fees for 2011-2012 include a $448 registry account fee and a $48 digital certificate fee. NOTE: does not include administrative costs associated with recording and storing data, and completing reports
Summary Uncertainties remain about the details of implementing the EU ETS Patience will be required in the short term until details are finalized In the interim, operators should keep complete and accurate records of all flight information for trips to/from and within the European Union and ETS affiliated countries Identify and store records of any errors in fuel consumption data inherent in the Small Emitter s Tool applicable for your particular aircraft