Publications
June 2025
Policy guide to the EU ETS for aviation
The law, economics and policy of exempting international aviation from paying for its climate impact
Background
The aviation industry has long enjoyed a privileged regulatory regime that has not held it accountable for its climate damages. A large part of this is the exemption of flights between EU and non-EU airports, from the emissions trading system (ETS). Next year, the EU Commission has the opportunity to end this exemption, a move that would accelerate the energy transition, boost industrial competitiveness, and reaffirm its role as global climate leader. For the reasons given in the report, it cannot let that opportunity pass it by.
What is the EU emissions trading system?
The ETS is a ‘cap and trade’ system, meaning that there is an EU-wide limit on the total amount of emissions from activities within the scope of the system.
Within that cap, emission ‘allowances’ are auctioned off or allocated to companies and can be traded between companies, rewarding those quick to cut emissions and making polluters pay. At the end of each year, companies must surrender allowances equivalent to their actual emissions for the previous year, and are penalised for any extra emissions over that year’s cap. The system reduces the number of allowances year by year so that by 2045 the allowances reduce to zero, driving real emissions reductions.
Why aren’t international flight emissions included in the ETS?
In 2012, when the ETS was set to extend to international flight emissions, the EU Commission caved to US and aviation industry pressure, passing the ‘stop the clock’ mechanism. This derogation of the ETS Directive was a temporary exemption of flights arriving at or departing from the European Economic Area (EEA) from the ETS, in order to allow the UN body regulating international aviation, the International Civil Aviation Organization (ICAO), time to develop a global system to reduce emissions.
Since then, aviation emissions have increased substantially, with environmental and fiscal repercussions. Our analysis shows that:
Had these flights been included, an extra 1.1bn tonnes of CO2 would have been regulated between 2012 and 2023.
This figure is equivalent to the total emissions of Greece over the same period.
This regulatory gap represents the loss of approximately €26bn in revenue that could have been used for climate action.
See for yourself the cost to European climate action of giving aviation a free pass with our interactive EU aviation climate cost calculator.
Why we’re calling on the EU to include international aviation emissions in the ETS
Next year, the EU Commission will have the opportunity to bring international aviation back into the EU ETS. Opportunity Green and Carbon Market Watch have written to EU President Ursula von der Leyen and Commissioners calling for emissions from international flights departing Europe to be regulated under the EU emissions trading system (ETS), despite anticipated US pressure.
The letter is launched alongside a new comprehensive policy guide to the issue and a digital ETS revenue calculator tool showing how much the ETS exemption has cost climate action.
Aoife O’Leary, CEO at Opportunity Green, says:
“Aviation has enjoyed free passes on climate for far too long and it’s time for the EU to put a price on its pollution by including it in the Emissions Trading System. The EU earned its reputation as a climate leader by pioneering the ETS as a global first 20 years ago – now it must prove it still merits that title by making international aviation pay for its emissions. Caving to industry and US lobbying by exempting international aviation from the ETS in 2012 left billions of tonnes of carbon emissions unregulated, and billions of euros uncollected that could have gone to climate action at home and abroad.”
Read the Policy guide to the EU ETS for aviation
The guide offers a complete overview of the EU ETS for aviation, where it fails to regulate the sector and how policymakers can make it fit for purpose. It includes:
A comprehensive look at aviation’s privileged regulatory regime
The cost for climate action, and what’s at stake
The wider economic landscape – including international objections.
The conclusion is clear: the time has come to put international flights in the EU ETS.
Download the full report here: