The EU Emissions Trading System (ETS), which requires polluters to pay for their emissions, was a world first, yet international aviation emissions are still exempt from ETS pricing despite their huge climate damage. The EU must now bring international aviation back under regulation, stand up for its values and reaffirm its role as a global climate action leader, write Aoife O’Leary of Opportunity Green and Bastien Bonnet-Cantalloube of Carbon Market Watch.
It’s hard to avoid headlines bemoaning the Trump administration’s aggressive tariff campaign as an assault on free trade. But not so long ago it was the EU that was the object of such criticism from the US, and for much less disruption in aid of a much more sensible cause: expanding the ETS to price international aviation emissions. Next year’s opportunity to bring international aviation into the ETS comes at a time when even stronger US opposition is to be expected – that’s why we wrote to European Commission President Ursula von der Leyen to say the EU cannot let itself be bullied into submission on this issue for a second time running.
Aviation is responsible for about 4% of climate impact worldwide every year. The sector’s environmental damage is often understated thanks to the focus on CO2 emissions that are relatively easy to measure, at least compared to non-CO2 emissions, which mostly stem from aircraft contrails. At a high altitude the soot particles in these exhaust fumes trap heat, having a global warming effect. The scientific consensus is that non-CO2 effects are as great, or even twice as great, as those from CO2 alone. The upshot is that we’ve been treating aviation as half or even a third as polluting as it actually is.
Turning a blind eye to flights departing the European Economic Area (EEA) ignores 61% of European aviation’s total emissions. Between 2012-2023, a quantity of emissions equivalent to all those of Greece in the same period went unregulated (see graph below). The free pass the EU gave aviation is a stain on its otherwise strong climate record. But why did it let this high-polluting sector off the hook in the first place?
A brief history of the ETS
When the EU was on the cusp of bringing international aviation into the ETS in 2011, it came under a prolonged spree of attacks levelled by the US government and aviation industry. US Senator John Mica of Florida referred to the inclusion of international aviation emissions in the ETS as a “unilaterally imposed and unlawful tax scheme”, warning of a trade war. Then-Secretary of State Hillary Clinton and Transport Secretary Ray LaHood urged the European Commission against the move. That this letter was sent just days before the European Court of Justice’s verdict on a case brought by US airlines against the expansion is hardly a coincidence. When the Court ruled against the airlines, to say the ETS was perfectly legal under international law, the US government denounced the decision.
But this clear court victory was not enough for the EU to stick to its guns. It eventually backed down in 2012, waiving international aviation from the ETS with a temporary exemption that has continually been extended to this day. Nevertheless, US Senator John Thune introduced the EU ETS Prohibition Act, which gives the US Secretary of Transportation the authority to prohibit a US airline from participating in the EU ETS.
The exemption was to allow the International Civil Aviation Organisation (ICAO) to agree international regulations. ICAO, the UN agency responsible for international aviation, has a remarkable record on safety (aviation is the safest form of transport), but sadly, less so on climate.
In the 13 years since the EU suspended the ETS extension, emissions from international aviation have not reduced. While emissions did drop during the peak COVID-19 years, emissions are now back to pre-pandemic levels and are projected to keep increasing. Carbon Action Tracker estimates that current aviation policy is on track for 4°C of warming or more, leaving a lot of room for further regulation to reduce emissions.
ICAO’s flagship emissions reduction policy does not inspire confidence. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) puts no cap on aviation emissions and only requires emissions over a certain threshold (85% of 2019 levels) to be offset from 2027. Offsetting regimes are known to be an inadequate way of reducing emissions, and the high threshold means that no airline has yet been required to buy even one offset. So, 13 years after the EU temporarily paused its effective climate measure in favour of one that is inherently less effective, that less effective regulation has achieved nothing.
It’s now time for the EU to lead again
With a fresh opportunity to price aviation’s pollution on the horizon, the EU must not let history repeat itself and stand true to its principled commitment to climate action in spite of inevitable, and likely intensive, US pressure – Senator Thune, architect of the anti-ETS bill, is today the majority leader in the Senate.
Refusing to cave under this pressure and extending the EU ETS to all flights, including transatlantic routes, would send the very clear signal that Europe is still a climate leader and willing to stand up for its values.
These include not just the principles of climate action but also social equity. ETS opponents may claim the free trade argument but their economics only goes so far. Even if airlines are not paying for their pollution, someone else is. That could be a family displaced by the floods in Spain or a wildfire in Greece. But even more problematically, it’s more likely to be climate vulnerable countries that are in danger of entirely being subsumed by sea-level rise but have contributed little to the emissions that have caused this crisis.
An interesting quirk of the ICAO rulebook is that there is only one meeting which all ICAO member states are allowed to attend: the ICAO Assembly. And, it only takes place every three years. This leaves a big question around whether any policy agreed at ICAO negotiations could really have been designed with the input of those who are most climate vulnerable. The most climate vulnerable countries are often the least developed. They will be the ones with the smallest capacity to participate at ICAO negotiations.
This leads to an important benefit of adding international aviation to the ETS: the money that the sale of emissions allowances could generate. The exemption of international flights from the ETS cost EU member states €26 billion in the 12 years from 2012-2023 alone. Revenue from the ETS is currently used for climate purposes by the EU country in which the allowance is sold. While this is perfectly reasonable from the perspective of a powerplant, another approach is required for international aviation.
We must ensure that the climate damage caused by aviation does not fall on the 80% of people globally who have never set foot in an airplane. Rather, revenue from the aviation portion of the ETS should go to climate finance for the most climate vulnerable globally. With states agreeing to find $1.3 trillion in climate finance by 2035, the EU needs to set out a plan on how it will contribute its portion of that, and international aviation ETS allowance sales seems like a good start.
The time has come to put international aviation emissions in the ETS. The EU must leave concerns about the US’s reaction out of the picture and hold true to its values. Ensuring that the polluter pays is sensible and modest. If planes fly from EU countries, it’s time for them to comply with EU law, including the EU ETS.
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Aoife O’Leary is a lawyer and economist with deep environmental expertise, and a strong background in decarbonising shipping and aviation. Aoife founded Opportunity Green to realise her vision of working closely with governments, other NGOs and industry to close the gaps in global climate action. Aoife is also Director of the SASHA Coalition, which unifies clean aviation and shipping companies to advocate for policy that supports green hydrogen climate solutions.
This article was first published by GreenAir on 8 July 2025.
