The European Union can generate 10 times more revenue for climate action by holding aviation industry to account in Emissions Trading System revision
In 2026 the European Commission is set to revise its flagship climate policy, the Emissions Trading System (EU ETS). As it stands, barely 15% of the aviation industry’s climate impact will be priced by the EU’s carbon market in 2026.
However, successive public surveys show that there is strong demand from EU citizens for bolstered climate action, and for airlines to start paying their fair share.
A new study by independent environmental consultancy Carbone 4, commissioned by Carbon Market Watch, simulates four potential strategies for how the EU might revise its carbon market rules in 2026 to foster further emission reductions and raise funds to enhance the bloc’s climate policies covering the aviation sector and beyond.
The untapped revenue of aviation pollution
By confronting the aviation industry’s full climate impact, our research shows that by applying the polluter-pays principle and expanding carbon pricing to non-covered aviation climate impacts, there could be a tenfold increase in EU ETS revenues between 2025 and 2040 from the aviation sector.
Since 2012, only flights departing from or arriving at airports within the European Economic Area are subject to today’s lax emissions charges. The report reveals that expanding the policy to price the pollution of all departing flights would at least double revenue generated, and as much as four times more should the EU reverse its controversial ‘Stop the clock’ decision.
Furthermore, if non-CO2 aviation emissions – such as contrails or nitrous oxide, which can have a climate-warming effect three times higher than CO2 – were taken into consideration, this would boost revenue further.
Similarly, 67% of the emissions from private jets escape the attention of the EU ETS. Removing existing exemptions would unlock significant funding for decarbonisation from this indulgent form of travel.
“It is scandalous that the aviation industry has skirted paying for its climate impacts for so long,” says Bastien Bonnet-Cantalloube, CMW’s policy expert on the decarbonisation of aviation. “The upcoming EU ETS review can set aviation on a decarbonisation flightpath and generate greater revenue to fund the bloc’s climate policies.”
Air fair
Revenue raised can be returned to source by supporting industry efforts to adopt cleaner fuels, especially by making e-kerosene projects more viable. Proceeds can also be channelled to upgrade the EU’s railway infrastructure thus providing a more affordable and cleaner form of transport than can substitute short-haul flights.
Crucially, achieving a boost in revenues can help bridge the shortfall in funding for the EU to pay its fair share of the global climate target, which requires a mobilisation of $1.3 trillion by 2035. This should include supporting aviation workers affected by the transition in least developed countries.
The time is now for the EU to uphold its climate values and principles. It all starts with charging aviation polluters fairly.
