All things not being equal: Aviation in the EU ETS

Abstract

The EU ETS lays down distinctions between the aviation sector and other covered sectors with regard to the determination of the emission cap and the manner in which allowances are allocated to operators in different sectors. The choices made by the legislature could infringe upon the principle of equality. I rely upon the criteria set out by the Court of Justice of the European Union to assess whether the principle is respected under the EU ETS. The decision to use different base years for the aviation sector in the calculation of the emission cap can be justified by the undue burden that would be placed on the sector if the base year were set to 1990, in view of its rapid growth over the past two decades. The use of a different allocation method for aviation is not so easily explained. Whether the principle of equality is respected as between different sectors and within the aviation sector will depend on the material effect that the EU ETS will have. In turn, this depends on the development of the price of EUAs. The treatment of aviation under the EU ETS in phase three could give rise to a challenge in a national court once the effects of it become clear.