Emissions trading

The EU Emissions Trading Scheme

The Finnish Transport Safety Agency is the competent authority for the national implementation of the emissions trading scheme for aviation in Finland. The first emissions trading period commenced on 1 January 2012. The objective of the EU ETS is to reduce greenhouse gas emissions in a cost-effective manner. The scheme allows airlines to trade emission allowances and to decide on how and when they intend to reduce their emissions.

The EU ETS applies to all flights departing from and arriving at aerodromes within the EU, unless the flight is excluded from the scheme on special grounds.

Under the emissions trading scheme for aviation, one allowance is considered equivalent to one ton of carbon dioxide emission.

In 2012, the airlines will be allocated allowances equivalent to 97% of the average emissions of years 2004 - 2006. In the second emissions trading period starting 2013, the number of allowances will be cut to an annual level equivalent to 95% of the average emissions in the years 2004 through 2006.

Emission allowances are both granted free of charge and sold through auction

Three per cent of the allowances are allocated free of charge from a special reserve to new entrant aircraft operators and to aircraft operators with a rapidly expanding operation. Of the remaining allowances, 85% will be granted to aircraft operators free of charge based on a benchmark established by the EU. In the allocation of free allowances, the determinant factor is the number of tonne-kilometres flown by the aircraft. The remaining 15% of the allowances will be sold through auction.

The aircraft operators are required to surrender emission allowances equivalent to the emissions of the previous year by 30 April each year.

All operators covered by the EU ETS whose emissions exceed their emission allocation can purchase allowances from other aircraft operators or from stationary installation operators covered by the general emissions trading scheme. By purchasing allowances, the operator can meet the obligation to surrender a sufficient number of emission allowances. If the operator's allowance allocation exceeds the actual emissions, the operator can sell off the surplus allowances.

Role of the Finnish Energy Market Authority

In Finland, the Energy Market Authority is the competent authority for organising the auctions and for crediting auction revenue toward the state budget. The Energy Market Authority is responsible for recording the allowances every year on the aircraft operator's registry account. The authority will also cancel the surrendered allowances, emission reduction units (ERU) and the certified emissions reductions (CER), and transfer these to the write-off registry account of the state.