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Air France-KLM key messages
on the European Green Deal
26 March 2021
Introduction
Legislative initiatives
The European Commission (EC) has set out an objective of
EU climate neutrality by 2050, translating into
reducing
emissions from transport by 90% by 2050 compared to 1990, and an
EU intermediate target of emissions
reduction of 55% by 2030 compared to 1990. To meet those objectives, the EC announced and confirmed in its
December 2020 Sustainable and Smart Mobility Strategy the following
legislative initiatives:
-
ReFuelEU Aviation: a legislative proposal aiming to ramp up the production and deployment of sustainable
aviation fuels (SAFs).1 Timeline: EC proposal expected in
May or June 2021.
-
Revision of the EU ETS for aviation: a legislative proposal aiming to implement CORSIA2 into EU legislation
and to reduce free allowances for aviation.
Timeline: EC proposal expected in
June 2021.
-
Revision of the Energy Taxation Directive (
not specific to transport), in which existing fuel tax exemptions
will be reconsidered, including for aviation. EC proposal expected in
June 2021.
-
Carbon border adjustment mechanism (
not specific to transport) to prevent distortion of competition to
the detriment of EU companies due to climate policies being more stringent in the EU than in third
countries, thus causing carbon leakage (shift of emissions). EC proposal expected in
June 2021.
-
The existing regulation on the
EU Taxonomy for sustainable activities (
not specific to transport),
which is
meant to guide public and private investors, is to be amended to possibly include as “green” activities
certain investments by airlines, in particular related to
fleet renewal. Timeline: Delegated Act amending
the regulation to be issued by the EC in
early 2022.
Interrelatedness
The different initiatives are closely interrelated. Notably, ReFuelEU, the revision of the EU ETS and the revision of
Energy Taxation Directive all
have the potential to cause major cost increases for European carriers, with two main
potential consequences:
-
A reduced capacity to invest in SAFs and fleet renewal. This could be mitigated to a certain extent by
incentives schemes under RefuelEU or resulting from the EU Taxonomy.
1 The EC is also conducting a
review of the Renewable Energy Directive (not specific to transport), possibly leading to a
revision, to support the development of renewable energy sources. Timeline: EC proposal expected June 2021.
2
CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation): a global market-based measure agreed in 2016 by
ICAO countries to address emissions from international aviation and achieve carbon-neutral growth from 2020. To date, 80 countries
(including the U.S., China and Gulf countries), representing 77% of international emissions, are to participate in the voluntary first
phase of the agreement (2021-2026).
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-
Reduced competitiveness vis-à-vis third-country carriers resulting in traffic being captured by extra-EU
hubs, thus causing
carbon leakage3. This could be mitigated by a
carbon border adjustment mechanism (although the feasibility for aviation does not seem to have been assessed at this stage), or
other measures
included in the legislative initiatives (see “Key messages” below).
Industry commitments
As early as 2009, air transport, through IATA,
committed itself proactively to concrete climate objectives4: a yearly
improvement in fuel efficiency of 1.5% from 2009 to 2020, carbon-neutral growth from 2020, and reducing CO2
emissions by 50% by 2050 compared to 2005.
In November 2020, in the
Aviation Round Table Report on the Recovery of European Aviation5, European
associations representing the entire aviation sector, as well as environmental NGOs, called “for
all stakeholders and
all policy-makers to
work together to achieve net zero CO2 emissions from all flights within and departing from
the EU by 2050“, while “achieving significant emission reductions by 2030”, and to “consider the feasibility of
making 2019 the peak year for CO2 emissions from European aviation”.
In February 2021, European airlines, airports, manufacturers and ANSPs published the
Destination 2050 roadmap
6,
which shows
a possible pathway to net-zero emissions in 2050 for all flights within and departing from the EU,
with a yearly passenger traffic growth of 1.4%, based on four main pillars:
-
Aircraft and engine technology
-
Air Traffic Management and aircraft operations
-
Sustainable Aviation Fuels
-
Smart economic measures
The industry’s commitments under Destination 2050 are
subject to securing the required supporting policy and
financing framework at EU and national levels.
Key messages
Aircraft and engine technology
Research and development on new propulsion technologies such as electric and hydrogen must be
supported, while keeping in mind that they are not a solution for short-term decarbonisation.
Fleet renewal is currently airlines’ main lever to decarbonise and should therefore be supported. Electric
or hydrogen aircraft will not be available until the mid-2030s and for short flights only. Existing new-
generation aircraft burn 25% less fuel on average than those they replace, but are difficult to finance in the
current crisis.
Support could take the form of a “
green stimulus” subsidy scheme, and should at least be
allowed in the context of the
EU Taxonomy and the
EIB lending policy.
3 According to a recent study by AFEP, air transport is the 4th most exposed sector to carbon leak
age: https://afep.com/wp-
content/uploads/2021/01/Trade-and-Climate-Change-Quantitative-Assessment-of-the-Best-Policy-Tools.pdf
4
https://www.iata.org/en/programs/environment/climate-change/
5
https://a4e.eu/wp-content/uploads/aviation-round-table-report-16-11-2020.pdf
6
https://www.destination2050.eu/
2
Air Traffic Management and aircraft operations
The Single European Sky must be fully implemented, resulting in more direct flight routes and reducing
CO2 emissions in Europe by up to 10%, as indicated by the Commission in its amended
SES2+ proposal
published in September 2020.
Sustainable Aviation Fuels
Innovative incentive policies must be introduced to make sustainable aviation fuels economically viable.
In addition to fleet renewal, SAFs are the most promising option for decarbonising aviation in the
short/medium term as they emit up to 80% less CO2 than regular kerosene, but they are currently three to
eight times more expensive. That price gap must be closed.
Smart economic measures
Changes to the EU ETS must allow for a full and proper implementation of CORSIA, as emissions are a
global issue which must be tackled at global level. Additionally, they should take into account the ICAO
principle7 that “international aviation CO2 emissions should be accounted for only once”, meaning that the
future EU ETS should only address emissions that are not mitigated by CORSIA
.
New taxation must be avoided, as it would deprive airlines of the means to invest in fleet renewal and
SAFs, and would fail to preserve the socio-economic benefits of air connectivity. Aviation, it should be
noted, pays for almost all of its infrastructure (mostly, airport and air navigation infrastructure), contrary
to other modes of transport. If taxes were put in place nonetheless, their revenues should at least be
earmarked to projects and measures that effectively contribute to decarbonising aviation.
Level playing field and carbon leakage
The reinforcement of EU environmental standards must be conducted simultaneously to the
establishment of a carbon border adjustment mechanism for aviation to avoid unfair competition and
carbon leakage. Reduced competitiveness of EU airlines would result in third-country carriers capturing
traffic flows through their hubs at Europe’s doorstep, thus merely displacing emissions.
Absent a separate carbon border adjustment mechanism for aviation, other measures ensuring a level
playing field would have to be adopted to the same effect
as part of the
different legislative initiatives.
For
example, the reduction of free ETS allowances could be limited, the financial burden on intra-EU connecting
traffic could be alleviated (e.g. by maintaining a higher number of free allowances in proportion to the
share of connecting traffic), hubs close to the EU could be integrated into the EU ETS via air services or
trade agreements, and a clause conditioning the levels of blending obligations to the adoption of mandates
in other regions of the world could be included in RefuelEU.
7 ICAO Resolution A40-19: (18). “Determines that the CORSIA is the only global market-based measure applying to CO2
emissions from international aviation so as to avoid a possible patchwork of duplicative State or regional MBMs, thus
ensuring that international aviation CO2 emissions should be accounted for only once.”
3