Aviation
under the EU ETS
Which flights are covered by the EU ETS?
Since 2012, flights within the European Economic Area (EEA) have been covered by the EU ETS. Aircraft operators are covered by the EU ETS if their emissions exceed 10.000 tCO2 for commercial operators or 1.000 tCO2 for non-commercial operators in a reporting year.
The system applies to flights:
- between two EEA countries,
- within EEA countries (domestic flights within an EEA Member State),
- from an EEA country to the United Kingdom and Switzerland.
Today, around 400 aircraft operators participate in the system.
Aircraft operators must surrender emission allowances each year corresponding to their actual emissions
Why is aviation part of the ETS?
Aviation is a significant source of greenhouse gas emissions in Europe.
To reduce the climate impact of aviation, the European Union included aviation in the EU ETS.
Exemptions
Certain flights are excluded from the EU ETS, including:
- law enforcement and customs flights
- search, rescue and emergency flights
- small aircraft operations, such as aircraft with a maximum take-off mass of less than 5,700 kg.
How does the system work?
Aircraft operators have in the past received a certain number of free emission allowances. If their emissions exceeded this allocation, they must purchase additional allowances on the market.
Aircraft operators must surrender emission allowances equal to their verified emissions annually for the previous calendar year.
The surrender of emission allowances takes place in the Union Registry.
One allowance equals one tonne of CO₂-equivalent emissions.
If an aircraft operator fails to surrender enough allowances within the required deadline, the competent authority must impose an administrative fine of EUR 100 per tonne for each tonne not covered in time.
Iceland and the EU ETS
Iceland has been an active participant in the EU ETS since 2013. Icelandic airlines have been part of the system from the beginning.
Iceland acts as the administering state for several non-EEA aircraft operators operating within the EEA.
The following aircraft operators were under the administration of Iceland in 2025:
- Air Atlanta
- Fly Play
- Icelandair
- Papier Mettler
- Royal Air Force (RAF)
Free emission allowances
In most cases, free allocation to aircraft operators decreases in 2024 and 2025 and ends from 2026 onwards. After that, aircraft operators must purchase all emission allowances they need to surrender.
Due to a special arrangement for Iceland, aircraft operators may apply for additional free emission allowances in 2025 and 2026.
Under certain conditions, including equal treatment and the submission of a carbon neutrality plan - Iceland may grant additional allowances for flights to and from Iceland that are covered by the EU ETS.
During the period 2024–2030, aircraft operators may also apply for SAF allowances, which are based on the amount of Sustainable Aviation Fuel (SAF) used.
This mechanism encourages the use of fuels with lower climate impact.
New monitoring requirements
From 2025 onwards, aircraft operators must also monitor climate impacts beyond carbon dioxide (CO₂), non-CO2 effects.
These include:
- nitrogen oxides (NOₓ),
- soot particles,
- sulphur compounds,
- water vapour.
These factors can have an equal or greater impact on the climate than CO₂.
By the end of 2027, a decision will be made on whether these effects will also be included in the EU ETS.
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