The EU Green Agreement will charge airlines higher pollution costs

A person familiar with the matter told Bloomberg News that a proposal to be announced by the European Commission next week includes the phasing out of airline emission quotas.

As the European Union strengthens its climate policy under the Green Agreement, airlines in the world’s largest carbon market will eventually have to pay for all the pollution caused by their aircraft.

According to people familiar with the matter, a proposal by the European Commission includes the phasing out of emission allowances for operators and will be part of the measures to be announced on July 14. The package will also impose stricter requirements on companies in the transportation sector to use cleaner fuels.

As the economy recovers from the pandemic, the EU’s goal is to make its green agreements and ambitious environmental reforms a new growth strategy. The planned cleanup actions also include strengthening and expanding the EU’s carbon market, formulating new emission trading schemes for construction and road transportation, and formulating new emission standards for automobiles.

The person, who asked not to be named, said that the European Commission wants to force fuel suppliers to mix increasingly high levels of sustainable aviation fuel into existing jet fuel sold at EU airports. In addition, EU executives are planning to encourage the use of synthetic low-carbon fuels under the so-called “Fit for 55” package.

Clean fuels will also receive preferential treatment under the EU’s new energy tax framework.

The legislative push aims to align the European economy with the new goal of reducing greenhouse gases by at least 55% from 1990 levels by 2030. The previous goal was to cut it by 40%.

The package plan will also include recommendations to increase the share of renewable energy, improve energy efficiency, and strengthen national emission reduction targets. The committee will be committed to the transition in a “fair, cost-effective and competitive manner,” it said in a draft document to be sent to governments and the European Parliament next week.

The Climate Action Social Fund will be launched to help the most vulnerable households offset the cost of transformation. To help alleviate the concerns of poorer member states, the EU also hopes to support the modernization fund of the carbon market. It supports low-income countries and redistributes one-tenth of their carbon allowances for auction.