EU Prepares to Apply Carbon Charges on Select International Flights Starting in 2029

On Friday, the European Commission unveiled a proposal to bring its Emissions Trading System to bear on international flights landing in Europe from destinations up to 5,000 kilometres away, starting in 2029, as part of a comprehensive overhaul of the bloc’s carbon market.

According to the Commission’s plan, routes like Frankfurt‑Dubai and Frankfurt‑Istanbul would fall under the carbon market, whereas longer hauls such as Frankfurt‑Tokyo would remain outside its scope. Flights arriving from the United States and China would be exempt from the charge.

Exemptions for domestic flights to the EU’s outermost regions — such as those connecting mainland Spain with the Canary Islands — will continue to apply through the end of 2035.

Commission officials noted that the measure would level the playing field for EU airlines by curbing competitive advantages held by rival hubs located outside the Union.

The revised ETS includes provisions to hasten the sector’s climate objectives, requiring flights that land in the European Economic Area to begin covering the CO₂ emissions tied to their operations starting in 2029.

“Aviation remains the only major sector with rising emissions. Meanwhile, the EU confronts a level‑playing‑field problem: the ETS currently applies only to flights within the European Economic Area, while several Gulf states subsidise their carriers,” said Climate Commissioner Hopke Woekstra on Friday.

“All private jets taking off and landing will likewise fall under the scheme. It seems inequitable that a family flying once a year to Benidorm pays ETS while a private‑jet traveller making twenty annual trips to luxury destinations is exempt,” Woekstra added.

International aviation is under scrutiny to begin paying for its emissions under the EU’s carbon market overhaul, given Brussels’ legal duty to weigh extending carbon pricing beyond intra‑European routes, even as worldwide attempts to curb aviation emissions fall short.

The EU is reviewing whether to bring international aviation into its revised carbon market, as Brussels must by law examine expanding carbon pricing beyond flights within Europe, despite global efforts to curb aviation emissions having so far yielded insufficient results.

Central to the discussion is the EU’s long‑standing “stop‑the‑clock” arrangement, which was adopted after strong international opposition to the initial proposal of applying the ETS to all overseas flights.

Presently, the ETS applies to flights inside the European Economic Area, a rule in place since 2012, whereas most international aviation is governed by the ICAO’s CORSIA offsetting programme.

Legal obligation to consider ETS expansion

Should the global framework prove inadequate to deliver significant emissions cuts by 2032, the Commission will be obliged to extend the ETS to all departing international flights from Europe, not merely those within a 5,000‑kilometre radius.

EU officials acknowledged that the step would be politically challenging, yet stressed that legal commitments leave little flexibility to preserve the current situation.

“Obviously, we recognise that this is easier said than done. We are exploring options for an expansion that continues to prioritise multilateral schemes such as CORSIA. The EU was the first and most committed adopter of CORSIA,” said a second EU official, who requested anonymity.

Nevertheless, EU officials contend that rising competitive disparities — especially from airlines using nearby non‑EU hubs — could necessitate further European action if global progress stalls.

“We do not believe our decarbonisation targets can be met without the ETS,” the official added, emphasising that carbon pricing must function together with regulation, sustainable aviation fuel mandates, and investment support, rather than in isolation.

ETS to fund sustainable aviation fuels

Current ETS revenues already support sustainable aviation fuel adoption via a dedicated allowance allocation, and officials said this backing could be expanded under the revised proposal.

Aviation climate targets call for a 2% sustainable aviation fuel share by 2025 — a goal that has largely fallen short — with a view to reaching 70% by 2050.

Despite mounting political pressure from certain EU member states and industrial groups to ease the ETS for competitiveness reasons, Commission officials dismissed claims that the carbon market is being fundamentally weakened.

Instead, they contended that the post‑2030 reforms aim to safeguard investment certainty while bringing the ETS into line with the EU’s legally binding 2040 climate objective.

The Commission maintains that reducing the yearly allocation rate — i.e., the speed at which industries obtain free allowances — simply mirrors the shift toward the 2040 framework, under which emissions are slated to drop by 90 % rather than eliminated entirely.

Free carbon allowances

The Commission proposes to keep free emissions allowances beyond 2030, but to tie them to corporate decarbonisation investments — a shift that ranks among the most significant changes to the ETS since its launch in 2005.

Under the proposal, industrial firms would obtain 80 % of their free allowances once they publish a board‑approved decarbonisation investment plan, with the remaining 20 % released only after the investments are made and verified emissions cuts are achieved.

“Eighty percent of the free allowances will be allocated annually to companies after they publish their decarbonisation investment plans,” said a second Commission official.

“We will hold back 20 % of the free allowances, disbursing them only after the investments have been carried out and the resulting emission reductions have been published.”

Commission officials said the reform shifts free allocation from a carbon‑leakage safeguard to what they call “investment allowances,” intended to retain manufacturing and clean‑technology investment within Europe.

More broadly, Brussels aims to direct at least half of national ETS revenues back into the sectors covered by the carbon market — namely aviation, maritime transport and energy‑intensive industry.

Veteran EU lawmaker Peter Liese (EPP/Germany), appointed lead negotiator for the ETS revision in the European Parliament, commented ahead of the proposal’s release that the current ETS feels overly restrictive.

“We cannot accept a scenario where, by 2039, no allowances remain. Neither aviation nor energy‑intensive industry could be emission‑free or climate‑neutral by that point,” Liese told reporters a few days prior to the revision.

“We also require more free allowances than the current scheme provides. However, those allowances must be tied to conditions; we can no longer tolerate firms using them to fund investments outside Europe. Ideally, they would be linked to on‑site investments that preserve local jobs,” Liese insisted.

The German lawmaker added, however, that progress should be rewarded, meaning that frontrunners already deep in decarbonisation ought not to be penalised by the ETS review.

“I consider this essential, given that decarbonisation investments are already underway across Europe. We have numerous construction projects underway, and we must not alter the framework in a way that halts them,” Liese added.

‘Vested fossil fuel interests’

Kädi Ristok, director of energy and climate at the campaign group Transport & Environment (T&E), lauded the ETS’s achievement of cutting emissions by about 50 % since 1990 in the electricity, transport and manufacturing sectors.

However, Ristok cautioned against vested fossil‑fuel interests and several countries that are treating the mandatory ETS review as a proxy battle for Europe’s industrial survival, lobbying hard for an emergency brake on carbon pricing, the continuation of unconditional free allowances, and a weakening of allowance scarcity.

“Undermining the ETS is a short‑term gamble that would erode Europe’s long‑term competitiveness and rob governments of the revenue required to fund future‑oriented technologies,” Ristok said.

The Council and the Parliament will launch political discussions after the summer recess, setting the stage for intense negotiations between advocates of stronger climate action and those seeking greater flexibility for industry.

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