Contrails in the EU ETS: a proposal with good intentions but no teeth

On 17 July, the European Commission published its proposal for a revision of the EU Emissions Trading System (ETS). For the first time, the proposal goes beyond monitoring aviation’s non-CO₂ climate impacts and brings in a measure directed specifically at reducing contrail warming.

Given that contrails have potentially caused more than half of aviation’s contribution to climate warming to date, this all sounds like good news. But, would the proposed measure actually be effective?

What is in the Commission’s proposal on non-CO₂?

The proposal’s aviation non-CO₂ mechanism allows airlines to claim free ETS allowances equivalent to 0.1% of their annual verified emissions. To qualify, airlines must embed contrail forecasting models into flight planning, and “make available the contrail forecasts to their operations control centre or equivalent, which shall be instructed to assess their operational viability and, if possible, to incorporate them when filing the corresponding flights”.

Airlines can claim additional allowances equivalent to an extra 0.02% of their verified emissions if they use actual data for flight trajectories and fuel flow when reporting their non-CO₂ impacts. The whole scheme is capped at 420,000 allowances per year, and 3m in total until the end of 2033.

Will it help to target contrails?

The Commission itself acknowledges, in its explanatory memorandum, that aviation’s non-CO₂ impacts are at least as significant as its CO₂ emissions, yet the proposal makes no one pay for them. If adopted as is, it will not deliver meaningful action.

To claim allowances, airlines only need to forecast contrails, pass that information on to flight planners, and ask them to consider it. There is no incentive for flight planners or airlines to actually enact contrail avoidance, or engage with any other potentially impactful measures, like airspace-scale trials or identifying and targeting their most warming flights.  

Worse still, the measure sets the precedent for EU contrail action to be voluntary, incentive-based and funded by public finance at the expense of ETS revenues which would otherwise have been raised. Even disregarding the question of who should foot the bill for contrail action, it’s unclear whether such a mechanism could ever deliver effective action at scale.

So it begs the question: is this the most effective policy design, or simply the one deemed most palatable to the powerful airline lobby in Brussels?

Unless airlines go further voluntarily – something history suggests is unlikely – this measure essentially legitimises inaction. Under this policy, any actual reductions in contrail climate impacts will have to wait until after 2033.  

What’s the alternative?

Rather than signing up to another seven years of inaction on the climate impacts of contrails, there is still a chance for the EU to amend this proposal into something that works. To do so, we propose two key changes: 

1. Strengthen conditionality. Contrail forecasting is crucial, but it can’t have any impact on its own. Conditionality must be strengthened over time to include airlines identifying their most warming flights and proving they have executed contrail avoidance on those routes. Conditionality should also evolve to include additional, fuel-based contrail reduction measures, such as hydrotreating.
2. Switch from handouts to an avoidable fee. To enable strengthening through time, and make sure airlines are properly incentivised to take action, the EU should replace voluntary free allowance allocations with an avoidable fee. Rather than getting money to take action, airlines should pay unless they take action.

Combined, this would mean an avoidable fee on contrail impacts from 2028, with exemptions that tighten over time: approved forecasting tools at first, demonstrated avoidance on the most warming routes from 2030, approved fuel-based measures from 2032, until, by 2035, no exemptions remain and airlines pay the full fee on their remaining impacts, based on MRV-reported data.

For all the details of our proposal, see our briefings contrail avoidance in the EU and improving the EU aviation ETS.

What now for addressing non-CO₂ impacts?

Now that the Commission has published its proposal, MEPs can suggest amendments and Member States can shape the Council’s position. Reaching agreed positions will take months, although there is pressure to move fast.

In the Council, the Irish Presidency is pushing for Member States to reach a compromise on the proposal by mid-December, while, in Parliament, MEP Liese – EU ETS rapporteur – has been working hard over the summer to gather stakeholders’ feedback and is planning to have his draft reports and amendments ready in early fall.

Once both institutions have agreed their positions on the proposal, they will enter trilogues – a three-way negotiation with the Commission – before a final text is adopted, likely next year. That makes the coming months the moment when this proposal can be fixed, or hollowed out. 

There is real momentum for finally addressing non-CO₂ impacts, with growing awareness that contrail warming impacts are comparable in scale to CO₂ and much cheaper to tackle than almost anything else in aviation. This trend is not only in the EU – the UK recently announced Operation Blue Skies, a large-scale contrail avoidance trial.

But without binding obligations, momentum can stall as quickly as it builds. The EU ETS revision is the golden opportunity to introduce an effective, fee-based mechanism that pushes airlines to actually tackle contrails.