The EU could boost its carbon pricing revenues from aviation by up to tenfold if it eliminates key exemptions and fully applies its emissions rules to the sector, according to a new study by Carbon Market Watch.
The green watchdog says the planned 2026 revision of the EU’s CO₂ pricing system is an “excellent opportunity” to both cut aviation emissions and generate significant funding for climate policies.
Despite the sector’s substantial climate impact, intercontinental flights to and from Europe remain largely exempt from the EU’s emissions trading system (ETS) – the bloc’s main tool for pricing carbon pollution from heavy-emitting sectors.
Currently, only intra-European flights are fully covered, and even then, half of their emissions are exempt until 2026.
Airlines are also required to monitor their non-CO₂ emissions – including water vapour, nitrogen oxides, and sulphur dioxide – but these warming effects remain excluded from carbon pricing.
Billions in missed revenue
According to Carbon Market Watch, extending CO₂ pricing to all intercontinental commercial flights from and to Europe could increase projected revenues between 2025 and 2040 from €112 billion to €417 billion.
That figure would be limited to €196 billion if the rules applied only to EU routes and flights connecting Europe with countries that do not participate in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – a controversial and less stringent international carbon offsetting system still under development.
But if the EU ETS were expanded to include private aviation and the pricing of non-CO₂ climate effects, total revenues could reach a staggering €1.1 trillion, the study adds.
Ending exemptions and prioritising e-kerosene
Carbon Market Watch is urging EU policymakers to extend carbon emission pricing to all departing flights from the European Economic Area (EEA) – which includes the EU, Iceland, Liechtenstein and Norway – and end exemptions for private jets.
The group also calls for restricting the use of the 20 million free emission permits granted to the sector to cover the cost premium of cleaner fuels. The permits should fund only e-kerosene, a synthetic and carbon-neutral fuel when made from green hydrogen and captured CO₂ , and not biofuels, which have questionable sustainability benefits, says Carbon Market Watch.
Currently, e-kerosene remains scarce and expensive, and accounts for just a fraction of the EU’s targets for clean jet fuel blends.
(de, cs)