The European Union Emission Trading Scheme (EU ETS) is the first and largest emission trading system to date, for reducing GHG (greenhouse gas) emissions. The EU ETS cover more than 11,000 power stations and industrial plants in 31 countries, and flights between airports of participating countries. It is structured as a ‘cap-and-trade’ system that allows trading of emission allowances so that the total emissions of the installations and aircraft operators stays within the cap and the least-cost measures can be taken up to reduce emissions.

In 2012 the EU ETS was also applied to aviation emissions. Aircraft operators operating in the European Economic Area are required to monitor, report, and verify their CO2 emissions and to surrender allowances against those emissions.

Non-commercial aircraft operators with total annual emissions lower than 1,000 tonnes CO2 per year (based on all their flights departing from or arriving into the European Economic Area/EEA) are exempt until 2030.

EU ETS emissions are calculated based on the flights coming to/from and within the EEA area. This is known as full scope of EU ETS emissions. This yearly indicator determines if an operator has any reporting obligations and furthermore, has to surrender any emission units. The latter is based on the reduced scope which consists of emissions for the flights solely within the EEA area. In addition, emissions are based on the fuel consumption for each flight.

In case of any offsetting requirements, emission units (EUA) need to be purchased to offset the reduced scope.