On 6 December 2022, the European Parliament and the European Council came to a compromise regarding the future of EU ETS from 2023 and the implementation of CORSIA in Europe as part of the ‘Fit for 55′ proposal by the European Commission to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990.

The key points of the compromise are as follows:

1. Extension of the ‘stop-the-clock’ mechanism until 2026. EU ETS will continue to apply to flights within the EU/EEA and departing flights to Switzerland and the United Kingdom.
2. Application of CORSIA on extra-European flights only (international flights between EU/EEA and third countries participating in CORSIA)
3. In 2026, the Commission will carry out an assessment of CORSIA to see if it is sufficiently delivering on the goals of the Paris Agreement. Subject to the outcome of this assessment, the Commission will make a legislative proposal, which could extend the scope of EU ETS to ‘departing extra-European flights’ if CORSIA is not sufficiently aligned with the Paris Agreement.
4. Gradual phasing out of free allowances for the aviation sector during the 2024-2026 period:
   1. 25% reduction in 2024
   2. 50% reduction in 2025
   3. 100% reduction in 2026
5. New support scheme to speed up & incentivize the use of Sustainable Aviation Fuels (SAF): 20 million quotas set aside to cover Sustainable Aviation Fuels (SAF) price differential.
6. 5 million allowances transferred to an innovation fund
7. New system for airlines to monitor, report and verify non-CO2 emissions and climate effects of aviation to be proposed by the Commission in 2025.
8. European Commission to make a legislative proposal to deal with non-CO2 emissions by 2028.