EU carbon market to include international flights within 5,000 km from 2029 under ETS review

The European Commission has proposed extending the EU Emissions Trading System (ETS) to cover international flights arriving in Europe from destinations within 5,000 km, starting in 2029. Routes like Frankfurt to Dubai and Istanbul would be included, while longer sectors such as Frankfurt to Tokyo and flights from the US and China would be exempt. The move aims to address competitive imbalances created by non-EU hub airlines that currently avoid carbon costs. The revised ETS also includes changes for industrial companies. Free allowances would continue after 2030 but would be conditional on publishing and implementing board-approved decarbonisation investment plans. Companies would receive 80% of free allowances upfront, with the remaining 20% tied to verified emissions reductions. The Commission wants at least 50% of national ETS revenues reinvested in covered sectors like aviation and energy-intensive industry. Private jets departing and landing in the EEA would also be covered under the proposal. The Commission is legally required to consider full ETS expansion to all departing international flights if the ICAO CORSIA offsetting scheme is deemed insufficient by 2032. The reform is part of the EU's broader push toward a 90% emissions reduction target by 2040.