The legal requirements of the EU ETS apply when an aircraft operator first performs an aviation activity in Annex I of the EU ETS Directive which is not covered by any of the exemptions in that Annex.

Two conditions need to be fulfilled in order for an aircraft operator to benefit from the de minimis exemption under subparagraph (j) of Annex I to the EU ETS Directive:

• the operator is a commercial air transport operator; AND

• the aircraft operator operated less than 243 flights per consecutive period of four months (Jan-Apr, May-Aug, Sep-Dec) or emitted less than 10,000 tonnes of CO2 annually.

If these conditions are met, the most probable reason for inclusion in the list is that for its present functions EUROCONTROL does not retain comprehensive records about AOCs for all operators flying in the EU region. As a result, EUROCONTROL may not be aware of the commercial status of particular operators (as defined in Article 3 of the EU ETS Directive). When this AOC information is missing, the operator is deemed not to be a commercial air transport operator.

An operator may also be included in the list because the last condition above is not satisfied. This means that according to the air traffic information held by EUROCONTROL and the CO2 emissions estimations produced by EUROCONTROL, in any of the years since 2006 both of the following conditions were fulfilled:

• in one of these years, the annual CO2 emissions were estimated to be above 10,000 tonnes and

• in at least one of the four month periods Jan-Apr, May-Aug, or Sep-Dec of the same year you operated at least 243 flights

Article 16 of the EU ETS Directive establishes a limited harmonisation of the financial penalties that will be paid by operators that fail to surrender the necessary number of emissions allowances (i.e. €100 per tonne of CO2).

More generally, the co-legislators decided that the Member States should adopt rules on penalties for breaches of national legislation which transpose the Directive's requirements and that these penalties should be "effective, proportionate and dissuasive".

Τhere is no legal obstacle for an aircraft operator to be identified by multiple ICAO designators so long as these are associated with a single aircraft operator. Obviously, it is administratively simpler if an operator uses only a single identifier when filing its flight plans.

The relevant test in the EU ETS Directive for an aircraft operator is simply that there is a legal person responsible for flights arriving or departing from EU aerodromes which are not covered by the exemptions in Annex I of the EU ETS Directive. Individual companies that have been duly incorporated each possess their own distinct legal personality. It follows, therefore, that each company responsible for flights covered by Annex I is a different aircraft operator for the purposes of the EU ETS Directive even if they are in the same corporate group of companies.

In addition, Article 18(a) of the EU ETS Directive identifies an administering Member State, in relation to a particular commercial aircraft operator, by reference to the mandatory operating licence issued to that operator by the Member State concerned. There is a presumption, therefore, that each legal person issued with an operating licence by a Member State should be treated as a distinct and separate aircraft operator.

After an aircraft operator is reattributed on the basis of Article 18a(1) or transferred on the basis of Article 18a(2) of the EU ETS Directive to a new administering Member State, the monitoring plan will have to be transferred from one administering Member State to another, or resubmitted by an operator to the new administering MS.

This process has to be agreed between the Member States on a case by case basis, taking account of the views of the aircraft operator affected and seeking to minimize the financial costs and administrative burden to aircraft operator.

The timing of the transfer or resubmission of the monitoring plan should also be agreed between the Member States and the operator.

An aircraft operator that does not perform any flight activity in Annex I of the EU ETS Directive for a complete calendar Year X is not required to comply with EU ETS requirements for that calendar year. However, verified emissions reports and the surrender of allowances will be required in Year X in respect of any relevant flight activity performed in the calendar year X-1.

The Commission intends to publish an updated list each year around the beginning of February on the basis of the best available information. The aim of this update is to include new aircraft operators that have undertaken flight activities covered by Annex I of the EU ETS Directive in the previous calendar year. In addition, this represents an opportunity to correct manifest errors in the designation of operators or administering Member States.

It is not so important to remove operators that cease their activities given that obligations arise under the ETS from performing relevant flight activities in Annex I of the EU ETS Directive rather than from inclusion on the list. However, to keep the list manageable administratively, where operators have clearly ceased to be covered by the ETS and will not return to it because, for example, they are no longer in existence or because they have rescinded their operating licence, then the Commission will remove such operators from the list at the time of its update. It should be remembered that the activities of some operators may be such that in one year they are not covered by the ETS but activity levels may increase so that in subsequent years they are covered. It does not make sense to amend the list in such circumstances.

There is a de minimis exemption in subparagraph (j) of Annex I to the EU ETS Directive below which an entity ceases to be an aircraft operator covered by the provisions of the EU ETS. This exemption only applies to commercial air transport operators. Flights may also be provided by commercial operators without remuneration but this factor is not relevant when determining whether the de minimis threshold is exceeded.

In summary, all flights of a commercial operator which are not covered by any of the other exemptions in Annex I of the EU ETS Directive must be considered when assessing whether the de minimis threshold is exceeded.

The definition in Article 3(o) of the EU ETS Directive determines who is an "aircraft operator" for the purposes of the EU ETS. This definition refers to a natural or legal person which operates an aircraft at the time it performs an aviation activity specified in Annex I to the EU ETS Directive (i.e. a flight departure or a flight arrival at an aerodrome in the territory of the EU). If the identity of the operator cannot be ascertained then the aircraft owner is deemed to be the operator unless the owner identifies the relevant operator.

The primary function of the list of aircraft operators published by the Commission is to facilitate the good administration of the EU ETS by providing information on which Member State will be regulating a particular operator.

It must be emphasised that inclusion on the list of aircraft operators published by the Commission is not determinative as to whether a natural or legal person is an aircraft operator. This is clearly spelled out in Part 1 paragraph (3) of the Annex to the Annex I DecisionSearch for available translations of the preceding. Moreover, a separate information note has been published on the Europa web site on the role of the list whose primary function is to facilitate the good administration of the EU ETS by informing regulators and aircraft operatorsSearch for available translations of the preceding about who is regulating whom. Conversely, aircraft operators that are on the list do not fall under the EU ETS if they only perform aviation activities that are exempt under Annex I to Directive 2003/87/EC.

A small emitter is a non-commercial air transport operator (i) whose flights in aggregate emit less than 10 000 tonnes of CO2 per annum; or (ii) which operates fewer than 243 flights per period for 3 consecutive 4-month periods. A small emitter can take advantage of a simplified procedure to monitor its emissions of CO2 from its flight activity. This procedure is described in Section 4 of Annex XIV of the Monitoring Decision and involves the use of a calculation tool developed by EUROCONTROL or similar tool developed by other organisations.

Annex XV of the Monitoring Decision states in Part 2 that for the purpose of identifying the aircraft operator defined by Article 3(o) of the EU ETS Directive, the ICAO designator in box 7 of a flight plan is to be used or, in the absence of such a designator, the aircraft registration marking is to be used. It appears that there is no uniform system, criteria or procedure for the application and issue of ICAO designator codes.

Where the aircraft operator cannot be identified then the legislation stipulates that the owner will be responsible.

The same basic procedure in 3.1 above should be followed. However, the administering Member State is determined according to the greatest attributed emissions in the first year of operation which may not be immediately clear and may not be established definitively until the operator is included in a revised list published by the Commission. As such, the operator cannot submit a monitoring plan for approval to its administering Member State.

In such circumstances, the operator is required to determine its emissions with retrospective effect for the time it falls under the scope of EU ETS. For the period when it has not been attributed to an administering Member State, the operator can determine its emissions according to the approach in section 5 of Annex XIV of the Monitoring Decision to fill "data gaps". This allows an operator to determine its emissions which are missing for reasons beyond its control by a simplified method.

Where the administering Member State is clear from the nature of the operator's flight activity, operators can submit monitoring plans on an informal basis to the administering Member State before formal inclusion on a revised list of operators published the Commission.

There are several categories of flight which are exempt from the EU ETS. These are contained in Annex I of the EU ETS Directive and include activities such as search & rescue, state flights transporting third countries' Heads of State, Head of Government and Government ministers, police flights amongst others.

There are special codes to designate these types of flight which should be inserted into the flight plan which is filed by the operator in order that the flight can be correctly excluded. More information about the types of flight excluded and the associated codes to be inserted in the flight plan can be found in the Annex I Decision1.

What does a new operator with an EU operator's licence have to do under the EU ETS?

For new entrants the EU ETS requirements will start from the moment an operator performs an aviation activity laid down in Annex I of the EU ETS Directive i.e. it departs or arrives at an aerodrome in the EU. The Administering Member State responsible for all aspects of administering the ETS in respect of the operator is the Member State that issued the operating licence. The following steps will need to be followed by the new aircraft operator and administering Member State for an activity which commences in Year X:

Operators will have to submit a monitoring plan to the administering Member State as soon as possible.

The administering Member State should approve the monitoring plan and the operator should monitor its emissions according the methods in the monitoring plan, the Monitoring Decision and relevant aspects of the Member States national rules and procedures.

The operator should draft an emissions report for the calendar year X and have it verified by a verifier at the beginning of year X+1.

The operator submits the verified emissions report to the administering Member State by 31 March of year X+1.

The operator must surrender sufficient emissions allowances to cover its emissions in calendar year X.