COMMENTARY

  • Why the EU is unlikely to give ground on aviation EU ETS

    September 17 2012

    Nine months have elapsed since aviation was included in the European Emissions Trading System (EU ETS). Most airlines have now met their initial compliance obligations and have submitted a Monitoring and Reporting Plan and Emissions Reports for 2010 and 2011. Even most airlines domiciled in countries that are opposed to inclusion in the EU ETS are currently compliant and entitled to receive free EU aviation emissions allowances (EUAAs).

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  • ‘Repo’ trading escalates aircraft lessee credit risk exposure

    June 18 2012

    The EU ETS has created an additional credit risk exposure for aircraft lessors and financiers that may result in tens if not hundreds of millions of Euros additional financial liabilities to individual airlines.  This exposure could also potentially result in systemic risk for some aircraft lessors, banks and export credit agencies.

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  • What worth is an EU ETS Authority Letter?

    May 14 2012

    Some, but not all new aircraft finance and lease agreements contain a document referred to as an EU ETS Authority Letter.  The form of the letter comes in various guises but each Letter of Authority is intended to have the same effect.  That is to allow the aircraft owner, be it a lessor, mortgagee or its agent to monitor an aircraft operator’s performance obligations under the EU Emissions Trading Scheme (EU ETS).

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  • EU ETS compliance - When is an aircraft owner an aircraft operator?

    April 13 2012

    Should an aircraft lessor, SPC or mortgagee be named on the EU list of aircraft operators, it will generally have the same EU ETS compliance obligations as an airline.  A number of aircraft owners are currently named on the EU list of aircraft operators as having performed flight activities recorded by Eurocontrol, usually where aircraft have been repossessed, ferried or repositioned.  The EU ETS Directive also clearly states that the aircraft owner has responsibility for compliance where the actual operator of flight activities cannot be identified.

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