1. 2009-07-16The Ministry of Environment of the Republic of Lithuania1 Seminar „Inclusion of aviation in the EU Emission Trading Scheme“ 30 07 2009 Ministry of Environment Lithuania

2. 2009-07-16The Ministry of Environment of the Republic of Lithuania2 Content Trading periods and scopeTrading periods and scope Allocation procedureAllocation procedure Monitoring and ReportingMonitoring and Reporting SanctionsSanctions TimetableTimetable

3. 2009-07-16The Ministry of Environment of the Republic of Lithuania3 EU ETS EU ETS came into force 01/01/2005 EU ETS came into force 01/01/2005 From 2012 onwards inclusion of aircraft operators From 2012 onwards inclusion of aircraft operators Cost-effective strategy for the reduction of emissions Cost-effective strategy for the reduction of emissions Step on the way to the global carbon market Step on the way to the global carbon market

4. 2009-07-16The Ministry of Environment of the Republic of Lithuania4 EU ETS for Aviation: basic elements Total cap of aviation: - Based on 2004-2006 average annual emissions - Based on 2004-2006 average annual emissions - Figure to be published by the Commission on the - Figure to be published by the Commission on the 2 of August, 2009 (aprox. 216 608 927) 2 of August, 2009 (aprox. 216 608 927) Free allocation, based on benchmark related to t-km data (to be reported for 2010)

5. 2009-07-16The Ministry of Environment of the Republic of Lithuania5 Trading periods and emissions cap (1) 1st trading period: 2012 - The total number of allowances is equivalent to 97% of average emissions in the historic reference period 2004-2006 - 15% of allowances will be auctioned by Member States - 85% of allowances will be allocated free of charge to operators

6. 2009-07-16The Ministry of Environment of the Republic of Lithuania6 Trading periods and emissions cap (2) 2nd trading period: 2013 to 2020 - The annual total number of allowances is equivalent to 95% of average emissions in the historic reference period 2004-2006 - 15% of allowances will be auctioned by Member States - 82% of allowances will be allocated free of charge to incumbents - 3% of allowances will be set aside in a special reserve for new entrants and „fast growing operators“

7. 2009-07-16The Ministry of Environment of the Republic of Lithuania7 Trading periods and emissions cap (3) Use of CERs and ERUs from JI and CDM project activities:Use of CERs and ERUs from JI and CDM project activities: - in 1st trading period: 2012 up to 15% surrended allowances might be exchanged with CERs and ERUs - in 1st trading period: 2012 up to 15% surrended allowances might be exchanged with CERs and ERUs - in 2nd trading period: from 2013 to 2020 up to 1,5% surrended allowances might be exchanged with CERs and ERUs - in 2nd trading period: from 2013 to 2020 up to 1,5% surrended allowances might be exchanged with CERs and ERUs

8. 2009-07-16The Ministry of Environment of the Republic of Lithuania8 EU ETS for Aviation: Coverage Directive covers all flights to and from EU airports Directive covers all flights to and from EU airports Small aircraft and certain flights excluded Small aircraft and certain flights excluded Detailed guidelines for the interpretation of aviation activities have been published: Detailed guidelines for the interpretation of aviation activities have been published:http://ec.europa.eu/environment/climat/aviation_en.htm

9. 2009-07-16The Ministry of Environment of the Republic of Lithuania9 Exemptions from the scope S pecific aviation activities, mentioned in Annex I to the Directive, are exempt from the scope. Those include: - military, customs and police flights - search, rescue, fire-fighting flights; humanitarian flights and emergency medical service flights - flights performed under visual flight rules - round flights - training flights - flights for purpose of scientific research - flights performed by aircraft with maximum take-off mass of less than 5 700 kg - flights performed by commercial aircraft operators, falling under the „de-minimis“ rule

10. 2009-07-16The Ministry of Environment of the Republic of Lithuania10 Exemptions substantiated by de-minimis rule Commercial aircraft operators only are exempt from the scheme when at least one of the following thresholds applies: - fewer than 243 flights per period for three consecutive four-months periods within a calendar year (Jan-Apr; May-Aug; Sept-Dec) - annual total CO2 emissions of less than 10 000 tons The thresholds are applied with respect to the scope of the Directive (solely flights within the EU and between EU and third countries) As soon as (both) thresholds are met/exceeded, aircraft operators are mandatorily included in the emissions scheme for the entire calendar year; relevant obligations are to be provided by operators ubsequently (submission of a monitoring plan; monitoring and verification of emissions; surrender of allowances).

11. 2009-07-16The Ministry of Environment of the Republic of Lithuania11 Geografical scope (1) All flights starting from or terminating at an aerodrome in a Member State of the Community are covered by the scheme: All flights starting from or terminating at an aerodrome in a Member State of the Community are covered by the scheme: - Flights within a Member State - Flights between Member States - Flights between a Member State and third country (both incoming and outgoing)

12. 2009-07-16The Ministry of Environment of the Republic of Lithuania12 Geografical scope (2) This does not include: This does not include: - Subsequent flights after first landing in third country (e.g. Vilnius – Shanghai /Shanghai – Tokyo) - Flight sections within/between third countries before direct flight into EU (e.g. Hongkong – Bangkok / Bangkok – Vilnius)

13. 2009-07-16The Ministry of Environment of the Republic of Lithuania13 Administrating Member State Administering Member State is: - The Member State of the EU which granted a valid operating licence in accordance with Council Regulation No 1008/2008 on licensing of air carriers - In all other cases the Member State with the greatest estimated attributed emissions in the base year The list of administering Member States was published by the European Commission in February 2009 and shall be revised annually by the 1st of February. The list of administering Member States was published by the European Commission in February 2009 and shall be revised annually by the 1st of February.

14. 2009-07-16The Ministry of Environment of the Republic of Lithuania14 Allocation procedure for 1 st trading period Aircraft operators make an application for allocation of cost- free allowances. Prerequisites for operators: Aircraft operators make an application for allocation of cost- free allowances. Prerequisites for operators: 1. Submission of a monitoring plan for the reporting of t-km data and annual emission to the CA by 31 August, 2009 2. Monitoring of t-km and annual emission during the calendar year 2010 and submission of independently verified t-km and annual emission to the CA by 31 March, 2011 3. Member States submit all valid applications to the European Commission by 30 June, 2011 4. Member States shall issue to each aircraft operators the number of allowances by 28 February, 2012

15. 2009-07-16The Ministry of Environment of the Republic of Lithuania15 Monitoring and reporting Guidelines (MRG) Legally binding Legally binding Have been developed with broad stakeholder involvement Have been developed with broad stakeholder involvement Take into account existing industry practice Take into account existing industry practice Principles: Principles: Completeness, Consistency, Transparency, Trueness, Cost effectiveness, Faithfulness, Improvement of performance Completeness, Consistency, Transparency, Trueness, Cost effectiveness, Faithfulness, Improvement of performance

16. 2009-07-16The Ministry of Environment of the Republic of Lithuania16 MRG overview Annex I: General requirements Annex I: General requirements Annex II – XI: Calculation Methods for Annex II – XI: Calculation Methods for stationary installations Annex XII – XIII: Continuous measurement Annex XII – XIII: Continuous measurement (CO2 and N2O) for stacionary installations Annex XIV: Emissions from Aviation Annex XIV: Emissions from Aviation Annex XV: t-km data from Aviation Annex XV: t-km data from Aviation (Annex XVI – XVIII: Carbon Capture and Storage) (Annex XVI – XVIII: Carbon Capture and Storage)

17. 2009-07-16The Ministry of Environment of the Republic of Lithuania17 MRG principles and resposibilities Operators develops monitoring plan (MP) for the reporting t-km and annual emission – each year by 31 August Operators develops monitoring plan (MP) for the reporting t-km and annual emission – each year by 31 August CA in the administering Member State approves MP - each year by 31 December CA in the administering Member State approves MP - each year by 31 December Operator carries out monitoring consistently with the approved MP Operator carries out monitoring consistently with the approved MP Accredited Verifier (contracted by operator) verifies: Accredited Verifier (contracted by operator) verifies: - Correctness of the data - Correctness of the data - Conformity/compliance with the MP - Conformity/compliance with the MP Operator sends the annual report with the verification statement to the CA for approval – each year by 31 March Operator sends the annual report with the verification statement to the CA for approval – each year by 31 March Operators surrenders a number of allowances equivalent to the verified emissions – each year by 30 April Operators surrenders a number of allowances equivalent to the verified emissions – each year by 30 April

18. 2009-07-16The Ministry of Environment of the Republic of Lithuania18 Monitoring plan Sets out the exact monitoring methodology, Sets out the exact monitoring methodology, including measurement methods, data flow management, internal quality controls etc. Key issue for aviation is to ensure the Key issue for aviation is to ensure the completeness of data To be submitted to the CA by 31 August 2009 To be submitted to the CA by 31 August 2009

19. 2009-07-16The Ministry of Environment of the Republic of Lithuania19 Monitoring of Fuel Consumption (1) Method A: Actual fuel consumption for each flight (tonnes) = Amount of fuel contained in aircraft tanks once fuel uplift for the flight is complete (tonnes) – Amount of fuel contained in aircraft tanks once fuel uplift for subsequent flight is complete (tonnes) – Amount of fuel contained in aircraft tanks once fuel uplift for subsequent flight is complete (tonnes) + Fuel uplift for that subsequent flight (tonnes) + Fuel uplift for that subsequent flight (tonnes)

20. 2009-07-16The Ministry of Environment of the Republic of Lithuania20 Monitoring of Fuel Consumption (2) Method B: Actual fuel consumption for each flight (tonnes) = Amount of fuel remaining in aircraft tanks at block-on at the end of the previous flight (tonnes) – Amount of fuel contained in tanks at block- on at the end of the flight (tonnes) – Amount of fuel contained in tanks at block- on at the end of the flight (tonnes) + Fuel uplift for the flight (tonnes) + Fuel uplift for the flight (tonnes)

21. 2009-07-16The Ministry of Environment of the Republic of Lithuania21 Emissions from aviation activities Emissions = Fuel consumed (tonnes) * EF Use of standard emission factors, e.g.: Use of standard emission factors, e.g.: EF (Jet kerosene) = 3.15 t CO2/t Density (if needed for converting fuel volumes to mass) to be taken from best available source (onboard measurement or fuel supplier, if not available standard value) Density (if needed for converting fuel volumes to mass) to be taken from best available source (onboard measurement or fuel supplier, if not available standard value) Special requirements for non-standard fuels (biofuels) Special requirements for non-standard fuels (biofuels)

22. 2009-07-16The Ministry of Environment of the Republic of Lithuania22 Simplified methods Small emitters: Small emitters: Less than 10,000 t CO2/year or Less than 10,000 t CO2/year or Less than 243 flights per 4 months Less than 243 flights per 4 months Emission estimate taken from a model Emission estimate taken from a model (approved by EU Commission), e.g. Eurocontrol’s PAGODA Same models allowed to close unavoidable data gaps Same models allowed to close unavoidable data gaps

23. 2009-07-16The Ministry of Environment of the Republic of Lithuania23 t-km data Actual t-km are used, not „revenue t-km“ Actual t-km are used, not „revenue t-km“ Distance = Great circle distance (GCD) + 95 km Distance = Great circle distance (GCD) + 95 km - Aerodrome coordinates from official AIPs (Aeronautical - Aerodrome coordinates from official AIPs (Aeronautical Information Publications) - GCD calculated using WGS 84 - GCD calculated using WGS 84 Payload: Payload: Mass of freight and mail: Mass of freight and mail: from Mass & Balance Documentation Passengers and checked baggage: Passengers and checked baggage: Standard 100 kg/Person or Standard 100 kg/Person or taken from Mass & Balance Documentation taken from Mass & Balance Documentation

24. 2009-07-16The Ministry of Environment of the Republic of Lithuania24 Electronic reporting to CA MRG define content of the reports MRG define content of the reports Standardised Excel templates have been published by the Commission: Standardised Excel templates have been published by the Commission: http://ec.europa.eu/environment/climat/emis sion/mrg_templates_en.htm

25. 2009-07-16The Ministry of Environment of the Republic of Lithuania25 Sanctions in cases of non-compliance If the required amount of allowances is not being surrendered, the fine for operator is 100 Euros per allowance If the required amount of allowances is not being surrendered, the fine for operator is 100 Euros per allowance

26. 2009-07-16The Ministry of Environment of the Republic of Lithuania26 EU legislation EU ETS Directive: 2003/87/EC, as amended by Directives 2004/101/EC and 2008/101/EC (and 2009/29/EC) EU ETS Directive: 2003/87/EC, as amended by Directives 2004/101/EC and 2008/101/EC (and 2009/29/EC) Monitoring and Reporting Guidelines (”MRG”): Decision 2007/589/EC, as amended by 2009/87/EC; Amendment for Aviation (2009/339/EC) Monitoring and Reporting Guidelines (”MRG”): Decision 2007/589/EC, as amended by 2009/87/EC; Amendment for Aviation (2009/339/EC) Detailed guidelines for the interpretation of “Aviation activities”: Detailed guidelines for the interpretation of “Aviation activities”:

27. 2009-07-16The Ministry of Environment of the Republic of Lithuania27 National legislation 1. Law on Climate Change...... 1. Law on Climate Change...... 2. Draft order on the Requirements to include Aviation activities in EU ETS...... 2. Draft order on the Requirements to include Aviation activities in EU ETS...... 3..................................................................... 3.....................................................................

28. 2009-07-16The Ministry of Environment of the Republic of Lithuania28 Important timetable for aircraft operators By 31st August 2009: Submission of the monitoring plan to the CA By 31st August 2009: Submission of the monitoring plan to the CA From the 1st of January, 2010: monitoring of emissions and tonne-kilometres according to the monitoring plan From the 1st of January, 2010: monitoring of emissions and tonne-kilometres according to the monitoring plan By 31st March 2011: report to be submitted to the CA By 31st March 2011: report to be submitted to the CA

29. 2009-07-16The Ministry of Environment of the Republic of Lithuania29 Competent Authorities Contact information of EU Member States for national Competent Authorities responsible for the implementation of the inclusion of aviation into EU Emissions Trading System : http://ec.europa.eu/environment/climat/pdf/aviation/ contacts.pdf http://ec.europa.eu/environment/climat/pdf/aviation/ contacts.pdf

30. 2009-07-16The Ministry of Environment of the Republic of Lithuania30 Competent Authorities in Lithuania Ministry of Environment Address: 4/9 A. Jakšto, LT-01105 Vilnius, Lithuania Contact person: Romualdas Brazauskas e-mail: r.brazauskas@am.lt phone: +370 5 2663498 Stasile Znutiene e-mail: s.znutiene@am.lt phone: +370 5 2191867 phone: +370 5 2191867 Ministry of Transport and Communications Address: Gedimino pr. 17, LT-01105 Vilnius, Lithuania

31. 2009-07-16The Ministry of Environment of the Republic of Lithuania31 Information sources EU-Legislation: http://eurlex.europa.eu/en/index.htm EUETS: http://ec.europa.eu/environment/climat/emission/index_en.htm Aviation in the EU ETS: http://ec.europa.eu/environment/climat/aviation_en.htm Monitoring and Reporting in the EU ETS: http://ec.europa.eu/environment/climat/emission/mrg_en. h http://ec.europa.eu/environment/climat/emission/mrg_en. h Electronic reporting: http://ec.europa.eu/environment/climat/emission/mrg_en. htm

32. 2009-07-16The Ministry of Environment of the Republic of Lithuania32 Thank you for your attention