EU Could Raise Billions by Expanding Aviation Emissions Rules, Study Finds

A new analysis suggests the European Union could unlock billions in extra funding for environmental programmes by widening the scope of its aviation charges under the EU Emissions Trading System (EU ETS).

Looking through an airplane window at a EU deciduous forest from above. AI generated picture.

The study, commissioned by Carbon Market Watch and carried out by consultancy Carbone 4, was released ahead of the EU ETS review planned for 2026. It found that just 15% of aviation’s overall environmental impact is currently priced—leaving the vast majority outside the system.

From full coverage to ‘stop-the-clock’

When aviation was added to the EU ETS in 2012, it was supposed to cover all flights to or from the European Economic Area (EEA). However, pushback from non-EEA countries led to the ‘stop-the-clock’ measure, which restricted coverage to flights within the EEA.

International routes were instead left to CORSIA, the global offsetting scheme launched by the International Civil Aviation Organization (ICAO) in 2020. The report highlights that CORSIA only applies to traffic growth above 85% of 2019 levels, focuses solely on offsets, and excludes most emissions entirely.

Four possible futures for aviation in the EU ETS

In July 2026, the EU will review CORSIA and decide whether to lift “stop-the-clock.” The study models four scenarios:

1. Restoring coverage to all flights to or from the EEA (original 2012 plan)
2. Covering all flights departing from the EEA (excluding arrivals)
3. Keeping intra-EEA coverage but adding routes to or from countries outside CORSIA
4. Maintaining the current intra-EEA-only scope

Cumulated revenues 2025-2040 in billion €. Source: Carbone4  

Potential for up to a tenfold revenue boost

Simply expanding the geographic scope could nearly quadruple revenues from aviation under the ETS. Including the impact of non-CO₂ effects—such as contrails—and bringing private jets into the system (67% of their emissions are currently excluded) could push revenue gains close to ten times today’s levels.

At present, most allowances are bought directly by airlines or through secondary markets. Around 75% of the proceeds go to EU Member States, while 25% fund EU-level initiatives. Free allocations are set to end in 2026, further increasing potential income.

Funding for the transition

The authors suggest using additional funds to accelerate the roll-out of sustainable aviation fuels (bioSAF and eSAF), improve Europe’s rail network through the Trans-European Transport Core Network (TEN-T), and contribute to the EU’s commitment to the New Collective Quantified Goal.

“It is scandalous that the aviation industry has skirted paying for its climate impacts for so long,” said Bastien Bonnet-Cantalloube of Carbon Market Watch.

With ambitious neutrality targets set for the next 25 years, the decisions made in 2026 could have far-reaching effects on both aviation’s path to lower emissions and the EU’s ability to finance sustainability projects.