IATA Urges EU to Review Emissions Trading System to Protect Aviation Competitiveness

Why It Matters

A reformed EU ETS could preserve Europe’s air connectivity while channeling billions of euros toward the sector’s climate transition, directly influencing the region’s economic resilience and global market position.

Key Takeaways

• IATA calls for EU to adopt CORSIA uniformly
• Proposes SAF “book‑and‑claim” system within EU ETS
• Seeks greater EU ETS revenue reinvestment into decarbonisation
• Warns ETS could erode European air connectivity
• Highlights €57‑67bn SAF funding gap by 2035

Pulse Analysis

Europe’s Emissions Trading System has become a flashpoint for the aviation industry, as airlines grapple with rising compliance costs and regulatory overlap. IATA’s latest appeal underscores a strategic shift toward global harmonisation, urging the EU to fully integrate the ICAO‑approved CORSIA scheme across all international routes. By eliminating regional divergences, policymakers can reduce administrative burdens and create a predictable environment that encourages investment in low‑carbon technologies, while still meeting the EU’s climate objectives.

A central pillar of IATA’s proposal is the introduction of a “book‑and‑claim” model for Sustainable Aviation Fuel within the ETS framework. This approach decouples the environmental claim from the physical fuel location, allowing airlines to purchase SAF credits regardless of where the fuel is produced or used. The resulting market liquidity can drive down SAF prices, attract new producers, and accelerate the scaling of supply chains that are currently constrained by limited hub infrastructure. Transparent tracking mechanisms would safeguard against double‑counting, ensuring that each tonne of SAF delivers genuine emissions reductions.

Beyond market design, IATA emphasizes the need to reinvest the substantial ETS revenue—projected to reach billions of euros between 2026 and 2030—directly into aviation decarbonisation. Allocating funds to SAF expansion, emerging zero‑emission propulsion, and infrastructure upgrades would address the €57‑67 billion financing gap identified for 2035. Such targeted investment not only bolsters the sector’s competitiveness but also aligns climate ambition with economic reality, preserving Europe’s connectivity and its role as a global aviation hub.