The European Union could substantially increase resources for environmental initiatives by reforming how it prices aviation under the EU Emissions Trading System (EU ETS), according to new research commissioned by Carbon Market Watch and conducted by Carbone 4 ahead of the 2026 review. Today, only a fraction—about 15%—of aviation’s overall impact is priced, leaving large portions unaddressed.
Aerial view of an EU deciduous forest seen through an airplane window. AI generated picture.
Aviation entered the EU ETS in 2012 and was meant to cover all flights to or from the European Economic Area (EEA). Following pressure from third countries, the ‘stop-the-clock’ measure limited coverage to intra-EEA flights. International routes were instead steered towards CORSIA, the ICAO scheme launched in 2020. The study notes CORSIA’s narrow reach: It applies only to traffic growth above 85% of 2019 activity, relies on offsets rather than in-sector reductions, and leaves most activity exempt.
The EU will assess CORSIA in July 2026. Depending on that assessment, ‘stop-the-clock’ could end, and the EU may propose extending the EU ETS to all departures from the EEA. The study models four scope choices: reinstating coverage for all flights to or from the EEA (as originally planned); covering all departures from the EEA (excluding arrivals); maintaining intra-EEA coverage while also applying it to routes to or from countries outside CORSIA; or keeping the current intra-EEA-only scope.
Cumulated revenues 2025-2040 in billion €. Source: Carbone4
On revenues, the study finds that broadening geographic coverage alone could nearly quadruple aviation ETS income versus the narrow status quo. Adding pricing for non-CO₂ effects (notably contrails) and including private jets—67% of whose emissions are presently outside the system—would lift totals several-fold further; in combined cases, modelled outcomes approach a tenfold increase over today.
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Most allowances are purchased directly by operators or via secondary markets, with roughly three quarters of proceeds accruing to Member States and the remainder to EU-level funds. Free allocations are set to end in 2026, which would further expand paid coverage. The authors highlight priority uses for additional proceeds: accelerating industrial-scale sustainable aviation fuels (bioSAF and eSAF), strengthening the Trans-European Transport Core Network for rail, and contributing 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 a 25-year neutrality horizon, the 2026 decisions on scope and coverage could shape both aviation’s decarbonisation path and the EU’s wider sustainability financing.
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As the EU weighs decisive reforms to its aviation emissions framework, the direction is clear: Stronger pricing mechanisms and broader coverage are becoming essential tools to drive measurable impact. For businesses, this shift signals a growing premium on transparent, verifiable action—especially in sectors linked to transport, energy, and land use. At DGB Group, we translate these emerging policy signals into tangible opportunities through large-scale, nature-based projects that restore ecosystems, enhance biodiversity, and generate independently verified carbon units. Whether your goal is to align with evolving regulations, strengthen your sustainability credentials, or secure high-quality offsets, we help turn commitments into real-world results.
