IATA calls for a revision of the European emissions trading system: a warning to Brussels that climate policy must not undermine Europe's air connectivity
The International Air Transport Association IATA called on the European Union on 19 March 2026 to reconsider its Emissions Trading System, known as the EU ETS, with the message that the current model for aviation carries a serious risk to the competitiveness of European carriers, the connectivity of the continent, and the resilience of the economy. At the heart of the request is not a rejection of climate goals, but a change in approach: IATA argues that the decarbonisation of air transport must remain ambitious, but also economically sustainable, especially at a time when Europe is facing geopolitical instability, disruptions in supply chains, and growing pressure on industrial competitiveness.
The association believes that the revision of the EU ETS is an opportunity for Brussels to align climate policy with real conditions on the global market. The main message is that Europe should not create parallel or overlapping systems that increase costs for airlines while not delivering a proportionally greater effect on emissions reduction. IATA therefore proposes four directions: full implementation of the global CORSIA system for international flights, adjustment of rules for sustainable aviation fuel through the “book-and-claim” model, returning a larger share of ETS revenues back into the decarbonisation of the sector, and balancing climate policy with issues of resilience and market competition.
The dispute is not about the goal, but about the method
The debate now opening is not reduced to a classic conflict between ecology and industry. In its latest statement, IATA emphasises that air transport remains committed to the goal of net zero carbon dioxide emissions by 2050, but warns that the cost and regulatory framework must be set so that companies can invest in real solutions, and not only in meeting ever more complex administrative obligations. According to IATA Director General Willie Walsh, European policy towards aviation must strengthen competitiveness while at the same time pushing the sector towards decarbonisation, and the revision of the EU ETS should be an opportunity to focus on cost-effective emissions reduction.
This is important also because European aviation competes not only within the European Union. Major carriers from Europe are directly exposed to competition from companies from the Gulf, Turkey, Asia, and other markets that do not have the same regulatory burden. When the costs of carbon, sustainable fuel, reporting, and compliance are added up, the question is no longer only how much a flight will become more expensive, but whether European companies will have less room to invest in fleet, new technologies, and route networks. This is precisely where IATA sees the danger: if the political signal is reduced only to a new cost, and not also to the creation of conditions for transition, Europe could weaken its own transport and economic infrastructure.
What the EU ETS is and why it has become a point of contention
The EU ETS is the main European carbon pricing mechanism. In practice, this means that operators must surrender emission allowances for emissions from activities covered by the system, and they buy some of them at auctions or on the market. In aviation, the system existed for years with a certain number of free allowances, but the European Commission states that this free allocation for air carriers is being gradually phased out and will be completely abolished by 2026. The Commission also states that the transition is gradual: free allocation was reduced in 2024, reduced further in 2025, and from 2026 the sector moves to full exposure to the auctioning model.
For advocates of stricter climate policy, this is a logical step because the price of carbon should encourage emissions reductions and investment in cleaner solutions. But for the industry, this means a sharp rise in costs in a period when alternative fuels are still expensive, production capacities are limited, and global rules are still not harmonised. This is exactly where the divergence arises: Brussels argues that the ETS remains a key tool for reducing emissions, while IATA believes that the current design, especially in combination with other European rules, can lead to overlapping obligations and weakened competitiveness without an adequate climate benefit.
Why IATA is calling for the full implementation of CORSIA
The central element of the request is CORSIA, the global system for offsetting and reducing emissions from international aviation that operates within the framework of the International Civil Aviation Organization ICAO. ICAO states that CORSIA is the first global market-based mechanism applied to an entire sector. For the period from 2024 to 2035, the system is based on a reference level of 85 percent of 2019 emissions, and participating states and operators must, under certain conditions, offset emissions above that level.
At the same time, the European Commission points out that the ETS Directive was revised in 2023 precisely for the appropriate implementation of CORSIA and that additional rules for monitoring, reporting, and verification of emissions were adopted in 2025 so that this system could be implemented within the European Economic Area. In July 2025, the Commission also published a list of countries which, for the purposes of European law, are considered countries that apply CORSIA for emissions in 2025.
IATA, however, argues that the European Union still does not implement CORSIA in full for all international flights, including flights within the European Economic Area, and warns that regional deviations, additional criteria, and parallel obligations can undermine the single global framework. The point of its argument is that aviation by nature is not a local or regional activity. If every major jurisdiction introduces its own special conditions on top of the global model, carriers will face fragmented rules, different costs, and greater legal uncertainty. In such a scenario, IATA argues, the environmental effect is not necessarily greater, but the administrative burden is.
Sustainable fuel as the greatest hope, but also the greatest cost
A particularly sensitive issue is sustainable aviation fuel, or SAF. On its official pages, the European Commission states that SAF is precisely the strongest tool for reducing carbon dioxide emissions in aviation and that the ReFuelEU Aviation regulation from 2025 prescribes a mandatory share of such fuel in supply at European airports. The Commission states that the target for 2025 is a 2 percent share, for 2030 6 percent, while in the long term the shares rise significantly, including synthetic fuels.
The problem is that SAF is still several times more expensive than conventional kerosene, and its availability is still nowhere near the level required for a rapid and broad transition. At the end of February 2025, the European Commission published a report on the development of the SAF market and concluded that the industry is on track to meet the 2 percent target for 2025, but also that better traceability, greater transparency, and a lower administrative burden are needed for further growth. In other words, the market is developing, but it is still fragile.
That is why IATA is calling for the introduction of the “book-and-claim” model within the EU ETS. This is a system in which the environmental value of purchasing SAF can be recorded and recognised regardless of whether the fuel is physically loaded at the very airport from which the specific aircraft takes off. The industry argues that such an approach is necessary because the production and distribution of sustainable fuel are not evenly distributed across Europe. Without that flexibility, larger and traffic-heavier hubs have an advantage, while carriers and regions further from the main supply points enter a less favourable position. IATA therefore advocates a model that would make it possible for the purchase of and investment in SAF to be recognised through a transparent and strictly supervised record-keeping system, without double counting of benefits.
ETS revenues and the question of who pays for the transition
Another key point of contention concerns money. IATA argues that aviation enters the European ETS with billions of euros in costs, but that too little of that money is returned to the actual mechanisms of decarbonising the sector. In the statement of 19 March, the association says that between 2026 and 2030 the aviation sector will have to surrender almost 330 million emission allowances and that this will bring member states billions in revenue. At the same time, it warns that the current support through the SAF allowances system is limited and that, according to its estimate, it covers only a small part of the industry's real needs in the second half of this decade.
The European Commission confirms that for the period 2024-2030, 20 million emission allowances from the aviation part of the ETS have been reserved to support the use of alternative fuels. But the Commission itself, in documents on the sustainable transport investment plan, also highlights the scale of the investments needed: according to the official factsheet, to align with European targets by 2035, between 57 and 67 billion euros are needed just for sustainable aviation fuels, while the needs by 2050 are even significantly greater. This clearly shows that the question is no longer only whether support exists, but whether its scale is sufficient in relation to the set pace of the transition.
IATA therefore calls for a larger share of ETS revenues to be channelled back into aviation, primarily into increasing SAF production, developing less mature production technologies, and supporting the introduction of solutions that are today still too expensive for commercial application. Their logic is simple: if the sector is already paying a high carbon price, then those funds should accelerate technologies that truly reduce emissions. Otherwise, in the eyes of the industry, the ETS easily turns into a fiscal instrument rather than a transition tool.
Europe's competitiveness as the political framework of the debate
IATA places its request not only in the framework of aviation policy, but connects it to the broader debate on European competitiveness. In the statement, it refers to the growing scepticism of part of the European leaders towards the effects of certain elements of the ETS on the industrial strength of the Union, and as a reference point it also mentions Draghi's report on the future of European competitiveness. The European Commission does indeed state on its pages that Draghi's report served as an important basis for the discussion on how Europe can strengthen growth, reduce dependencies, and implement decarbonisation without further weakening its economy.
This is a politically important detail because it shows that IATA is trying to fit its message into the broader European narrative: it is not asking for the abandonment of green goals, but argues that the question of cost, regulatory complexity, and speed of implementation has become a question of economic resilience. In translation, air connectivity is not only a service for passengers but also infrastructure for trade, tourism, investment, and labour mobility. If European carriers are burdened more than competitors, the possible consequences will not be felt only in airline balance sheets, but also in regional connectivity, the price of travel, and the availability of routes.
What follows in European regulation
During 2026, the debate on the ETS in aviation will probably intensify further because the system is in a sensitive transitional phase. Free emission allowances are disappearing, obligations related to SAF are growing, CORSIA is entering a new stage of implementation, and the European Commission is simultaneously developing a system for monitoring non-CO2 effects of aviation that has applied since 1 January 2025. The Commission has also announced a report by the end of 2027 on the results of that system and a possible legislative proposal to further address the non-carbon effects of flying.
This means that the European regulatory framework for aviation is still in motion. For the industry, this is an additional reason for concern because uncertainty itself carries a cost: companies find it harder to plan investments, fuel contracts, fleet renewal, and route networks when they do not know what the final regulatory package will be in a few years. On the other hand, from the perspective of European institutions, now is precisely the moment to consolidate the direction towards decarbonisation and not postpone measures that should have an effect by 2030.
Can a middle ground be found
The key question is not whether aviation should pay the price of emissions, but how to shape the rules so that they simultaneously encourage investment, do not create unnecessary overlaps, and do not push European operators into a weaker position than global competition. In that sense, IATA's request to Brussels opens a debate that will become increasingly important beyond aviation itself: how to align climate ambition with industrial policy and Europe's strategic autonomy.
According to the currently available official data, the European Union is not abandoning the ETS as a fundamental instrument of climate policy, nor ReFuelEU Aviation as the main engine for the growth of the sustainable fuel market. But it is equally clear that the real success of these policies will depend on whether Europe in the coming years secures enough SAF production, a sufficiently predictable regulatory framework, and a sufficient return of revenues back into the transition. If it fails to do so, IATA's warning that climate rules could weaken the connectivity and competitiveness of European aviation will no longer be just an industry complaint, but a serious political issue for Brussels.
Sources:- IATA – official statement of 19 March 2026 on the request for revision of the EU ETS in aviation (link)- European Commission, Climate Action – overview of reducing emissions from aviation and announcement of the system for non-CO2 effects from 2025 (link)- European Commission, Climate Action – rules on the free allocation of emission allowances and their complete abolition for aviation by 2026 (link)- European Commission – announcement on the adoption of rules for monitoring, reporting, and verification of emissions for the implementation of CORSIA of 4 June 2025 (link)- EUR-Lex – Commission Implementing Regulation (EU) 2025/1500 on the list of countries considered countries applying CORSIA for emissions in 2025 (link)- ICAO – official overview of the CORSIA system as a global market-based mechanism for international aviation (link)- European Commission, Mobility and Transport – ReFuelEU Aviation and targets for sustainable aviation fuel in the EU (link)- European Commission – report and clarifications on the implementation of ReFuelEU Aviation of 28 February 2025 (link)- European Commission – Sustainable Transport Investment Plan and estimates of the investment needed for SAF in Europe (link)- European Commission – page on Draghi's report on the future of European competitiveness (link)
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