On 17 July 2026, the European Commission (the Commission) published its long-awaited proposal to revise the EU Emissions Trading System (EU ETS) as it applies to aviation, in accordance with its obligations under Article 28b(2) of the EU ETS Directive (the Directive)[1]. The Directive required the Commission to assess whether the International Civil Aviation Organization (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) had matured sufficiently to justify leaving the EU’s “stop-the-clock” arrangement in place. If CORSIA fell short, the default consequence, baked into the Directive since the last revision, was reconsideration of expansion of the EU ETS to cover all flights departing the European Economic Area (the EEA).
The Commission’s own assessment found that CORSIA had not been strengthened and participants currently account for well under 70% of international aviation emissions[2]—below the threshold that would have permitted the Commission to leave the scheme as it stands pursuant to Article 28b(3) of the Directive. In response, the Commission has proposed that the EU ETS will extend to flights departing the EEA for destinations within a 5,000km radius, from 2029, running for an initial four years and subject to review in 2032[3]. This proposal omits longer-haul routes—many of them more politically contentious—from the scope of the EU ETS. Meanwhile, the Commission proposes to incorporate CORSIA’s own unit-cancellation mechanism under Article 12(9) into EU law through to 2035[4].
A More Measured Proposal?
In the run-up to the announcement, there had been concerns that the Commission might conclude that is should apply a more sweeping option and expand the ETS to all departing flights[5]. Fears of this may have been overblown, as it was unlikely that the Commission would want to face the same disagreements over double charging and extraterritorial reach that resulted in the initial “stop-the-clock” arrangement. Indeed, ICAO was quick to make exactly this point in response to the July proposal, warning that an expanded EU ETS risks “fragmenting global aviation decarbonization efforts and jeopardizing the achievement” that CORSIA represents and undermining the level playing field the scheme was designed to preserve[6].
That the Commission did not apply a more sweeping conclusion is not a vote of confidence in CORSIA—by the Commission’s own assessment the scheme is under-delivering: cumulative authorised carbon credit supply had reached only around 42 million tonnes by August 2026, against Phase 1 demand estimated at roughly 200 million tonnes[7].
Instead, the near-neighbourhood approach reads as a mechanism to keep pressure on ICAO and CORSIA’s participating states to close the implementation gap before the 2032 review, rather than as an endorsement that all is well. Whether that pressure is applied for principled environmental reasons or because it is the path of least political resistance is a fair question.
Economics v. the Environment
Both the Commission and the International Air Transport Association (IATA) frame their concerns from similar perspectives—the Commission considering the wider ETS package as a response to a changing “geoeconomic context” placing European businesses under growing pressure[8], and IATA has separately pointed out competitiveness concerns when the EU ETS changes are added to the Entry Exit System issues, consumer protection rules, taxation and airport charges, especially when added to fuel price volatility flowing from the tensions in the Strait of Hormuz this summer[9].
Noting the 5,000km threshold captures short-haul competitor routes into the Gulf and North Africa while leaving the EU’s longest, most emissions-intensive intercontinental routes untouched, industry and environmental groups have each appeared to read the outcome as a compromise engineered as much for its optics as for its climate logic—IATA being “deeply frustrated” at the extraterritorial reach of even this narrower scope[10], and Transport & Environment arguing that “due to industry pressure, only a proportion of journeys will be covered and the longest, most polluting flights will remain exempt. This must only be a starting point... Aviation must pay for all its emissions, just like any other sector of the economy.”[11]
A Proposal is Just a Start
The proposal now enters the ordinary legislative procedure, with the European Parliament and the Council of the European Union each needing to agree on a position before trilogue negotiations can begin. Aviation dossiers of this kind are rarely waved through unamended, and this one arrives with real consumer-facing objections—Transport & Environment has estimated that the near-neighbourhood levy would add in the order of €10 to a Paris–Madrid fare and €31 to a Paris–Istanbul fare[12]. Figures of that kind arrive at a moment when the cost of living remains a live political issue across the European Union, and when Members of the European Parliament will be conscious that a proposal billed as closing a loophole for long-haul travel can easily be characterised on the doorstep as a tax on the weekend city break.
It is easier to imagine the proposal emerging from scrutiny watered down under pressure from consumer and industry lobbies concerned about competitiveness and fares rather than, conversely, hardened by environmental committees unpersuaded that a 5,000km cut-off is appropriate. Equally, now that the proposal is exposed to the oxygen of debate, it seems unlikely to some that the proposal will disappear completely[13]. Either way, operators exposed to EU-departing routes within the relevant radius would be well advised to treat the 2029 start date, and the precise geographic and temporal scope, as provisional rather than settled.
Conclusion
CORSIA remains, for now, the primary international framework governing the great majority of cross-border aviation emissions, and the Commission has chosen not to displace it wholesale. That is a materially better outcome for airlines than the alternative that was anecdotally mooted in the spring. But the narrower proposal buys stability at the cost of coherence, layering a geographically arbitrary EU measure alongside a global one—CORSIA is in its infancy, is designed to be different to the ETS, is likely to have different cost structures, and, despite its issues, brings some of the biggest aviation economies with it. These factors need weighing up when considering a proposal that reads as calibrated to competing domestic political pressures as much as to environmental effectiveness, which will now be tested by 18 months of Parliamentary negotiation, in a cost-of-living conscious environment.
[1] Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC.
[2] Paragraph 82, Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2003/87/EC and Decision (EU) 2015/1814 as regards driving competitiveness and cost-effective decarbonisation (COM(2026) 616).
[3] Para. 82, id.
[4] Para. 83, id.
[5] See, e.g., https://www.ft.com/content/0ad147b4-e8e2-412b-8337-72ac61c09060?syn-25a6b1a6=1#:~:text=Brussels%20is%20due%20to%20review,the%20bloc%20to%20international%20flights.
[6] ICAO, “ICAO statement on proposed expanded scope of EU Emission Trading System,” 17 July 2026.
[8] Para. 5, COM(2026) 616.
9 See the comments of Rafael Schvartzman, IATA’s Regional Vice President for Europe in [9] IATA Airlines, “Europe must strengthen its aviation competitiveness,” 29 Aug. 2026: https://airlines.iata.org/2026/08/29/europe-must-strengthen-its-aviation-competitiveness.
[10] IATA Airlines, id.
[11] https://www.transportenvironment.org/articles/eu-takes-half-hearted-step-towards-taxing-international-flights?trk=public_post_comment-text.
