EU Carbon: Extension of ETS Tax to International Flights Announced for 2026

A major setback for international airlines. On May 14, the European Commission confirmed its plan to include all international flights in the EU Emissions Trading System (ETS) starting in 2026—a strong signal less than two months before the formal revision of the scheme. According to the Commission, extra-European aviation currently accounts for most of the non-regulated emissions within the Union.

Scope of the European Project

Until now, the ETS required airlines to purchase carbon allowances solely for intra-EU flights. Flights to and from third countries, which are responsible for the largest share of aviation emissions, remained outside the scheme (Commission européenne, 2026 - Politico EU News du 14/05/2026). Polona Gregorin, head of unit at DG Climate, outlined the goal of “effective pricing for all emissions from air transport” within the single market. The Commission is targeting the “end of the current asymmetry” between intra- and extra-European routings.

Timeline and Legal Basis

The formal presentation of the ETS revision is expected during the next legislative round in July 2026. While the published timeline remains cautious, DG Climate is aiming for entry into force to coincide with the new ETS allowance allocation period, i.e., from early 2027 “at the earliest.” The basis for this is Directive 2003/87/EC as amended, which has underpinned the European carbon market architecture for aviation since 2012. Article 3ter of the directive sets out the modalities for including air operators from third countries.

Operational Challenges for the Industry

The announcement has triggered a backlash from airlines, already affected by rising fuel costs linked to the Middle East crisis and by sharp volatility in EU ETS carbon allowance prices (spot price above €87/t for May 2026 according to EUA European Carbon Prices, ICE). The International Air Transport Association (IATA) fears a domino effect on passenger fare structures, with operators telling the BBC that a hike in ticket prices for Europe is “inevitable” (BBC News, 15/05/2026). Freight forwarders and customs brokers will need to adapt the carbon valuation of emissions related to each flight in real time, based on the enhanced instructions expected from the Commission prior to the practical entry into force of the new rules.

Given the bilateral tensions already observed with the United States during the first extension attempt (2012), the risk of WTO disputes remains high. Several analyses recall that a system built on the polluter-pays principle, which is not pooled and applies only to certain non-EU operators, raises major compatibility issues with the GATT and the Chicago Convention (see Bartels, EJIL Vol. 23 No. 2, 2012).

Sector Reactions and Outlook

The industry is urgently awaiting clarification of the scheme. Several EFTA carrier members and global airline operators are concerned about escalating European regulation within an international context that remains fragmented on carbon pricing, even as parallel discussions continue at ICAO and among voluntary coalitions (see Mining.com.au, 13/05/2026). The Commission has reiterated that “applying the ETS to all international air traffic is essential for reaching climate neutrality by 2050.” Compliance managers, warehouse operators, and Authorized Economic Operators (AEOs) in the aviation sector will need to factor this new element into customs compliance management, with increased vigilance over double taxation risks for transatlantic flows—an argument already raised in previous legal challenges (EJIL 23(2), 2012).

L’extension de l’ETS aux vols internationaux doit être présentée en juillet 2026 pour une application au plus tôt en 2027, avec un impact opérationnel majeur pour le secteur aérien et tous les intervenants de la chaîne logistique. (The extension of the ETS to international flights will be presented in July 2026 for entry into force from 2027 at the earliest, bringing major operational consequences for the aviation industry and all parties involved in the supply chain.)

Sources: Politico EU Trade, 14/05/2026 · BBC News, 15/05/2026 · EJIL, Vol. 23 No. 2, 2012