IATA is calling on the European Union to review its Emissions Trading System, warning it risks harming aviation competitiveness and connectivity. The association advocates full CORSIA implementation, SAF market reforms, and reinvestment of ETS revenues to support decarbonization while maintaining economic resilience in a volatile global environment.
Brussels, March 19, 2026 — The International Air Transport Association (IATA) has called on the European Union to review its European Union Emissions Trading System (EU ETS), warning that the current framework risks undermining Europe’s air connectivity and economic resilience while adding cost and complexity to decarbonization efforts.
The appeal comes amid growing concern among EU leaders about the system’s effectiveness and its impact on the bloc’s global competitiveness—concerns echoed in the Draghi Report, which highlights regulatory complexity, high costs, and underinvestment as key barriers to economic growth. Against a backdrop of geopolitical instability and supply chain disruptions, IATA argues that strong air connectivity remains essential to Europe’s global standing.
A Call for Global Alignment
At the heart of IATA’s proposal is the full implementation of Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a global emissions framework agreed under the International Civil Aviation Organization (ICAO).
IATA is urging the EU to apply CORSIA uniformly to all international flights, including routes within the European Economic Area (EEA), and to avoid regional deviations that could fragment the market.
According to the association, overlapping regional measures not only increase administrative burdens but also weaken the effectiveness of globally coordinated climate action. A harmonized approach, free from EU-specific eligibility constraints, would provide airlines with a predictable and consistent regulatory environment while ensuring credible emissions reductions worldwide.
Boosting Sustainable Aviation Fuel Through Market Reform
Another central recommendation is the introduction of a “book-and-claim” system for Sustainable Aviation Fuel (SAF) within the EU ETS.
Such a system would allow airlines to claim environmental benefits based on SAF purchases, regardless of where the fuel is physically used. IATA argues that this flexibility is critical to scaling SAF adoption across Europe, especially for carriers operating outside major fuel hubs.
By enabling a transparent and liquid SAF market, the mechanism could lower costs, improve investment certainty, and ensure a level playing field for all operators. Implementation would require updates to EU ETS rules and enhancements to the Union Database to track both physical fuel and its environmental attributes, preventing double-counting.
Redirecting Billions Toward Decarbonization
With free emissions allowances for aviation phased out in 2024, airlines are facing a significant increase in compliance costs. IATA estimates that the sector will surrender nearly 330 million allowances between 2026 and 2030, generating billions of euros in revenue for EU member states.
However, only a small fraction of these funds currently flows back into aviation decarbonization initiatives.
IATA is calling for a greater share of EU ETS revenues to be reinvested into the sector, particularly to:
- Scale up SAF production and infrastructure
- Support emerging zero-emission technologies
- Help airlines absorb the high costs of early-stage green solutions
The association points to estimates from the Sustainable Transport Investment Plan, which suggest that €57–67 billion will be needed by 2035—and up to €376 billion by 2050—to meet SAF demand.
It also recommends expanding the SAF Allowance scheme, which currently covers just 4–5% of projected needs, and reconsidering the removal of free allowances to protect competitiveness and sustain investment in green technologies.
Balancing Climate Ambition with Economic Reality
IATA emphasizes that climate policy must strike a balance between environmental ambition and economic resilience. With new EU ETS rules set to take effect in 2026, the industry faces rising costs at a time of ongoing geopolitical and economic uncertainty.
“European aviation policy must strengthen competitiveness as it advances decarbonization,” said Willie Walsh. “Reviewing the EU ETS offers a critical opportunity to refocus efforts on cost-effective emission reductions.”
Walsh stressed that priorities should include full CORSIA implementation, reinvestment of ETS revenues into credible decarbonization solutions, and the removal of overlapping regulations that add cost without environmental benefit.
A Strategic Crossroads for European Aviation
IATA concludes that a revised EU ETS must deliver a harmonized, science-based climate policy aligned with international standards. Failure to do so, it warns, could erode Europe’s aviation competitiveness, reduce connectivity, and ultimately weaken the region’s economic resilience.
As the EU weighs reforms, the outcome could shape not only the future of aviation decarbonization but also Europe’s position in an increasingly competitive and uncertain global economy.