Proposals aimed at including airlines into the EU’s carbon trading scheme have been revised to take account of trade concerns. Non-EU airlines will be exempt until 2012.

The Commission, on 20 December 2006, tabled a proposal to integrate European airlines into the EU carbon trading scheme as of 2011. 

After heated discussions at the Commission, foreign airlines were allowed to continue emitting CO2 freely for an extra year, until 2012.

An impact study evaluates that the scheme would raise ticket prices by €4.6-€39.6, depending on the distance covered. 

The proposal will now be forwarded to Parliament and Council for approval. 

The revised version is a result of pressure exerted on the one hand by Transport Commissioner Jacques Barrot – who supported the aviation industry’s view that the initial draft was too aggressive vis-à-vis third countries – and by Trade Commissioner Mandelson – who feared that it could compromise the EU’s trade relations with the United States. 

US officials had earlier threatened to take legal action if the EU went ahead with plans to treat all airlines coming or going from EU airports, irrespective of their nationality, in the same way.

Details of the proposal include:

  • Intra-EU flights come under the scheme in 2011. Flights in and out of the EU will be exempted until 2012; 
  • pollution limits will be set by the Commission EU-wide, calculated on the basis of average aviation emissions in 2004-2006. This is in contrast with the system currently in place for other industrial sectors, where ‘pollution credits’ are allocated at national level and then approved or rejected by Brussels; 
  • airlines will receive 90% of pollution permits for free. The remaining 10% will be auctioned with a view to setting a market price, and; 
  • pollution permits allocated under the scheme can only be used (and therefore traded) by the aviation sector. 
  • government and military flights are excluded, and; 
  • non-CO2 emissions are not tackled.