The European Court of Justice's senior legal advisor is poised to put forward an opinion on the challenge against the inclusion of aviation in the EU's emissions trading system (ETS), brought forward by the Air Transport Association of America (ATA) and three of its members.
During a recent technical briefing to detail the amount of free allowances aircraft operators will be entitled to when ETS takes effect on 1 January 2012, Jos Delbeke, the European Commission's director general for climate action, said the court's advocate general would issue a view on the challenge on 6 October.
This will be an "important moment", said Delbeke, because the opinion expressed will give "a strong indication of how the court will rule".
Non-compliance with ETS will result in a penalty of €100 ($135) per tonne of carbon dioxide emitted, warned Delbeke. The US House of Representatives' transportation and infrastructure committee recently approved a bill that would prevent US carriers from taking part in ETS, and strong opposition to the scheme has also been voiced by China and Russia.
Delbeke said the European Commission is "still having intensive discussions" with various countries about ETS, and is "very open to taking those discussions forward".
The Commission announced on 26 September that aircraft operators will receive 85% of their emissions allowances free of charge in the first year of ETS, before dropping to 82% in the period from 1 January 2013 to 31 December 2020.
In the first year, airlines will have to purchase the remaining 15% of their allowances through an auctioning process. However, the Commission has set aside 3% of remaining allowances in the 2013-2020 period as a "special reserve", which will be available to new entrants and fast-growing airlines.
"At current market prices, these free allowances represent more than €20 billion ($27 billion) over the decade," said EU climate action commissioner Connie Hedegaard. "With these potential revenues, airlines could invest in modernising their fleets, improving fuel efficiency and using non-fossil aviation fuel."
However, this suggestion has been slammed by the IATA, which is calling for EU ETS to be scrapped. "If that were the reality, we wouldn't be complaining. But it's not," said IATA director general Tony Tyler. "The well-known fact is that airlines will be net purchasers of carbon emissions permits for the foreseeable future. The starting cost is $1.2 billion in 2012. To put that into perspective, the industry's projected 2012 profit is $4.9 billion."