Airlines flying into Europe will be included in the EU ETS from next year, the first attempt to include the sector in an emissions scheme. Industry bodies have argued against standalone regional schemes, instead calling for a global system via ICAO.

In October, the EU's approach received backing from the European Court of Justice. In an initial opinion on the challenge brought by US carrier body the Air Transport Association (ATA), supported by IATA, ECJ advocate general Juliane Kokott said the inclusion of international aviation in ETS is not contrary to international law. ATA and IATA argue the move violates the Chicago Convention.

Kokott's decision is not binding but offers the court an opinion ahead of a final ruling, expected later this year or early in 2012.

Following the decision, Connie Hedegaard, European commissioner for climate action, reaffirmed the EU's wish to "engage constructively" with non-EU countries during implementation of the scheme.

ATA, stressing it is not unusual for the final ruling to differ in complex cases, highlights a recent declaration by 25 nations opposing the scheme and warning of retaliatory action. The declaration, signed by China, the USA, Russia, Brazil, India, Japan and the United Arab Emirates among others, marks the first time multiple states have banded together to fight the EU on emissions.

"If it falls on deaf ears, there are going to be serious economic consequences in Europe," Prashant Sukul, joint secretary of India's Ministry of Civil Aviation, a co-organiser of the summit, said at the World Route Development Forum in Berlin. The 25 nations are set to meet again this month.

IATA, calling on Europe to back a global scheme through ICAO rather than "risking a further escalation of tensions among states", rejects EU suggestions that the issuing of free permits to airlines initially covering 85% of emissions allowances will enable airlines to invest €20 billion ($27 billion) in clean technologies. "If that were the reality, we wouldn't be complaining. But it's not," says Tyler, adding airlines will be net purchasers of carbon emissions permits for the foreseeable future. IATA estimates airlines face starting costs of $1.2 billion in 2012.

But Gernot Wagner, an economist with the USA's Environmental Defense League, argues airlines are overstating the cost of complying with EU ETS and suggests the costs of a New York-Brussels flights are likely to increase by under $3 in 2012.

Source: Airline Business