EU caps airline CO2 emissions as of 2012

Brussels: The European Union has decided to cap airline emissions as of 2012, bring to an end an internal impasse over the draft legislation that the United States has opposed.

The legislation could possibly cost the airline industry billions of dollars. A parliament statement confirmed reports that airlines would be required to cut emissions by three per cent in the first year, and by five per cent from 2013 onwards. The accord by European Parliament and government negotiators adds European Union and foreign airlines to the European emissions-trading system (ETS) in January 2012. The system imposes carbon-dioxide quotas on businesses, and mandates those exceeding their limits to buy permits from companies that emit less.

Negotiators also decided that quotas should cover 97 per cent of historical emissions in 2012, and 95 per cent from 2013. 15 per cent of allowances on which the caps are based should be auctioned, instead of allocated for free to raise the cost of polluting. That means that airlines taking off or landing in the EU would have to buy 15 per cent of their permits in ETS auctions, and the EU has an obligation to seek an agreement on global measures to reduce greenhouse gas emissions.

With a global agreement on greenhouse gas emissions as the final goal, the inclusion of third-country flights that touchdown and take off from Europe in the ETS is being seen as a major step in the battle against climate change. The deal was approved by the EU's 27 member states at a meeting on Friday, and therefore needs only the final approval by the European Parliament on 9 July before becoming law.

The soaring costs of fuel have made the issue issue controversial, at a time when several airlines are pushed to the brink of bankruptcy, and had lawmakers and member states split down the middle on the issue. The EU parliament was pushing for a start date of 2011, but lawmakers prevailed for 2012. Aviation generates three per cent of all carbon dioxide emissions in the 27-member bloc. It had been excluded from emissions trading system thus far primarily on account of concerns that its ability to compete in the international markets would be compromised if it were to be included. Now, with air traffic projected to double by 2020, politicians are keen to apply the "polluter pays" principle.