The deal, based on an agreement between the Council and Parliament on 26 June (EurActiv 27/06/08), would require all flights, both within the EU as well as international ones arriving or leaving the bloc, to participate in the Union's carbon cap-and-trade scheme from 2012. 

Other main points included in the deal are:

• Emissions reduction targets will be based on average annual emissions between 2004-06 and will be cut by 3% in 2012, and then by 5% from 2013 onwards (this could be subject to change as part of a general review of the ETS in the future). 
• 85% of emissions allowances will be allocated to airlines for free with 15% to be auctioned off. 
• EU to look for an international agreement on curbing aviation emissions, including a bilateral agreement with the US. 
• Airline operators who persistently fail to comply with the scheme could be banned from the EU if a member state asks for this. 
• Exemptions from the aviation ETS will cover:  
• • light aeroplanes under 5.7 tonnes
  • humanitarian and UN mandated planes 
  • firefighting and emergency planes 
  • police, customs and military planes
  • planes on research missions
  • small airline companies with low emissions 

The use of the revenues received from the auctioning process will be determined by the member states, although the deal says they should go towards funding R&D on 'clean aircraft', anti-deforestation measures in the developing world and general climate change alleviation projects. 

Flights carrying government officials and royalty have been included in the scheme. 

The costs of placing the aviation industry in the ETS will be beared by the customer, meaning air ticket hikes of €5 to €40 by 2020 depending on the length of the flight, according to an impact assessment report from the Commission. 

The Parliament's rapporteur on the subject, German Conservative MEP Peter Liese, believes the agreement was a step closer to the objective of reaching a global agreement. "The inclusion of third country flights starting and landing in Europe is a major step for the global fight against climate change," he said. "Money should be used to tackle climate change and not disappear somewhere in the general budget." 

Responding to critics who believed the compromise deal agreed upon with the member states was a long way off what could have been reached, he said the agreement was "not perfect, but the Council went further than on any other comparable occasion".

The European Commission welcomed the deal, with Environment Commissioner Stavros Dimas commenting that since emissions from the aviation industry were growing faster than in any other sector in the EU, the aviation sector was making "a fair contribution to Europe's climate change targets". The deal shows the "EU's commitment to implementing the concrete measures needed to reduce emissions," he added. 

The US has repeatedly warned that it could take legal action against the EU in the WTO if it went ahead with its plans to include foreign airlines in the ETS.

The President of the Air Transport Association of America James May decried the legislation as a "tax grab" and said the inclusion of non-EU airlines is "not only bad policy, it is illegal". He said the Parliament's "unilateral decision to cover the world's airlines" was "sure to spawn a legal challenge" as it contravened the Chicago Convention.

The environment director of the US Federal Aviation Administration accused the EU of unilateral action, saying foreign airlines would now effectively be subsidising the EU aviation industry. Carl Burleson criticised the Commission for "acting as judge and jury" over another country's airline sector. 

The Greens in Parliament have accepted "with considerable reluctance" the compromise deal on capping aviation emissions. "This is a small step in the right direction, but a truly missed opportunity compared to what should have been achieved," said UK Green MEP Caroline Lucas. 

Published: Wednesday 9 July 2008  www.Euractiv.com