As the European Union’s Emissions Trading Scheme (ETS) deadline for airline compliance in 2012 approaches, U.K. companies are offering India products and services related to the trading of emission reduction credits and investing in greenhouse gas abatement projects.

As of Jan. 1, 2012, all flights arriving at or departing from airports within the EU will be subject to the ETS. This means that by 2020 the CO2 emissions of those flights are to be reduced by at least 20% of their 1990 levels.

Airlines around the world are grappling to come to terms with this new challenge. “We are concerned about the ETS. This concern is felt not just by India but by the entire block of developing countries. We would like to be guided by the United Nations Framework Convention on Climate Change (UNFCCC)…” said Nasim Zaidi, secretary, Ministry of Civil Aviation at the U.K.-India Aviation Meet held here.

“We would like to be guided by a global approach of ICAO,” added Zaidi.

However, Willie Walsh, CEO of the International Airlines Group (IAG), which runs the combined British Airways/Iberia, says ETS would help investment in infrastructure. “ETS is sensitive. BA has been a proponent of ETS. It is cost effective.”

On the other hand, he said proliferation of damaging taxes needs to stop. “We cannot deliver social benefits if you keep taxing us.”

“The concern Indians have about ETS is that they will be penalized because they believe emissions are granted on historical [basis],” said Mark Kenber, CEO, The Climate Group, U.K., an independent, non-profit organization working internationally with government and business leaders to advance policies and technologies to cut global emissions.

There has been an East-West divide on the ETS. The Association of Asia-Pacific Airlines (AAPA) Director General Andrew Herdman had said of the ETS in 2008: “European legislators have again overreached their authority in seeking to impose this scheme on international airlines ... this particular decision can only be described as an unhelpful provocation. One of the most offensive aspects of the scheme is that Europe is, in effect, appointing itself as tax collector-in-chief for international aviation ... there is absolutely no assurance that such funds will be directed towards meeting genuine environmental objectives.”