Depending on the viewpoint, the deal to limit greenhouse-gas emissions reached this month at the International Civil Aviation Organization (ICAO) Assembly in Montreal is either a success for aviation or a setback for the environment.

Most airlines, governments and aviation organizations welcomed the deal, which put up obstacles to a patchwork of regional mechanisms becoming established before a global system of market-based measures (MBM) is agreed to and implemented. Environmental organizations and some politicians lament the agreement, which essentially prevents the European Union from expanding its own MBM, the Emissions Trading System (ETS), to cover foreign airlines flying in its airspace.

Despite the setback, EU officials put a brave face on the agreement reached in Montreal on Oct. 4, which commits ICAO to finalize the details of a global MBM at its next Assembly in 2016 and implement the system in 2020. “I am very pleased that after long and hard negotiations we finally have a global deal on aviation emissions,” said Siim Kallas, European Commission (EC) vice president responsible for transport. “We have also avoided a damaging conflict among trading partners.”

The International Air Transport Association, which pushed for a global deal, was pleased. “Now we have a strong mandate and a short three-year time frame to sort out the details. Airlines need and want global MBMs,” says Tony Tyler, CEO and director general.

“Aviation has been advocating for [this] since we developed the first global industry targets five years ago. We now have agreement on a global scheme and . . . the building blocks to deliver it,” says Paul Steele, executive director of the Air Transport Action Group.

Environmental organizations are less sanguine. “By essentially restricting the EU's emission trading system for aviation to its own carriers and airspace, ICAO has handicapped the world's leading legislation to put a price on aviation pollution,” states the World Wildlife Fund. The U.S.-based Environmental Defense Fund says: “A bedrock principle of international law is that nations have the sovereign right to limit pollution emitted in their borders. So ICAO took half a step backward with its attempt to narrow the ambit for countries to implement their own [MBMs].”

Organizations on both sides recognized the EU's role as a catalyst, first by introducing ETS, then by suspending it for international flights until a global deal was reached. “The EU ETS, while it created tensions between states, also prompted action at a global level and their willingness to 'stop the clock' on extra-European flights provided the necessary welcome relief of tension in the discussions,” says Steele.

It will take weeks before all elements of the ICAO resolution and “all words and articles are understood in a coherent and compatible manner,” says one industry observer. There is lingering disagreement on a threshold that would exempt from MBMs the airlines of states with less than 1% of global air transport activity. Language that introduces the United Nations principle that developed nations have more responsibility and capacity to address climate change is similarly under fire.

The EU delegation, meanwhile, must still sell the deal to the European Parliament (EP) and member-states. The EC is simply stating that, until 2020, countries “should—within certain parameters—be able to deploy MBMs.” In coordination with the EP and member-states, the EC “will now assess the decision taken at ICAO in more detail before deciding on the next steps with respect to the EU ETS,” says a spokesman for Connie Hedegaard, EU climate-change commissioner. A meeting of environment ministers on Oct. 14 in Luxembourg “will surely discuss this,” he says.

Peter Liese, a member of the EP's Environment Committee and driving force behind inclusion of aviation in EU ETS, believes there are “too many ifs and buts” in the ICAO resolution and “unfortunately” no guarantee the system will be introduced in 2020. “In my estimation, the European Parliament will not agree that until 2020 we only cover intra-European flights,” he says. “The inclusion of all flights taking off and landing in Europe, for the part that they travel in European airspace, is indispensable. This is a matter of fairness to European airlines, their competitive situation and the environment.”

The EP endorsed the EC proposal to “stop the clock” on applying ETS to routes beyond Europe for a year to give ICAO time to devise a global solution. Until the end of this year, operators (regardless of nationality) must surrender emissions allowances only for flights between European airports.

EU law does not allow suspending the emissions trading for international aviation until 2020. If a new legislative text is not agreed upon by April, legislation as originally planned will come into force for intercontinental flights taking off and landing in Europe.

With commission and EP members facing reelection in May, few are eager to take on the challenges of EU ETS.