The European Commission should expect continued resistance to its emissions trading system (ETS) despite today’s rejection of Airlines for America’s (A4A’s) legal challenge by the European Court of Justice.

A4A’s case sought to dismiss a European law imposing emissions controls on all flights serving EU member states, claiming that the legislation breached international conventions. However, the ECJ ruled that “the uniform application of the scheme to all flights which depart from or arrive at a European airport is consistent with the provisions of the Open Skies Agreement designed to prohibit discriminatory treatment between American and European operators.”

The ruling was heralded as a victory by EU Commissioner for Climate Action Connie Hedegaard, who called on airlines to respect the rule of law. And while initial reaction indicates that most countries will accept the ECJ’s ruling, opposition to ETS is growing and at least one more lawsuit is being contemplated.

“Today’s decision does not mark the end of this case and A4A is reviewing options to pursue in the English High Court,” says the U.S. trade group, noting that “at the same time, the U.S. government and dozens of others around the world are increasing pressure on the EU to come back to the table to consider a global sectoral approach.”

But in the interim, A4A says “members will comply under protest and will continue to operate safely and efficiently to Europe when the scheme takes effect Jan. 1.”

Tony Tyler, the International Air Transport Association’s director general and CEO, however, was more forthright. “The [ECJ] decision may reflect European confidence in European plans. But that confidence is by no means shared by the outside world where opposition is growing,” he says.

“A formal resolution of the ICAO [International Civil Aviation Organization] Council supported by 26 countries urged Europe to take a different approach. India is reported to have instructed its airlines not to comply. Similar legislation is moving through the U.S. Congress. Other legal challenges are expected. And on Dec. 16 the U.S. Secretaries of State and Transportation warned that the U.S. would be compelled to take appropriate action if Europe does not rethink its plans,” adds Tyler.

That action could include penalties or revised traffic rights for EU carriers under new powers granted the U.S. Transportation Secretary, but for now DOT is issuing only verbal attacks. “The United States strongly supports the goal of combating climate change, including reducing green house gas emissions from international aviation. However, the United States strongly objects, on both legal and policy grounds, to the EU’s plan to impose its own policies on other countries,” says the agency.

“We have expressed these strong objections to the EU and its member states at all levels of government for some time now. Last week, Secretary [of State Hillary Rodham] Clinton and [Transportation] Secretary [Ray] LaHood sent a joint letter to their member-state counterparts in the EU and counterparts in the European Commission. The letter urged the EU to halt or, at a minimum, to delay or suspend application of the Directive and to re-engage with the rest of the world to find a way forward at ICAO to address this important issue.”The DOT, however, warned that “the U.S. has a number of options at its disposal that we will exercise as appropriate.”

ETS supporters are urging those opposed not to act rashly because airlines will not have to deliver permits or buy carbon credits until 2013, while Hedegaard notes that the EU wants to “engage constructively with everyone during the implementation of our legislation.”

Reaction from within Europe was mixed. While environmental groups generally welcomed the decision as a consequent step ahead in the fight against climate change, most industry bodies were highly critical. “We now have EU legislation, but the political chaos continues,” says Klaus-Peter Siegloch, president of Germany’s air transport association BDL. “We need a global ICAO-based solution as soon as possible.”

However, the European Low Fares Airline Association says that “since 80% of European aviation emissions originate from long-distance flights to and from points outside the EU, environmental effectiveness necessarily requires inclusion of all flights to and from the EU.” The association also urged “colleagues in the industry to halt their resistance and lend their constructive support to the implementation of EU ETS.”

Andreas Arvanitakis, associate director at Thomson Reuters Point Carbon, estimates that ETS will cost airlines around €500 million ($650 million) in the first year given that the sector will face a shortfall of 60 million tons of carbon dioxide. ETS could cost the airline industry €9 billion in the next eight years, the analyst believes.