Once again, Europe's environmental ambitions are causing upheaval around the world. The European Commission has proposed new legislation that would include international aviation in the European Union's Emissions Trading System (EU ETS), and airlines are now trying to understand the coverage and impact of this revision.

The Association of European Airlines is concerned that adopting a European regional airspace system could retrigger noncompliance—and possible retaliation—by third countries.

The new rules, if adopted, would go into effect Jan. 1 and last until a global market-based mechanism (MBM) becomes applicable to international aviation emissions by 2020, as planned by the International Civil Aviation Organization (ICAO). It is a substantial downsizing of the geographic scope of the original EU ETS, which regulated emissions of the entire length of flights to, from or between European Economic Area (EEA) airports, but a widening of the coverage of the “Stop the Clock.” That action put a moratorium on emissions of flights from/to non-EEA countries for the first compliance year (2012) for the aviation sector. The EEA comprises the 28 EU member-states, plus Norway and Iceland.

Key features of the new draft rules, also dubbed Stop the Clock-Plus, are:

•All emissions from flights between airports in the EAA continue to be covered.

•Emissions from flights to/from countries outside the EEA are subject to the ETS solely for emissions attributable to the portion of the flight that is within EEA airspace.

•Flights between the EEA and developing countries—and which emit less than 1% of global aviation emissions—will be fully exempted from the EU ETS.

•Overflights of the 30 EEA countries are exempt.

There are many exceptions in the draft regulation, some of which will complicate the application of the system for airlines, but some others that will further limit the scope of the proposed European regional airspace MBM. Flights between the EEA and third countries are covered in proportion to the distance traveled within European airspace, except when the intermediate distances over third countries or sea areas between EEA member-states' territories exceed 400 nm, e.g., longer sea areas between Iceland and other EEA member-states; the Azores and EEA member-states, including mainland Portugal and Canary Islands; and EEA member-states, including mainland Spain.

Switzerland is not part of EEA airspace. In the original legislation, the EC regarded the country as like-minded on environmental goals and defined Swiss airports as European airports. Switzerland successfully protested this interpretation. Under the new draft rules, flights to and from Switzerland are only covered in proportion to their distance traveled within the EAA airspace.

Also, emissions from flights from/to non-EAA airports operated in 2013 (in addition to 2012) will be fully exempted because, officials of EC's directorate general for Climate Action (DG Clima) admit, “the implementation of the proposed amendment will require some adjustment to calculations regarding reporting of emissions, free allocation and auctioning shares.”

Most airline associations have already protested the EC's decision to continue with its ETS for international aviation, and claim it flies in the face of the agreement reached at the ICAO Assembly on Oct. 4.

DG Clima, on the other hand, asserts that the EU and its member-states have sovereign rights to regulate and take appropriate measures to mitigate aviation emissions. It also believes that their proposed action is fully compliant with the Assembly Resolution in that they are applying the de minimis threshold to exclude developing countries contributing less than 1% of global aviation emissions, and that they “engage in bilateral/multilateral negotiations with other states to reach agreement.” Such an accord, it points out, must not actually be reached before any implementation of a regional MBM.

The position of DG Clima is often seen as dogmatic by other European Commission departments such as DG Trade and MOVE (Transport), but the Stop-the-Clock-Plus proposal nonetheless received the support of the College of EU Commissioners.

The Council of the EU and the European Parliament (EP) need to approve the legislation, and while some airlines in Europe are actively lobbying their governments to block the proposal or delay it until after next year's European election, it is unlikely that the EP will drop this high-profile dossier in an election year.