The European Union has agreed to start integrating air travel into its emissions trading system. This is a big step, given how the industry has often been excluded from carbon pricing schemes - especially where international travel is involved.
Arguably, the biggest piece of news is that they want to charge non-EU carriers for emission permits when they enter EU countries. This is certainly going to kick up a stink in the WTO and other multilateral trading bodies. That being said, if a global regime of carbon pricing is not to be forthcoming, the regional arrangements will need mechanisms for ensuring that imports meet their standards.
Hashing out how such standards can be applied is sure to be a difficult and extended affair.
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I would love to see that WTO case, especially if they apply it differentially based on other countries’ emissions plans: it’s the first carbon tariff.
In 2005, one of my professors predicted that we would never need such a tariff, since eventually the US would implement a reductions scheme, and they would never tolerate the rest of the world having the comparative advantage of pollution - it would bully everyone into binding targets, or even a global trading scheme. I was skeptical, but now it looks like this is getting more and more likely!
EU includes aviation in CO2 curbs
In Europe
The European Parliament backs a law to include aviation in the CO2 Emissions Trading Scheme (ETS) for cutting greenhouse gases.
MEPs voted 640 to 30 for aviation to be included in the scheme from 2012. It includes both EU and non-EU airlines.
“Airlines will have to pay for permits covering 15% of their pollution quotas, the remainder being issued free. “