The most significant development to have taken place on carbon emissions is in Europe where the EU has established the mandatory EU Emissions Trading Scheme (EU-ETS) as a means of meeting its Kyoto commitments. Airlines are to be progressively phased into EU-ETS so that by 2012 all intra-EU flights and all flights into or out of the EU will be covered. This ETS inclusion has received varying levels of support from the sector which tends to view it as a preferable (and inevitable) alternative to a carbon tax. It should be noted, however, that some European countries already have such a tax, most commonly in the form of a surcharge on the price of tickets. Also it should be noted that some studies suggest that the imposition of a dual system of emissions trading and some sort of carbon tax might in fact produce a greater reduction in carbon emissions over the long term than just an ETS alone. It is IATA’s position, however, that any such taxation would be harmful to the sector’s growth and would be ineffective in reducing emissions.

This initiative should not be underestimated because it provides a crucial example and a potential framework for other governments. It is a good first step that in all likelihood will lead to more.

Useful sources of information

UK-ETS home page, it has good documents and reports covering the UK's ETS
http://www.defra.gov.uk/environment/climatechange/trading/uk/index.htm

An IATA study of Aviations inclusion into ETS
http://www.iata.org/NR/ContentConnector/CS2000/Siteinterface/sites/mgr/file/final_report.pdf

The EU-ETS Official website
http://ec.europa.eu/environment/climat/emission.htm

An EU-ETS document discussing the impacts of Aviation and the EU-ETS
http://ec.europa.eu/environment/climat/pdf/report_publ_cons_aviation_07_05.pdf

A Study of the impact of 5 hypothetical regulatory scenarios including ETS, Carbon taxation, and mixed approaches, conducted for the IPCC by QinetiQ
http://www.dti.gov.uk/files/file35675.pdf