MEPs have backed the idea of including aviation in the EU's cap-and-trade system for CO2 emissions and for ending tax exemptions on kerosene. The airline industry reacted furiously, saying the proposals totally ignore economic realities.

The European Commission suggested including aviation in the EU's emissions trading scheme (ETS), in a Communication published on 27 September 2005. Under the proposal, a cap on CO2 would be set for all flights departing from the EU.

Air traffic is estimated to contribute to about 3.5% of the total share of human activities held responsible for climate change. This share is expected to grow to 5% by 2050 and threatens to undermine global warming mitigation efforts made in other industrial sectors.

The European Parliament on 4 July has voted by 439 in favour, 74 against and 102 abstentions in favour of measures to address the impact of aviation on the world climate and apply the 'polluter pays principle' to international flights.

The report, drafted by MEP Caroline Lucas (Greens/EFA, UK), is a non-binding one as there is no formal proposal on the table yet. But it sends a strong political message at a moment when the Commission is drafting a legislative proposal to include aviation in the EU emissions trading scheme, due before year end.

The Parliament suggested that aviation falls under a special pollution-cutting scheme, similar to the ETS but separate from it. In a first stage, a pilot phase would be launched, covering the period 2008-2012, which corresponds to the second trading period of the ETS. Then, when aviation is eventually incorporated into the wider ETS, special conditions would apply to ensure it does not distort the market to the detriment of less protected sectors. Special conditions could for example include a cap on the number of emissions rights the aviation sector is allowed to buy from other sectors as well as a requirement to reduce emissions without trading. Other proposals in the report include: the introduction of a kerosene tax on intra-EU flights (flights en route to non-EU destinations would be exempted) a recognition that other tax exemptions enjoyed by air transport lead to "very unfair competition between aviation and other transport sectors".

However, specific calls to end VAT tax exemptions, supported by the Greens, failed However, there is little chance that these options will be considered by the Commission when it tables it legislative proposal later in the year. Indeed, the introduction of specific taxes on aviation has already been ruled out by the Commission as the unanimity rule means it has little chance of going past the EU Council of Ministers.