The Emission Trading Scheme (ETS) is where Europe is charging other airlines for the CO2 emissions they pollute into the air for the for length of the flight to Europe. On 25 October 2011 the US House of Representative passed a bill restricting the US from participating in the Europe's ETS. With the US restricting air carriers to participate in this, will likely give other countries a view on weather they should follow the US stand on the matter. China also is taking on a similar action compared to what the US has done preventing them to take place in the ETS.
China has said that they will not put up the ETS and is in the process of filling a lawsuit. Despite the United States efforts to change Europe's minds, China plans to take a route in persuading them from not doing this. China has said that if Europe does not back down from this, they will increase airfares and penalties for European carries to combat the ETS. Chai Haibo, the president of China Air Transport Association has confirmed is planes to do this in order to combat ETS.
ICAO has finally spoken up and have given some guidance with the situation. ICAO is stating that Europe should exempt non-European carries from the rules. French new sources state that ICAO seems to be backing the US, China, Japan, and Russia on this one. Europe's ETS guidance for countries who feel indifferent about this is that if countries do what they can to reduce their CO2 emission to meet EU's standards, then they will not have to pay a tax.
Although ICAO has finally spoken up, backing the U.S. China and other impacted countries, I think ICAO's proposal alone is not going to resolve the issue. It is unclear whether the Europeans are even willing to negotiate ETS with the U.S. or other impacted countries.
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