The European Union’s existing cap-and-trade system limits the carbon dioxide emissions of power plants and big factories in the bloc by issuing permits for each ton of carbon they can emit. Each company is allocated permits to emit a set amount of carbon dioxide. They can buy extra credits if they exceed that limit; if they emit less, they can sell credits.

Next year, all airlines flying to and from Europe will be brought into the program, which is currently being challenged in court by some American carriers.

Jos Delbeke, the European Union’s director general for climate action, said Monday that carriers would be allowed to emit 85 percent of their limit — or cap — free for the first year to ease the economic impact on the industry. The cap is set at 97 percent of the average aviation emissions from 2004 to 2006.

For the 2013-20 period, the cap will fall to 95 percent of that number, and the free allowances will decline to 82 percent.

Mr. Delbeke said airlines would be allowed to pass on to travelers the additional cost of those permits. He estimated the per ticket cost would be 2 to 12 euros ($2.70 to $16.20).

The European Union’s climate action commissioner, Connie Hedegaard, said the free allowances would save the aviation industry more than 20 billion euros over the next decade.

“With these potential revenues, airlines could invest in modernizing their fleets, improving fuel efficiency and using non-fossil aviation fuel,” she said.

The Air Transport Association of America, which represents airlines based in the United States, together with United Continental and American Airlines, have taken the European Union to court, arguing that imposing emission caps on non-European carriers breaches international law.

Article source: http://www.nytimes.com/2011/09/27/business/global/europe-gives-airlines-some-room-on-carbon-limits.html?partner=rss&emc=rss