EU ETS - The controversy refuses to die down

The controversy around the EU ETS scheme never seems to die. The Huffington Post had this piece by Gerard Wynn that captured the contours of the dispute. Attributing the measure of the EU as a result of a failure of international agreement, it states,

"The EU will almost certainly stand firm and foreign carriers will pay up. The main prospect for compromise would be for the EU to relent and not count emissions outside its airspace, which at present seems unlikely.

The EU says it must include all emissions on a flight because it's impractical to measure those only from the moment a plane enters European airspace. And that would also dilute the environmental purpose of the scheme since a large part of emissions are on take-off.

Regarding the notion that its charges are a tax on jet fuel (not allowed under the 1944 Chicago Convention on aviation), it says emissions permits are not the same thing because an airline can avoid paying at all if it undercuts its free quota by becoming more efficient.

On both these counts the bloc won a landmark case at the European Court of Justice in a judgment favouring Brussels against U.S. carriers last December.

The bloc of countries most wedded to a multilateral approach at the United Nations, the European Union, now feels compelled to use unilateral action.

The present spat could be a sign of things to come in climate politics, where progressive countries unite from the bottom up, at least until an over-arching treaty comes into force at the end of the decade."

The coming together of  "progressive countries" was highlighted in the joint declaration of 26 countries against the EU ETS in Moscow. It was not only this group of countries opposing the scheme. Recently Airbus along with eight other airlines also opposed the scheme on the ground that it hurt its trade interests with reports of China reconsidering its options of purchasing Airbus carriers due to the EU measure. The opposition to the scheme found strange bedfellows. Boeing supported Airbus' stand on the EU ETS but refused to come to an agreement on the WTO dispute related to subsidies. India also joined the opposition by asking its  airlines not to adhere to the emission scheme.

It would be interesting to see where this dispute goes. Will the EU temporarily suspend the scheme subject to more international negotiations? Will the business interests of Airbus and other European airlines prevail over the climate concerns of the EU? Will the joint signatories of the declaration against the EU ETS be able to diplomatically persuade the EU to reconsider the scheme till international consensus is arrived at? Will the threat of Chinese "business" retaliation force the EU to step back? Will it lead to a WTO dispute? Testing times for the interplay of international climate rules, international trade, national sovereignty and business interests in the aviation sector.