The first U.S. industry to face a cap on its greenhouse gas emissions is not, as may be expected, the coal-burning power utilities. It's not the oil refineries, churning through crude. It's not the automakers, manufacturing again.
It's the airline industry.
Sometime this month, the European Union will release a list of airlines it will regulate under its existing cap-and-trade system for carbon dioxide. Beginning in 2012, all international flights landing in the region must abide by the regulations. And several airlines on that list will have a decidedly New World feel: Delta, United and American.
They are not alone. A preliminary version of the list released earlier this year included more than 700 airlines registered in the United States, out of some 2,800 airlines total. While this number is expected to dwindle -- weaning out small-scale operations -- all large U.S. carriers flying into Europe expect to be on the finalized list.
The move to regulate what is an international business typically governed by treaty has raised hackles from airlines and governments around the world. Many see its position as a violation of national sovereignty -- or simply bad for business.
The European Union is seeking to "substitute its judgment for other parts of the world," said Nancy Young, vice president of environmental affairs at the Air Transport Association, the lobbying group for U.S. airlines.
"I'd say virtually every airline in the world opposes the unilateral European approach -- including the European airlines," Young said. At a certain point, she added, "the Europeans are going to have to decide whether they're playing in the sandbox or not."
E.U. legislators have enthusiastically supported taxing airline emissions, approving the law last year. While planes account for up to 3 percent of the bloc's total CO2 output, without caps these emissions could almost double within a decade, counteracting the European Union's ambitious low-carbon goals, said Philip Good, an environmental policy expert at the European Commission, the executive branch of the European Union.
"Aviation is a part of the economy that traditionally has been outside the scope of climate policies," since it was not included in the Kyoto Protocol, Good said. "Bringing aviation into the [scheme] normalizes the situation."
The airline industry is committed to reducing greenhouse gas emissions, but the E.U. scheme is shortsighted in taking a regional solution to international transport, said Quentin Browell, assistant director of aviation environment at the International Air Transport Association, which represents 230 airlines worldwide.
"What concerns us is there's no coordinated approach," Browell said. "We take responsibility for our emissions. It's perfectly valid for us to pay the cost of those emissions. But we should pay just once."
Of particular concern to U.S. carriers are fears of double taxation, given the provisions in the House's recently passed climate bill that would be tantamount to an indirect tax on aviation. While the bill is focused on stationary emissions, transportation fuel -- including jet fuel -- will be regulated at the point of sale, potentially raising the collective bill of U.S. airlines by $5 billion, according to Young.
The provisions that increase fuel prices for aviation could be revised in the Senate climate debate. Already, the Air Transport Association managed to insert a provision into the House bill that called for working "with foreign governments towards a global agreement that reconciles foreign carbon emissions reduction programs to minimize duplicative requirements."