If the U.S. airlines were writing the history of the world, the villain for the chapter on 2012 would have to be the European Union for its decision to apply its emissions trading scheme to international aviation.
From the airlines' perspective, this is a villainous act for two reasons.
First, it's going to cost them. The estimates vary, but one number you see a lot is that the cap-and-trade system could raise U.S. airline costs by about $3 billion over the next nine years.
Airlines for America calls that "an exorbitant tax."
Second -- and even worse than the $3 billion price tag, if you can believe it -- the airlines are outraged that the E.U. defied all of the global airline industry's conventional niceties and applied its policy unilaterally.
And even worse than acting unilaterally, the E.U. is said to have acted pre-emptively in the face of protests from the U.S. and other governments that it was usurping the role of the International Civil Aviation Organization (ICAO), the arm of the United Nations that is supposed to coordinate multinational aviation issues in a deliberative fashion.
Cap-and-trade systems are simple in theory: Businesses that emit carbon are given a carbon allowance and are charged a fee if they exceed it. The E.U. has had such a system in place for ground-based polluters since 2005, but airlines claim that what works for Europe's factories and power plants, which sit still, won't work for the planet's fleet of airliners, which don't.
Thus for various practical and legal reasons, airlines depict the E.U. plan as a monster. For one thing, they claim it will violate their nations' sovereignty by assessing them for carbon emissions that occur within their own borders. In the case of a flight from Los Angeles to Europe, for example, the E.U. carbon allowance would cover the segments flown over U.S. and Canadian airspace.
In addition, carriers note that individual European governments can, and do, impose additional carbon penalties, which means they will be taxed twice for the same carbon.
Airlines are also suspicious of the E.U.'s claims that fees collected under the program will be used solely for carbon mitigation. The phrase "cash grab" found its way into an industry letter to Congress.
Where this will lead in the short term is, apparently, higher fares. Delta has already put in place a $3 surcharge, and Lufthansa has said it will be raising fares to recoup about $169 million in additional costs this year.
For the longer term, it's going to be a diplomatic and legal mess. Airlines tried to block the plan in Europe's highest court, but the European Court of Justice late last month affirmed the E.U., which now has every reason to proclaim that its actions are perfectly legal.
What we dislike about that result is that the E.U. gets to be its own judge and jury. From an environmental and policy perspective, the plan might be perfectly wonderful, but it remains a European solution that is being imposed on the rest of the world without collaboration, and for that reason we dislike it.
As for the rest of the world, it has itself to blame for failing to use ICAO as an effective forum to address the issue. The E.U. has said repeatedly that it acted in large part because ICAO has been unable to come up with a global solution.
If the nations represented in ICAO want to prevent a global patchwork of schemes similar to what the E.U. has devised, their chance to be the airlines' hero is now.