On 20 December 2006, the Commission released an unofficial advance version of its proposal for a Directive amending Directive 2003/87/EC which established a scheme for greenhouse gas emission allowance trading within the European Community (OJ L 275, 25.10.2003, p. 32). The Commission proposes to now include aviation activities in this scheme.

This existing scheme works by allocating industrial operators with a number of allowances, each giving them a right to emit one tonne of carbon dioxide per year. The total number of allowances allocated sets a limit on the overall emissions from participants in the scheme. By 30 April each year, operators must surrender the allowances that they received and which they used in relation to their actual emissions. Further, operators can trade allowances so that emission reductions can be made where they are most cost-effective.

Under the terms of the proposal from the Commission, the total amount of emission allowances granted to the aviation sector shall be determined by reference to the average emissions from aviation in 2004-2006. Aircraft operators would be required to monitor and report emissions as of 2010. From 1 January 2011, all flights between EU airports would then be actually included in the trading scheme. The Commission further proposes to expand the trading scheme, as of 1 January 2012, to all flights arriving at or departing from a Community airport; thus including flights operated by non-Community carriers. This part of the proposal drew strong reactions from US parties. The proposal for a Directive now goes to the European Parliament and the Council of Ministers for discussion and possibly adoption under the co-decision procedure.