This blog has reported on the troubled inclusion of aviation in the European Emissions Trading Scheme (EU ETS) before.

As it’s not a key area of coverage for Enagri, which deals primarily with bioenergy, it’s a subject I thought had probably seen its day on the blog. How wrong I was. Like an episode of East Enders or Coronation Street, it just keeps going, with ever more bizarre plot developments.

The head of the United Nations body that oversees civil aviation told Reuters earlier this month that his agency still plans to have a proposal on measures to address emissions from aviation by the end of 2012. “You have to understand that ICAO is an international organization with a membership of 191 countries, and you have to find a consensus,” said Secretary General Raymond Benjamin.

While the war of words continues, Germany has reiterated its support for making all airlines pay for carbon emissions, underlining the EU’s determination not to scrap the scheme. However, it’s not just airlines who are critical of the new law. Airbus has become the latest high-profile European company to criticise the scheme. According to The Guardian, Airbus chief executive Louis Gallois said Beijing’s refusal to allow Hong Kong Airlines to complete a $4bn order for the A380 super-jumbos amounted to “retaliation measures” over the policy, which came into force at the beginning of the year. Other European aviation companies have also warned of the risk of sparking a trade war.

This has given consultants and commentators plenty to comment on. Societe Generale SA told Bloomberg that the Eu would back down over the measures. “The EU is close to the point of backing down,” Emmanuel Fages, an analyst with the bank in Paris, said on 13 March. “It’s becoming one of the big risks in this market” and may already be driving carbon prices lower, he said.

However, this view was disputed by Edit Kiss, the Rotterdam-based carbon portfolio manager at the unit of Dutch utility Eneco Holding NV. She told Bloomberg Businessweek ““The scenario that the European Union backs down is not very plausible. Ultimately, airlines are not suffering that much from the EU emissions trading system,” she said a day later.

Since then, India has become the latest country to threaten a boycott of the system, following in the footsteps of China and highlighting different economic and environmental priorities between the EU and the BRICs nations.

While the UN Aviation body has been hit by the carbon Emission Dispute, campaign group Transport & Environment said a firm EU stance on aviation emissions confirmed Icao’s promise for global proposal. However, the debate is now spilling over into the maritime shipping sector. Planet Ark reported earlier this month that the IMO is set to collide with the EU over vessel CO2 emissions as observers say that the IMO is making little progress on curbing shipping emissions.

STOP PRESS

Just as I was about to post this, India has confirmed that it will not allow its airlines to join the EU ETS, while Airbus and Boeing have, unusually, agreed that the scheme is bad news.

To get information like this delivered every week, subscribe to Enagri today.