	Introduction

Research on climate change has identified a wide array of sources that emit "greenhouse gases" (GHGs)—compounds that trap the sun's heat, with effects on Earth's climate. In the United States, aviation emissions have grown more slowly than those of other transportation sectors, and slightly less than the emissions of the economy as a whole over the last two decades, but worldwide aviation has been among the faster-growing sources of GHG emissions. If they were included in the U.S. aviation statistics, emissions from aircraft of all types would have accounted for 3.4% of the U.S. GHG total. Thus, while the precise share of aviation in total greenhouse gas emissions depends on what is included, and the impact of some emissions is unclear, there is little doubt that aviation is a significant contributor to U.S. and world GHG emissions. Regulating Aircraft Under the Clean Air Act

As policy makers consider whether the federal government should regulate aircraft GHG emissions (versus continuing to rely solely on market forces to determine the level of emissions), some have turned their attention to the potential for regulation under the Clean Air Act. The aircraft petitions are among several others that EPA has received to regulate GHG emissions from cars and trucks, ships, and nonroad engines and vehicles. This might delay implementation of controls. (For a general discussion of how such cap-and-trade systems work, see CRS Report RL34502, Emission Allowance Allocation in a Cap-and-Trade Program: Options and Considerations , by [author name scrubbed], especially Appendix A.) Capping emissions from fuels upstream of the air carriers and eventually lowering the cap more than 80%, as the bill would do, could have several effects: first, it would provide an incentive for refiners to produce lower-carbon fuels ; second, it would increase the price of fuels, as refiners either purchased additional allowances for their emissions or were forced to reduce production, in essence rationing fuels through a higher price in order to stay beneath the emissions cap; third, as the cost of fuel increased, the demand for fuel-efficient aircraft would increase; and fourth, consumers of aviation services (airline passengers and shippers of freight) would have incentives to replace higher-cost air transportation with lower-cost alternatives (e.g., video-conferencing by business and government entities, increased reliance on lower-emission forms of transport, greater reliance on local sources of goods, etc.). International Developments

		European Union

Unlike the upstream approach of U.S. cap-and-trade bills, the European Union (EU) has chosen to regulate aviation directly, by including the sector in its Emission Trading Scheme (ETS), beginning in 2012. The International Civil Aviation Organization (ICAO), the international organization that administers standards and recommended practices for the aviation authorities of more than 190 countries, agreed in September 2007 to support the development of an "aggressive" action plan on aviation and climate change, but without a fixed timetable or specific emission reduction targets. As noted earlier, the House-passed version of H.R. Some means of emission reduction are beyond the industry's control, including the pace of modernization of the air traffic control system, and the degree to which aeronautical research and engine modifications can reduce fuel consumption.
Aircraft are a significant source of greenhouse gases—compounds that trap the sun's heat, with effects on the Earth's climate. In the United States, aircraft of all kinds are estimated to emit between 2.6% and 3.4% of the nation's total greenhouse gas (GHG) emissions, depending on whether one counts international air travel. The impact of U.S. aviation on climate change is perhaps twice that size when other factors are considered. These include the contribution of aircraft emissions to ozone formation, the water vapor and soot that aircraft emit, and the high altitude location of the bulk of aircraft emissions. Worldwide, aviation is projected to be among the faster-growing GHG sources.
If Congress or the Administration decides to regulate aircraft GHG emissions, they face several choices. The Administration could use existing authority under Sections 231 and 211 of the Clean Air Act, administered by the Environmental Protection Agency. EPA has already been petitioned to do so by several states, local governments, and environmental organizations. Congress could address aviation or aviation fuels legislatively, through cap-and-trade or carbon tax proposals, or could require EPA to set emission standards.
Among the legislative options, the cap-and-trade approach (setting an economy-wide limit on GHG emissions and distributing tradable allowances to emitters) has received the most attention. Most cap-and-trade bills, including the House-passed energy and climate bill, H.R. 2454, would include aviation indirectly, through emission caps imposed upstream on their source of fuel—the petroleum refining sector. By capping emissions upstream of air carriers and eventually lowering the cap more than 80%, bills such as these would have several effects: they would provide an incentive for refiners to produce lower-carbon fuels; they would increase the price of fuels, and thus increase the demand for more fuel-efficient aircraft; and they might increase the cost of aviation services relative to other means of transport, giving airline passengers and shippers of freight incentives to substitute lower-cost, lower-carbon alternatives.
Besides regulating emissions directly or through a cap-and-trade program or carbon tax, there are other tools available to policy makers that can lower aviation's GHG emissions. These include implementation of the Next Generation Air Traffic Control System (not expected to be complete until 2025, although some elements that could reduce aircraft emissions may be implemented sooner); research and development of more fuel-efficient aircraft and engines; and perhaps the development of lower-carbon jet fuel.
This report provides background on aviation emissions and the factors affecting them; it discusses the tools available to control emissions, including existing authority under the Clean Air Act and proposed economy-wide cap-and-trade legislation; and it examines international regulatory developments that may affect U.S. commercial airlines. These include the European Union's Emissions Trading Scheme for greenhouse gases (EU-ETS), which is to include the aviation sector beginning in 2012, and discussions under the auspices of the International Civil Aviation Organization (ICAO).