Since January 1st, all airlines, including extra-European, have become part of the European regulation on emissions reduction. From now on, all flights involving airports in Europe, regardless of the nationality of the carrier, will be subject to annual CO2 emissions limits.
The EU Emissions Trading Scheme envisages that companies, in sectors responsible for large emissions of CO2, have annual emissions allowances. Companies that emit above these limits can be fined. The ETS operates through a CO2 Market where firms can trade their CO2 allowances. A company emitting beyond the fixed limits will have to buy CO2 credits from firms that emit below their quota limit. The ETS operates according to the principle of ‘polluter pays’. Virtuous firms who emitt under the limits can benefit from the sale of their unused allowances to other companies.
The application of the emissions reduction scheme to the aviation sector is an important step forward in the fight against climate change. The EU directive finally regulates a sector responsible for a large share of greenhouse gas emissions attributable to transport, and for 2% of total emissions on a global scale. With the extension of the ETS, the EU wants to force airlines to modernize their air fleets and invest in the development of more efficient and cleaner technologies.
The implementation of CO2 limits also for non-European airlines had raised strong objections from some U.S. and Canadian companies, who challenged the EU reglement in the European Court of Justice.
The European Court of Justice has instead affirmed the validity and compatibility of the directive with international law, since the Emissions Trading Scheme only applies to non-European companies operating to European airports and not for airlines just flying in EU skies.
The Air Transport Association of China (CATA) estimated that the EU plan to reduce emissions could cost Chinese airlines up to 95 million euros extra per year, and has already made clear that it will not apply the ETS.
From its side, the EU has announced strict measures to enforce its limits on emissions, providing fines and even a ban in the region for airlines that do not comply with the ETS.

Read more here:
http://www.bbc.co.uk/news/science-environment-16423633