Abstract: EU would include all flights from and to EU airports into EU Emission Trading System (ETS) since Jan. 1st, 2012 in the light of Directive 2008/101/EC. This paper elaborates the relevant EU legislation and policy and points out that EU ETS is a typical “cap and trade” system to limit the greenhouse gas emissions by means of regulating emission cap and trading allowances. Based on such an elaboration, this paper concludes that EU’s unilateral extension of EU ETS to international aviation will strengthen the climate change initiative to benefit EU economic interests in the end, and establish the monetary power system of EURO by accelerating improvement of EU’s carbon market. As well, such an action will not only induce legal conflicts with United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, but also constrain the growth of the international air transport owing to buying extra allowances, challenge the capacity building in developing countries through Measure, Report and Verify (MRV) and to some extent impact the UNFCCC negotiations on the sectoral approach.

Key words: EU emission trading system, civil aviation, greenhouse gas