Airlines find themselves battling cost pressures on many fronts lately. There are intermittent threats of employee strikes and constantly rising fuel prices. But one plan by the EU to include airlines in a scheme to reduce overall greenhouse gasses has many carriers and governments hotter than engine exhaust.

The argument over greenhouse gas emissions does not revolve around the need to curb them. Most everyone agrees on that goal. The debate over aircraft emissions is focused on how rules to reduce them are created and enforced, and whether one region has the right to set fees and standards for airlines in other regions. This is the issue that has many airlines and several countries fuming at the EU and one that could result in the unintended consequence of a trade war.

The EU is adding the airline industry to its emissions trading scheme (ETS) starting in January of 2012 and non-European airlines will be included. At least that's how it stands now. Any industry that is part of the ETS will be required to pay for carbon dioxide emissions that exceed established limits. They can do this by acquiring credits from companies that produce fewer emissions than the established threshold. It's a novel idea in theory, but it isn't yet flying with the airline industry as a whole.

Both the United States and China have vehemently opposed the inclusion of non-EU airlines, preferring instead a global approach to reducing emissions. The fear is that a unilateral imposition of fees by the EU could add more costs to the industry – costs that will surely find their way to passengers. Willie Walsh, chief executive if the International Airlines Group, which includes British Airways and Iberia Airlines, warns that other countries could impose additional taxes on European airlines or restrict access to certain routes as a form of payback. Instead, Walsh is echoing the overall airline industry sentiment that any solution to reducing excess pollution should be universal. Lacking that, Walsh offers a compromise – implement ETS only within Europe.

The battle over ETS will continue. As countries object to the EU's moves regarding carbon emissions, trade agreements and access to aviation markets could hang in the balance. This could affect industries that support airlines, such as aircraft manufacturers. Lawsuits against the EU are also underway or being threatened. The International Civil Aviation Organization (ICAO) has stated in the past that such actions may be necessary to bring the EU to the table to achieve a global solution that works for everyone in the industry.