THE carbon trading market may get a boost with the European Union decision to mandate all flights taking off from and landing in its territory to buy carbon credits for offsetting greenhouse gas (GHG) emissions.

The in-principle decision to this effect has already been taken although the details for implementation will be worked out over the coming years. Carriers may witness escalation in costs that could possible result in air travel becoming expensive.

"A political agreement has been reached on including aviation although the details will come late... by 2008 at the earliest," the UK Minister of State for Climate Change and Environment, Mr Elliot Morley, told Business Line.

He added that the details would come after an intense round of dialogue within the EU.

"Moreover, it would involve consultation with international aviation organisations and carriers."

He also said that the decision would be applicable on all flights including non-EU ones, as the intent was a part of European Union Emission Trading Scheme (EUETS).

EUETS is EU's own GHG reduction methodology having time-bound emission reduction targets for several sectors with strict penalties for non-compliance. Currently, it does not include the transport sector.

"It would be like our regulation. Any plane that comes to EU has to comply with it... if they (flights) want to land in EU, they will have to buy carbon credits," Mr Morley said.

On whether road transport and railways too would be brought under the emission reduction norms, he said: "People in the EU are advocating that road transport be included in carbon trading. We will have to discuss it.

"There is no political decision on any form of transport to be included in carbon trading, except aviation."

Mr Morley also met with the Ministry of Environment and Forests Secretary, Dr P. Ghosh, during his visit and discussed progress of clean development mechanism (CDM) projects in India and measures to make it more transparent.

He said: "One problem area was that it was seriously under-funded.

The process was rectified at Montreal and $8.8 million was raised for the CDM Board (at United Nations Framework Convention on Climate Change)."