Following a series of meetings between MEPs and the Slovenian Presidency of the Council, the two sides have agreed details of how to include aviation in the EU Emissions Trading System. The compromise agreement reached yesterday still needs to be formally endorsed by the full Council and put to a second reading vote at Parliament's July plenary session in Strasbourg.

The main elements of the compromise are as follows:

* All flights starting and/or landing in Europe (including intercontinental flights) to be included in the ETS from 2012;

* The EU to have an obligation to seek an agreement on global measures to reduce greenhouse gas emissions from aviation. Bilateral agreements, for example with the US, could be a first step;

* 85 per cent of the emissions certificates to be allocated for free according to a common European benchmark. 15 per cent to be auctioned;

* The reduction target to be calculated on the basis of airlines' average annual emissions between 2004-2006: in the first period (2012), airline emissions to be cut by 3 percent; in the second, from 2013 onwards, by 5 percent. The percentage to be further modified as part of the general review of the ETS;

* Research flights are excluded from the scheme;

* Small airline companies producing low emissions are excluded;

* The revenues generated from the auctioning of emissions allowances should be used to fund: climate change mitigation, research on clean aircraft, anti-deforestation measures in the developing world, low-emission transport.

Commenting on the compromise deal he helped broker over the last few weeks, Peter Liese, EP rapporteur on emissions, said: "Of course, a global agreement is our final goal, but the inclusion of third country flights starting and landing in Europe is a major step for the global fight against climate change. Other industries like steel would very much like to be in such a situation."

The Parliament, said Mr Liese, has fought for very strict provisions concerning the revenues from auctioned allowances. "Money should be used to tackle climate change and not disappear somewhere in the general budget. It is not a tax but an environmental instrument. This is why we are very engaged in this field. The agreement is not perfect, but the Council went further than on any other comparable occasion."

Highlighting the importance of funding public transport to reduce emissions, Mr Liese added: "people should be encouraged to use buses and trains - for example by reducing taxes and charges on [such] low emissions transports."