More than any other industry, aviation reminds us of a fundamental fact of climate change: Greenhouse gases emitted in one country wind up in our shared atmosphere. The trans-Atlantic air corridor is traversed daily by scores of flights to and from Europe and the United States, making this the first trade-related dispute over how to deal with the vast costs of climate change and testing the ability of governments to restrain emissions beyond their borders.

Aviation now contributes some three to four percent to the atmospheric load of greenhouse gases, according to the EU, and it is expected to grow exponentially over the next 40 years. New science suggests there may be an additional burden to the atmosphere from airplane's disruption of cloud patterns, which could be intensifying the greenhouse effect.

Take a flight tomorrow, say, from New York to Beijing or San Francisco, and no one will be counting your greenhouse gas emissions. Take that same plane, though, from New York to London (770 kilograms of carbon emitted) or Paris (834 kilograms), or any other European city, and the airlines would have to file those emission allowances.

The EU asserts that the cost of compliance would be no more than $6-$10 per ticket, depending on the flight's duration. The International Air Transport Association claims if airlines pass on the entire cost of allowances to customers, it could add up to $45 per ticket. But this is haggling over price. The larger question before the European Court of Justice is: How do we make laws about greenhouse gases that travel across country boundaries?

Next page: Who Owns the Skies?

THE AERIAL BATTLE OVER EUROPE

This week, the EU started the process of allocating 221 million tons of emission allowances, to be divided up by airlines depending on their traffic with Europe. The aim is to reduce emissions by about five percent over the coming eight years, a far slower decline than what's called for by the Kyoto Protocol. Eighty-five percent of the allowances are free; the remaining fifteen percent must be purchased, at a reigning carbon price of roughly $15/ton. In January, they'll have to start filing those allowances for every flight landing in or taking off from a European airport.

The carriers assert that the EU's directive violates principles of free navigation embodied in the Open Skies deal of 2007 that opened European and American air travel to competition, and the Chicago Convention, a longstanding bulwark of international travel rules.

This legal challenge pits the U.S. airlines against a vast coalition of countries, agencies, and environmental groups. That coalition includes the 27 member countries of the European Union, as well as Norway, Iceland and Switzerland (which collectively represent a far larger economy than the United States), the British Civil Aviation Authority (the case was originally filed in Britain, which has responsibility for U.S. carriers in the EU scheme), and an array of U.S. and European environmental organizations--including the Environmental Defense Fund, Earthjustice, and the World Wildlife Fund-UK.