In a victory for U.S. airlines, the European Commission said yesterday it was ready to suspend the inclusion of non-European carriers in the European Union's cap-and-trade carbon emissions program until September next year.

The announcement comes as the House of Representatives is expected to vote later today on Senate language that would authorize blocking U.S. air carriers from participating in the E.U. Emissions Trading System, or ETS.

The Senate bill, which enjoys widespread bipartisan support, also encourages U.S. officials to work toward an international agreement and leaves room to reassess the ban if a global agreement is reached. The House passed similar legislation last year and is expected to approve the Senate version.

China has also barred its airlines from participating in the program, and India is considering a similar decision.

Connie Hedegaard, the European Union's climate commissioner, said she was proposing a suspension of the E.U. law until after the International Civil Aviation Organization (ICAO) meets next year because she believed the U.N. body was making progress on a global deal.

Last week, ICAO representatives agreed to establish a high-level working group to flesh out an international agreement to reduce carbon emissions from airplanes for presentation before the full assembly in September.

"But let me be very clear: If this exercise does not deliver -- and I hope it does -- then needless to say, we are back to where we are today with the E.U. ETS. Automatically," said Hedegaard at a news conference in Brussels.

Cost to passengers under debate

For the suspension to come into effect, member states and the European Parliament would also have to agree. Meanwhile, E.U. airlines will still have to pay for their carbon emissions under existing rules of the ETS.

Airlines for America, or A4A, the trade group representing U.S. airlines, said it is "cautiously optimistic" about the E.U. announcement but renewed calls for Congress to pass legislation opposing the E.U. ETS.

Airlines landing or taking off in Europe had to join the ETS on Jan. 1 this year, getting 85 percent of their emissions certificates for free and buying the rest at auction. Under the original plan, carriers would have to start paying into the system next April.

While the International Air Transport Association has said the ETS would cost airlines a total of €1.2 billion ($1.5 billion) this year, the extra costs passed on to customers so far have been small -- a $3 surcharge on trans-Atlantic flights for Delta and a $6.44 surcharge for flights between Hong Kong and Europe for Cathay Pacific, for example.

But according to Keya Chatterjee, director of international climate policy at the World Wildlife Fund, U.S. airlines have been profiting from the higher ticket prices and now stand to make money from the proposed delay by holding onto about $230 million in free allowances awarded to them by the European Union over the last year. "That's a windfall profit."

Under legislation before the House today, airlines would also be held "harmless" from any costs associated with the E.U. ETS if it is ultimately implemented. Environmental groups have argued that the bill puts taxpayers on the hook to cover the E.U. fine of €100 per ton of carbon dioxide emitted if U.S. airlines refuse to comply.

Jean Medina, a spokeswoman for A4A, said the delay does not offer U.S. airlines any savings. "The E.U. has proposed a stay for 6 months. It's not final yet and it is only a stay -- so there are no real savings," she wrote in an emailed response.

"There is no scenario under which U.S. carriers are making money off of this [Emissions Trading System]," she added. "U.S. airlines expect the cost of the E.U. ETS to amount to about $3.2 billion between now and the end of the decade."

A global carbon market for airlines?

Environmental groups have charged that President Obama would start his next four years of leadership on the wrong foot if he signs into law a bill that blocks the E.U. effort to put limitations on greenhouse gas emissions, particularly after the E.U.'s sign of compromise and in the wake of an extreme weather event like Superstorm Sandy.

Air travel is responsible for about 2 to 3 percent of global emissions currently, but carbon dioxide output is expected to increase as the industry grows. ICAO has been negotiating for more than a decade to create a global carbon market for the industry but made little progress before this year.

Some have pointed fingers at the United States' failure to lead the discussion.

"Up until now, the United States has not put forward a positive proposal for how to address the issue. It's simply said, 'We don't like the E.U. ETS,'" said Annie Petsonk, the Environmental Defense Fund's international counsel.

"But now there's a chance for the United States to rise above the interagency fractiousness that's characterized this issue and show some leadership, consistent with President Obama's signal that he's going to give climate change a higher priority in his second term."

The president of the ICAO Council is expected to select the group of countries that will make up the high-level working group later this week. Petsonk said whoever is selected to represent the U.S. delegation will send a strong signal on where the talks are headed.

If negotiations fail, and the United States and other non-E.U. countries withdraw from the ETS, it would reduce the aviation sector's participation in the program by about 60 percent, according to consultancy Thomson Reuters Point Carbon.

The decision to delay implementation of the ETS "gives a weak signal to the market, as it amounts to the first step in a commission climb-down," said Emil Dimantchev, an analyst at Point Carbon.

Even though the decision will have a minimal effect on demand for carbon allowances this year, "it will keep airlines from buying permits for 2013 and it casts doubts on demand for carbon allowances through 2020, as it increases the likelihood the aviation sector will be taken out of the ETS altogether," he added.