The European Commission today proposed bringing greenhouse gas emissions from civil aviation into the EU emissions trading scheme.
But the proposals have been roundly criticised by for not going far enough to help the environment while still hurting business.
Caroline Lucas, the European Parliament's spokeswoman on aviation and climate change, said last minute wrangling among the European Commission had "ripped the guts out of the legislative proposals".
The EC proposals will apply to flights within the EU from 2011 and all flights to and from EU airports from 2012.
Airlines will be able to sell surplus carbon dioxide allowances if they reduce their emissions and will be required to buy additional allowances if their emissions grow.
"Aviation too should make a fair contribution to our efforts to cut greenhouse gas emissions," said environment commissioner Stavros Dimas.
"The commission will continue to work with our international partners to promote the objectives of a global agreement on aviation.
"Bringing aviation emissions into the EU emissions trading scheme is a cost-effective solution that is good for the environment and treats all airlines equally."
The EC estimates by 2020 carbon dioxide savings of up to 183 million tonnes a year, equivalent to twice Austria's annual greenhouse gas emissions from all sources.
But the proposals have drawn heavy criticism.
"These proposals represent the worst of both worlds. They will do virtually nothing to tackle climate change - and they will add extra costs and regulation to business," said shadow transport secretary Chris Grayling.
"There is a strong case for establishing an emission trading scheme for transport alone, to encourage a move to more environmentally friendly forms of travel. We have asked our policy groups to assess the workability of such a scheme."
Chris Huhne, Liberal Democrat environment spokesman, added: "This is a necessary step but is far too tentative to tackle an industry whose EU emissions have risen by 87 per cent since 1990 and which is growing so quickly that it could be using our whole carbon allowance by 2050.
"Aviation needs to be treated like other potential emitters, not just by more urgent inclusion in the emissions trading Scheme, but by ensuring flights are taxed fairly."