By Valerie Volcovici
MONTREAL, Oct 4 (Reuters) - The United Nations body in charge of civil aviation has reached a consensus on a market-based system to curb carbon emissions from airlines by 2020, but rejected a proposal to let Europe apply its own plan to foreign carriers in the meantime.
The final agreement, hammered out during two days of debates and talks on the sidelines at the International Civil Aviation Organization triennial meeting in Montreal, was ratified Friday.
It averted a looming global trade dispute over emissions in the aviation sector, which the International Air Transport Association forecasts will make $743 billion in revenues in 2014, up from $708 billion this year.
The resolution sets up steps the ICAO's 200 or so member states need to take between now and the next assembly in 2016.
Until then, many delegates will look back fondly on their time in Quebec's largest city. Talks were brightened by an average of three cocktail parties per night hosted by different countries, some of whom were angling to win a coveted seat on ICAO's 36-member governing council.
Diplomacy and good will were in full force during the first week, when representatives of countries at policy loggerheads clinked glasses of Singapore Slings, or chatted over plates of sushi, samosas and other national dishes.
Tensions mounted at the last minute when it appeared the long sought deal might not happen, but there was a breakthrough on Thursday when Europe made concessions.
"Aviation has indeed risen to the climate change challenge and has delivered a clear mandate to deliver a market-based measure by 2016 that is capable of being implemented in 2020," ICAO secretary general Raymond Benjamin said in remarks ending the two-week gathering.
He added that the climate resolution was a "major step forward" for the aviation sector and a "world first for any major industry."
The committee agreed to "develop a global MBM (market-based mechanism) scheme for international aviation" in 2016, as decided by the ICAO's governing council in early September.
But ICAO Assembly president Michel Wachenheim amended the text to reflect requests made by some developing countries, including India, to say the 2016 decision should take into account the "environmental and economic impacts" of different global MBM options, "including feasibility and practicability."
"After some very challenging discussions, including compromises by all parties, ICAO has made a strong commitment in favor of taking multilateral action to tackle climate change," said Todd Stern, the State Department's climate envoy and chief U.S. negotiator.
Tony Tyler, director general of IATA, the trade association for global airlines, addressed the final plenary session, praising the "historic decision of this assembly to develop a global MBM for international aviation."
IATA plans to work with the ICAO's governing council over the next three years to design a scheme.
In the waning hours of the meeting, it was unclear if the committee would be able to reach a consensus on a global MBM. A group of mostly developing countries voted 97-39 to limit the European Union's ability to apply its emissions trading system (ETS) to international airlines until a global plan is launched.
The EU insisted a deal should allow it to apply its ETS, while work continued on a global system, but backed down amid opposition from countries ranging from Argentina to Russia.
Although one European official said the delegation was "bruised" by the deliberations, a representative of Lithuania, which holds the EU's rotating presidency, praised the outcome.
"It will allow us to start the negotiations on the global MBM, which is the biggest achievement, not only for Europe, but for all ICAO members," said Arijandas Sliupas, Lithuania's deputy transport minister.
Europe wanted the ICAO to help shore up the continent's ETS, which is central to its climate policy and requires all airlines using EU airports to pay for emissions.
Analysts say the European Parliament could reject the Montreal package, but would have to act quickly to endorse any extension of the European Commission's decision to "stop the clock" on its law in time for an April 2014 deadline.
Some environmentalists felt let down by the outcome.
Friday's agreement lacked the "guts" that the environmental community has been looking for from the aviation industry, said Bill Hemmings, program manager for aviation and shipping for Brussels-based environmental group Transport & Environment.
"After all was said and done, much was said and not much was done," Hemmings added.