By Valerie Volcovici and Barbara Lewis
WASHINGTON/BRUSSELS, Nov 9 (Reuters) - The European Union welcomed on Friday progress made by the U.N.'s civil aviation body toward a global deal to cut carbon emissions from the sector, raising hopes that the bloc may stand down from applying its controversial law that forces all airlines to pay for their pollution.
The governing council of the U.N.'s International Civil Aviation Organization (ICAO), based in Montreal, discussed on Friday how it could deliver a global approach to tackling airline emissions.
The European Commission, the EU's executive, has said that a concrete global framework from ICAO would be a justification for changing its law.
The Commission has been under immense pressure to scrap the bloc's Emissions Trading Scheme (ETS), which requires all airlines using European airports to pay for each ton of carbon they emit flying into and out of the continent.
China and India have refused to comply, while both houses of the United States Congress have passed legislation that would make it illegal for its airlines to abide by the EU rules.
On Friday evening, EU Climate Commissioner Connie Hedegaard praised the "good news" from ICAO's meeting.
"Progress being made towards international regulation of aviation emissions. Congratulations to ICAO leadership!" she wrote in a message on Twitter.
The Commission has been critical of ICAO's progress on the issue, and said it had only decided to include airlines in its ETS after more than a decade of ICAO inaction.
Friday's ICAO council meeting ended with a new process and timeline for the body to agree on a global framework to help the aviation sector slash their greenhouse gas emissions.
ICAO is expected to assemble a high-level group of senior government officials representing different geographical regions next week, which will submit reports to the ICAO council for its next meetings in March and June, according to an ICAO spokesman.
It will be expected to submit a proposal for an official resolution by the end of the June council meeting, which would be presented to ICAO's general assembly, which takes place once every three years, with the next scheduled for November 2013.
The group will make recommendations on a number of potential measures, including emissions trading programs, carbon offsetting programs, alternative fuels and aircraft carbon emission standards.
The group will decide whether ICAO should adopt a single global market mechanism that would be applied uniformly to all countries, or a framework uniting a patchwork of different national programs, according to people who observed the meeting.
Environmental groups cautiously welcomed ICAO's decision to "speed up work" on a global measure to cut aviation emissions.
"The work of the high level group on a framework must be seen as a stepping stone to a global market-based measure and should not replace this objective or become an obstacle to progress," said Tim Johnson, director of the Aviation Environment Federation.
But U.S. airlines, represented by lobby group Airlines for America, said that despite the progress that came out of ICAO this week, it still believes the U.S. government should continue to oppose the ETS.
Congress is still expected to take action next week to harmonize two different bills that have passed in both the House of Representatives and the Senate that would shield U.S. airlines from having to comply with the EU law.
"We still believe the legislation is needed, and we are hopeful it can be acted on next week," said Jean Medina, a spokeswoman for the airline group.
Annie Petsonk, international counsel of the Environmental Defense Fund, said that President Barack Obama has a chance to help resolve the row by supporting ICAO's work.
"To a large extent, the US holds the key to real progress on a market-based measure now and this will be the first opportunity for Obama to show that he means what he said in his victory speech," she said, referring to his recent remarks that he does not want to children to live under the threat of global warming.