The Inclusion of Aviation in the EU Emissions Trading System: An Economic and Environmental Assessment
SummaryThis paper scrutinizes the inclusion of aviation transport in the European Union Emissions Trading Scheme (EU ETS) from an environmental and economic perspective. The authors shed light on issues relating to emissions and to demand, competitiveness and trade in the aviation sector. In addition, the paper also serves to highlight the first example of imports being included into a domestic carbon pricing strategy, which is part of a bigger picture. The authors find that the impact on net emissions covered by the EU ETS could be large. Given growing aviation emissions, operators would have to buy allowances from other sectors in the EU ETS, therefore driving down emissions in these other sectors. Changes in competitiveness and tourism may also occur. While the impact on trade between Europe and developing countries is likely to be small, this may vary between products and regions.