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Giving wings to emission trading

Inclusion of aviation under the European Emission Trading System (ETS): Design and impacts

The study examines the feasibility of including international aviation in the EU Emissions Trading Scheme in order to mitigate the climate impacts of the sector by encouraging airlines to integrate reduction of those impacts into their business objectives. This study can be regarded as the third study commissioned by the European Commission on the use of economic instruments to mitigate the climate impacts of aviation. Previous studies have shown that introducing a tax on aviation fuel at the European level would give rise to considerable distortions in competition and may need amendment of bilateral air service agreements. En-route emission charges are also under consideration. The study published today complements the existing knowledge base by examining the consequences of including aviation in the EU Emissions Trading Scheme (ETS). The main conclusion of the study is that emissions trading is a policy option worthy of consideration alongside other instruments for tackling aviation climate impacts. Effects on ticket prices are expected to be relatively modest. The system can be designed to encompass non-European air carriers too, thereby minimising economic distortions among carriers. Introducing emissions trading for the aviation sector does not appear to pose many challenges beyond those already encountered in the context of the current EU ETS.

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