This report sets out to design and evaluate policy instruments that address the climate impact of aviation NOx emissions. It is well established scientifically that cruise NOx emissions cause a significant part of the current total climate impact of aviation. At present, LTO NOx emissions are controlled but cruise NOx emissions are not, and they grow roughly at the same pace as air traffic.
After a review of the scientific literature, a comprehensive overview of NOx formation and control technologies and the environmental trade-offs, and an elaborate policy analysis, this report concludes that it will take around three to five years to provide robust scientific input for potential policy instruments that are both well founded in scientific evidence and provide the right incentives to reduce emissions both in the short term and in the long term. The two main issues that will have to be resolved before such an instrument can be developed are:
Both issues should be capable of being resolved in three to five years, given sufficient study. In the meantime, the analysis perfomed for this report shows that the policy instruments that could be introduced would either have very limited environmental impacts but a solid scientific foundation, or a questionable scientific basis but a significant impact.
An LTO NOx charge, introduced at European airports would primarily be a local air quality instrument, reducing NOx emissions in the vicinity of airports. It would have a very small co-benefit on NOx emissions at altitude. However, it may be perceived as an inequitable climate policy instrument, as the short haul flights that have a low contribution to the climate impact will pay most of the charge. It would be feasible to implement technically and legally.
An LTO NOx charge with a distance factor would need a good policy instrument to reduce the climate impact of NOx. Before it can be implemented, however, there needs to be a thorough assessment of the relationship between LTO and cruise emissions. A methodology already exists for the determination of this relationship but it is only applicable to current technology engines since it is empirical, and a more physically-based relationship would be required for this policy application so that future technologies could be robustly modelled. Moreover, it needs a well founded basis for the level of the charge, i.e. a value of the GWP of aviation NOx. The legal basis for the instrument could be strengthened if international agreement could be reached on this value. New engine technology may lead to the breakdown of the existing relationship between LTO and cruise emissions. If this would occur, the environmental impacts of the charge could be reduced.
A cruise NOx charge would be the best instrument to address cruise NOx emissions, but it cannot be currently implemented since cruise NOx emissions can neither be monitored nor modelled by a widely accepted method using publicly available data although manufacturers do possess the necessary information. Moreover, it needs a value for the GWP of NOx.
Inclusion of aviation NOx emissions in the EU ETS would need the determination of a method to calculate NOx emissions. One obvious candidate for such a method would be based on the product of LTO NOx emissions and distance. Moreover, the GWP of aviation NOx would need to be established. The main advantage of this policy instrument would be that it would give the right incentive to minimise the combined climate impacts of CO2 and NOx emissions in engine design.
An increased stringency of LTO NOx standards would reduce cruise NOx emissions for future technology engines as long as the current relationship between LTO and cruise emissions holds. However, this is by no means a certainty. Standards have a solid legal basis. However, as they would need to be established internationally it is questionable whether the standards would meet EU expectations.
A precautionary emissions multiplier in the EU ETS could be readily implemented. Its legal basis would not differ much from the legal basis for the inclusion of aviation in the EU ETS. However, there is currently no scientific consensus for the value of an emissions multiplier, nor the method by which it is calculated. Furthermore, an emissions multiplier would increase the incentive to reduce
CO2 emissions, and since there is a potential trade-off between
CO2 and NOx in future engine design, it may lead to NOx emissions that are higher than they would have been without the multiplier. (Note that an emissions multiplier is not necessarily exclusively the most well known and discussed ‘multiplier’, the Radiative Forcing Index (RFI), which is in fact not an emissions multiplier at all.)
The environmental impacts of most economic instruments are comparable, i.e. in the range of reducing NOx emissions by 3-5% relative to the baseline in 2020 if the levels of the charges reflect damage costs. The only exception is the LTO NOx charge, which would have very small environmental impacts. Of course, the impacts of standards would depend on the stringency increase and the impacts of economic instruments would depend on the level of the charges imposed. Since most impacts of economic instruments on emissions arise from reduced demand rather than by technological changes, revenue neutral charges would have significantly lower impacts.
The cost effectiveness of all financial instruments is in the same range of € 1 to € 2 per kg of NOx reduced. The main cost item here is welfare costs. In contrast, the main cost item of standards is resource costs. Therefore, the cost-effectiveness should not be directly compared. The cost-effectiveness of a 10% stringency increase would be € 10 – € 25 per kg of NOx reduced, depending on the fuel penalty of meeting the standard.