IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v45y2011i10p1066-1076.html
   My bibliography  Save this article

Much Ado about Nothing? – An analysis of economic impacts and ecologic effects of the EU-emission trading scheme in the aviation industry

Author

Listed:
  • Vespermann, Jan
  • Wald, Andreas

Abstract

From 2012 on, all CO2 emissions from flights departing from or arriving at airports within the European Union have to be offset. We analyze the economic and ecological impacts that are caused by an inclusion of the aviation industry into the proposed emissions trading scheme (ETS). Building on the now fixed system design we employ a simulation model to estimate the impacts of the scheme. Our results indicate that financial impacts are highly dependant on external settings, such as allowance prices and demand growth. We show that the financial burden on the aviation industry will be rather modest in the first years after the introduction of the system and therefore induce only low competition distortions. Likewise, emission reductions within air transportation will be comparably low. While aviation will induce a decline of emissions in other sectors, significant absolute reductions within air transportation can only be reached by a more restrictive system design.

Suggested Citation

  • Vespermann, Jan & Wald, Andreas, 2011. "Much Ado about Nothing? – An analysis of economic impacts and ecologic effects of the EU-emission trading scheme in the aviation industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(10), pages 1066-1076.
  • Handle: RePEc:eee:transa:v:45:y:2011:i:10:p:1066-1076
    DOI: 10.1016/j.tra.2010.03.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856410000443
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.tra.2010.03.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    2. Thomas H. Tietenberg, 1980. "Transferable Discharge Permits and the Control of Stationary Source Air Pollution: A Survey and Synthesis," Land Economics, University of Wisconsin Press, vol. 56(4), pages 391-416.
    3. Brons, Martijn & Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2002. "Price elasticities of demand for passenger air travel: a meta-analysis," Journal of Air Transport Management, Elsevier, vol. 8(3), pages 165-175.
    4. Oum, Tae Hoon & Yu, Chunyan, 1998. "Cost competitiveness of major airlines: an international comparison," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(6), pages 407-422, August.
    5. Givoni, Moshe & Rietveld, Piet, 2009. "Airline's choice of aircraft size - Explanations and implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 500-510, June.
    6. Morrell, Peter, 2007. "An evaluation of possible EU air transport emissions trading scheme allocation methods," Energy Policy, Elsevier, vol. 35(11), pages 5562-5570, November.
    7. Amekudzi, Adjo A. & Jotin Khisty, C. & Khayesi, Meleckidzedeck, 2009. "Using the sustainability footprint model to assess development impacts of transportation systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 339-348, May.
    8. Macintosh, Andrew & Wallace, Lailey, 2009. "International aviation emissions to 2025: Can emissions be stabilised without restricting demand?," Energy Policy, Elsevier, vol. 37(1), pages 264-273, January.
    9. Gudmundsson, Henrik & Hojer, Mattias, 1996. "Sustainable development principles and their implications for transport," Ecological Economics, Elsevier, vol. 19(3), pages 269-282, December.
    10. Rodier, Caroline J. & Johnston, Robert A., 2002. "Uncertain socioeconomic projections used in travel demand and emissions models: could plausible errors result in air quality nonconformity?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 36(7), pages 613-631, August.
    11. Olsthoorn, Xander, 2001. "Carbon dioxide emissions from international aviation: 1950–2050," Journal of Air Transport Management, Elsevier, vol. 7(2), pages 87-93.
    12. Teichert, Thorsten & Shehu, Edlira & von Wartburg, Iwan, 2008. "Customer segmentation revisited: The case of the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(1), pages 227-242, January.
    13. Carlsson, Fredrik & Hammar, Henrik, 2002. "Incentive-based regulation of CO2 emissions from international aviation," Journal of Air Transport Management, Elsevier, vol. 8(6), pages 365-372.
    14. Schipper, Youdi, 2004. "Environmental costs in European aviation," Transport Policy, Elsevier, vol. 11(2), pages 141-154, April.
    15. Poudenx, Pascal, 2008. "The effect of transportation policies on energy consumption and greenhouse gas emission from urban passenger transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(6), pages 901-909, July.
    16. Vespermann, Jan & Wald, Andreas & Gleich, Ronald, 2008. "Aviation growth in the Middle East – impacts on incumbent players and potential strategic reactions," Journal of Transport Geography, Elsevier, vol. 16(6), pages 388-394.
    17. Scheelhaase, Janina D. & Grimme, Wolfgang G., 2007. "Emissions trading for international aviation—an estimation of the economic impact on selected European airlines," Journal of Air Transport Management, Elsevier, vol. 13(5), pages 253-263.
    18. Banister, David, 2008. "The sustainable mobility paradigm," Transport Policy, Elsevier, vol. 15(2), pages 73-80, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Vespermann & Andreas Wittmer, 2011. "Financial, ecological and managerial impacts of emission trading schemes: the case of Lufthansa," Business Strategy and the Environment, Wiley Blackwell, vol. 20(3), pages 174-191, March.
    2. Anger, Annela & Köhler, Jonathan, 2010. "Including aviation emissions in the EU ETS: Much ado about nothing? A review," Transport Policy, Elsevier, vol. 17(1), pages 38-46, January.
    3. Pietro Lanzini & Andrea Stocchetti, 2017. "The evolution of the conceptual basis for the assessment of urban mobility sustainability impacts," Working Papers 02, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    4. repec:dau:papers:123456789/6792 is not listed on IDEAS
    5. Pels, Eric, 2021. "Optimality of the hub-spoke system: A review of the literature, and directions for future research," Transport Policy, Elsevier, vol. 104(C), pages 1-10.
    6. Adler, Nicole & Pels, Eric & Nash, Chris, 2010. "High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 812-833, August.
    7. Holden, Erling & Linnerud, Kristin & Banister, David, 2013. "Sustainable passenger transport: Back to Brundtland," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 67-77.
    8. Martín-Cejas, Roberto & del Pino, Francisco, 2017. "Welfare Gain From Carbon Tax Applied To Leisure Air Traffic," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 5(4), pages 471-480.
    9. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2016. "Has airline efficiency affected by the inclusion of aviation into European Union Emission Trading Scheme? Evidences from 22 airlines during 2008–2012," Energy, Elsevier, vol. 96(C), pages 8-22.
    10. repec:dau:papers:123456789/6794 is not listed on IDEAS
    11. Benoit Chèze & Pascal Gastineau & Julien Chevallier, 2010. "Forecasting air traffic and corresponding jet-fuel demande until 2025," Working Papers hal-02489878, HAL.
    12. Oesingmann, Katrin, 2022. "The effect of the European Emissions Trading System (EU ETS) on aviation demand: An empirical comparison with the impact of ticket taxes," Energy Policy, Elsevier, vol. 160(C).
    13. Stavins, Robert, 2001. "Lessons From the American Experiment With Market-Based Environmental Policies," RFF Working Paper Series dp-01-53, Resources for the Future.
    14. Wang, Zanxin & Wei, Wei, 2017. "External cost of photovoltaic oriented silicon production: A case in China," Energy Policy, Elsevier, vol. 107(C), pages 437-447.
    15. Thierry Bréchet & Pierre M. Picard, 2010. "The Price Of Silence: Markets For Noise Licenses And Airports," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1097-1125, November.
    16. Miyoshi, Chikage, 2014. "Assessing the equity impact of the European Union Emission Trading Scheme on an African airline," Transport Policy, Elsevier, vol. 33(C), pages 56-64.
    17. Schwartz Sonia, 2007. "Market Power Effects on Market Equilibrium in Ambient Permit Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-27, February.
    18. Benoit Cheze & Julien Chevallier & Pascal Gastineau, 2012. "Will technological progress be sufficient to effectively lead the air transport to a sustainable development in the mid-term (2025)?," Working Papers 1207, Chaire Economie du climat.
    19. Kudla, Nicole & Stölzle, Wolfgang, 2011. "Sustainability Supply Chain Management Research," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 65(3), pages 263-301.
    20. Wada, Kentaro & Akamatsu, Takashi, 2013. "A hybrid implementation mechanism of tradable network permits system which obviates path enumeration: An auction mechanism with day-to-day capacity control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 94-112.
    21. Wang, Xuhui & Xi, Haonan, 2023. "Carbon mitigation policy and international tourism. Does the European Union Emissions Trading System hit international tourism from member states?," Annals of Tourism Research, Elsevier, vol. 103(C).
    22. Koopmans, Carl & Lieshout, Rogier, 2016. "Airline cost changes: To what extent are they passed through to the passenger?," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 1-11.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:45:y:2011:i:10:p:1066-1076. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.