Including aviation emissions in the EU ETS: Much ado about nothing? A review

The European Community, motivated by the rapid growth of the aviation industry and related impacts on climate change, has decided to include aviation in the European Emissions Trading Scheme (EU ETS). Mitigation policies such as the EU ETS are considered to be necessary in order to change travel behaviour and induce operational and technological changes in the aviation industry that will result in lower environmental impacts. This paper reviews the available impact assessments of the proposed emissions trading scheme for airlines published between 2005 and 2009. It analyses the methods used and finds that the models used are often over-simplified, omitting important variables or that the reliability and robustness of the modelling results are reduced by linking models that are based on different assumptions. The paper also summarises the possible environmental (CO2 emissions) and economic (air fares, demand for airline services, supply of airline services, competitiveness, GDP, carbon price) impacts in the studies reviewed for the year 2020. Overall, the effects are found to be small: for example, CO2 emissions are expected to decline by a maximum of 3.8% and the maximum impact on GDP in the EU was found to be -0.002%. The reasons for these insignificant impacts are analysed in this paper; it is also found that there are some positive aspects of including aviation in the EU ETS.