Looking for winning policies to address the climate issue in EU-aviation

Abstract

This paper analyzes the different climate policies that are used by the EU in the aviation sector. Using a simple model, we study their effects on welfare as well as on their acceptability. The efficiency and acceptability depend on the strength of the international agreements (Paris, 2015; CORSIA, 2020) and on the implementation of the policy within the EU. Four different policies are discussed: carbon taxes, tradeable emission permits, Sustainable Aviation Fuels (SAF) blending mandates and fuel efficiency standards for new aircrafts. The Paris and the CORSIA agreements are both weak agreements where, in the absence of sanctions, the implementation depends on the will of the political majority of the moment. In terms of implementation, it is shown that for intra EU aviation, the insertion of aviation in the EU-ETS with partially auctioned emission permits is probably the most robust and efficient implementation of the Paris agreement as it can result in net zero emissions in 2040–2050. Subsidies for R&D in fuel efficiency and new fuels would be good complements to the ETS system as they also have a positive spillover for the non-EU aviation via better aircrafts and better fuels. SAF mandates are likely to be inefficient implementations of climate policies, they exist because they are more acceptable for the airlines and intensive air transport users.