Sustainable biofuel consumption in air passenger transport driven by carbon-tax policy

Abstract

Carbon emissions associated with air passenger transport have been in the spotlight for several decades. As most aircraft emission reduction technologies have reached a saturation point, biofuel is considered a sustainable resource for reducing carbon emissions in air passenger transport. In order to promote the sustainable consumption of biofuels in air passenger transport and curb carbon emissions, this study explores a carbon-tax policy, which includes a regular carbon tax and a punitive carbon tax for setting a cap of carbon emissions by the punitive tax based on the expected carbon emissions level, and biofuel consumption strategies by a bi-level programming model. By the planning model, we examine the decision-making interaction between the government and several airlines in order to establish the links between carbon-tax policy and biofuel consumption in air passenger transport, and analyze how carbon-tax policy helps reduce carbon emissions from biofuel consumption. Based on the results, sustainable biofuel consumption and carbon emissions reduction are mainly dependent on expected emission levels, in addition to the relatively low expected emission levels that exceed airlines' capability to reduce emissions. Moreover, the social cost of carbon emissions can be partially transferred with an appropriate proportional coefficient, depending on the carbon-tax policy parameters including the expected emission level and carbon tax prices. The findings of this study suggest that setting appropriate expected emission levels and carbon tax prices can encourage airlines to use biofuels, promote carbon emissions reduction and achieve sustainable air passenger transport. In addition, when implementing sustainable biofuel consumption planning, considering the relationship of government and airlines is conducive to making proper carbon-tax policy.