Unilateral linking of international aviation and stationary sources within the EU emissons trading scheme
(English)Manuscript (preprint) (Other academic)
Starting on January 1 st, 2012, the international aviation sector will be included into the already existing EU ETS. All air crafts departing and arriving within the European Union will be obliged to hold permits corresponding to their total emissions of CO 2for those routes. Since emissions from the international aviation sector are not included under the Kyoto Protocol, the European Commission has decided to introduce a trading barrier between the sectors in order not to jeopardize the Kyoto targets. The purpose of this paper is to analyse the potential loss in cost-effectiveness of introducing such a trading barrier between two sectors taking into account that damage from emissions is not necessarily uniform. A theoretical model is developed to address the question and it is found that, at least for the case with linking the international aviation sector to the stationary sources within the EU ETS, the trading barrier might be unwarranted as it might lead to higher damage from emissions as compared to alternative ways to link the trading sectors. However, it should be stressed that this finding is not general and caution should be taken in the future when linking emission trading schemes as, depending on the heterogeneity of emission damage, a trading barrier might very well be justified.
aviation, climate change, emissions trading, gateway, policy
Other Civil Engineering Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-34029OAI: oai:DiVA.org:kth-34029DiVA: diva2:418653