Decarbonizing Aviation: Cash for Clunkers in the Airline Industry

Jan K. Brueckner, Matthew Kahn and Jerry Nickelsburg

Journal of the Association of Environmental and Resource Economists, 2026, vol. 13, issue 2, 463 - 494

Abstract: The durability of the transportation capital stock slows down the pace of decarbonization since newer vintages feature cutting-edge technology. If older vintages were to be retired sooner, the social cost of travel would decline. This study analyzes and explores the viability of a potential cash for clunkers program for the airline industry, which would help to hasten decarbonization of aviation. Focusing on US aviation, our estimation and calculations show that airlines can be induced to scrap rather than sell older planes upon retirement with a payment that is less than the forgone carbon damage. The marginal value of a dollar of public funds used in the program is 8.67, a large value compared to other climate programs. Our estimates are highly conservative because they ignore non-CO2 aviation emissions while using relatively low carbon cost of $51.

Date: 2026
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Working Paper: Decarbonizing Aviation: Cash-for-Clunkers in the Airline Industry (2024)
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