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The Impact of the EU-ETS on the Aviation Sector: Competitive Effects of Abatement Efforts by Airlines

Consuelo Nava (), Linda Meleo (), Ernesto Cassetta () and Giovanna Morelli ()
Additional contact information
Giovanna Morelli: University of Turin, http://www.est.unito.it/

Department of Economics and Statistics Cognetti de Martiis. Working Papers from University of Turin

Abstract: In the next few years, it is estimated that the aviation sector will account for more than 15% of total GHG emissions against the current 5%. In order to curb emissions, Directive 101/2008/EC has included the aviation sector within the scope of the European Union Emission Trading Scheme (EU-ETS). The EU-ETS is generating additional costs for airline companies. The present article develops an original model with which to analyse the impact of EU-ETS on the aviation sector's market equilibrium. Our study expands prior research by explicitly allowing for abatement efforts in the cost function of airline companies and by highlighting interactions among strategies to reduce emissions, firm's actions in the secondary market, free allowances, and fines. The results contribute to enhancing policy makers understanding of the impact of the EU-ETS on the aviation sector also in light of its potential global-level extension that is currently under negotiation.

Pages: pages 29
Date: 2017-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur, nep-reg and nep-tre
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Journal Article: The impact of the EU-ETS on the aviation sector: Competitive effects of abatement efforts by airlines (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:uto:dipeco:201710

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