Aviation and Climate Change

Aviation emissions are small compared with emissions from road transport and electricity generation, but are potentially large compared with other sectors. In 2010, emissions from aviation were about 2.5 percent of global greenhouse gas (GHG) emissions (slightly more than half being international), compared to 17 percent for road transport and 35 percent for electricity.

Even with a growth rate of around 3 percent per year, forecasts suggest these emissions would be perhaps 5 percent of global emissions by 2050. After electricity and road transport, however, one quickly reaches sectors that are emitting only 5 percent of total emissions (e.g., petroleum refining is about 5 percent).

Fuel represents about more than 30 percent of operating costs, up from only 14 percent a decade earlier. It is therefore not surprising that aircraft manufacturers have responded: Newer aircraft, like the Boeing 747-800 and 787 use 30 percent less fuel per passenger-mile than older aircraft. Moreover, likely carbon prices from a market-based program would be only a small increase in fuel costs. A gallon of jet fuel now costs about $3 per gallon — which would go up about 30 cents with a $30 per ton of CO2 carbon price.

A key question for market-based programs is either how to allocate allowances in a cap-and-trade program or how to spend revenue under a levy. Giving out allowances to airlines for free in a competitive industry like aviation is likely to generate windfall profits, as occurred in deregulated power markets in the EU ETS. Auctioned allowances and levies will raise revenue for the government that could be used to reduce other taxes. (The Hill, 9/26/2014, Billy Pizer)