EU ETS versus CORSIA - A critical assessment of two approaches to limit air transport's CO2 emissions by market-based measures

Abstract

To limit air transport's climate relevant emissions, two important CO2 trading schemes for aviation are in force, or will be in the future: The EU Emissions Trading Scheme (EU ETS) for aviation, which was introduced in 2012, and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as agreed at International Civil Aviation Organization (ICAO) level in October 2016. The authors analyze and compare both schemes from an environmental and competition perspective. Also, options for proceeding with the EU ETS are discussed. Main results indicate that a continuance of the EU “Reduced Scope” regime (following the European Commission's “Stop the Clock Decision”) beyond 2020 and a parallel coverage of international flights by CORSIA would be the best option.