The Economic Impact of the Upcoming EU Emissions Trading System on Airlines and EU Member States – An Innovative Modelling Approach

In February 2009, the European Union‟s (EU) Directive for the inclusion of international aviation into the EU Emissions Trading Scheme (EU-ETS) for CO2-emissions came into force. From 2012 onwards, the EU-ETS will cover virtually all flights departing or arriving in the EU. The initial allo-cation of emission allowances to airlines will be based on a benchmark which is calculated by divid-ing the 2004-2006 CO2-emissions by the transport performance of the year 2010. This paper de-scribes an empirical simulation model for the impact of the EU-ETS. Current and future CO2-emissions and transport performance data of European aviation will be estimated. Furthermore, the economic effects of the upcoming EU-ETS on the aviation sector in total, on selected groups of air-lines and on the administering states will be analysed and discussed. It can be shown that certain airline groups and administering EU States will be affected very differently by the new EU legislation.

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