Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation

The report evaluates the impact of expanding the EU Emissions Trading System (EU ETS) to cover more European aviation flights compared to the European Commission's (EC) proposal, which retains the EU ETS for intra-EEA flights and uses CORSIA for flights between the EEA and other participating states. Using the AERO-MS model, the study finds that expanding the EU ETS to include all outgoing flights (Scenario 1) or all outgoing and incoming flights (Scenario 2) would significantly increase emission reductions and auctioning revenues, though at a higher cost to airlines. Specifically, Scenario 2 would result in a 113% higher emission reduction than the EC proposal. The report also highlights uncertainties in CORSIA's effectiveness, noting that changes in the baseline or non-participation of major aviation countries could reduce its emission reductions by up to 77%.

• Expanding the scope of the EU ETS beyond intra-EEA flights significantly increases emission reductions. Policy scenario 1 (covering intra-EEA and outgoing flights) results in a reduction of 1.693 Mt, which is 53% higher than the EC proposal. Policy scenario 2 (covering intra-EEA, outgoing, and incoming flights) results in 2.358 Mt, a 113% increase over the EC proposal.
• The vast majority of emission reductions under all three scenarios are achieved through the purchase of EU ETS allowances (EUAs) and CORSIA international credits, which reflect reductions in other economic sectors, rather than in-sector aviation reductions. In the two alternative scenarios, in-sector reductions account for only about 10% of the overall reduction.
• The economic cost to airlines for purchasing allowances and credits is substantially higher in the alternative scenarios. Total costs for the period 2021-2035 are estimated at 77 billion € for the EC proposal, 171 billion € for scenario 1, and 273 billion € for scenario 2.
• The EC proposal creates a disparity in relative cost increases for airlines, where intra-EEA flights face a cost increase of 5-6% of operating costs by 2035, while EEA outgoing and incoming flights face less than 1%. The alternative scenarios align these costs more closely.
• There is high uncertainty regarding the effectiveness of CORSIA. If the 2019 baseline is maintained and five major aviation countries (Brazil, China, India, Russia, and Vietnam) do not join the mandatory phase, CORSIA-related emission reductions for the EC proposal could be 77% lower than default assumptions.
• The additional auctioning revenues generated by the alternative scenarios are sufficient to cover the monetary compensation for CORSIA international credits. Net additional revenues for EEA Member States are estimated at 31.2 billion € for scenario 1 and 61.9 billion € for scenario 2 over the 15-year period.

APA

van Velzen, A. (2022). Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2022/09/20220523-Environmental-and-economic-impacts-of-EU-ETS-and-CORSIA-policy-scenarios-for-European-aviation.pdf

Chicago

van Velzen, André. Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation. Carbon Market Watch, 2022. https://carbonmarketwatch.org/wp-content/uploads/2022/09/20220523-Environmental-and-economic-impacts-of-EU-ETS-and-CORSIA-policy-scenarios-for-European-aviation.pdf.

Wikipedia

{{cite report |last1=van Velzen |first1=André |title=Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation |publisher=Carbon Market Watch |date=April 2022 |url=https://carbonmarketwatch.org/wp-content/uploads/2022/09/20220523-Environmental-and-economic-impacts-of-EU-ETS-and-CORSIA-policy-scenarios-for-European-aviation.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vanvelzen2022environmental, author = {van Velzen, André}, title = {{Environmental and economic impacts of EU ETS and CORSIA policy scenarios for European aviation}}, institution = {Carbon Market Watch}, year = {2022}, month = apr, url = {https://carbonmarketwatch.org/wp-content/uploads/2022/09/20220523-Environmental-and-economic-impacts-of-EU-ETS-and-CORSIA-policy-scenarios-for-European-aviation.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }