Airline fleet replacement funded by a carbon tax: An integrated assessment

Stimulating fleet renewal and attaching a price to carbon dioxide emissions have both been suggested as ways of reducing aviation׳s environmental impact. One potential route for emissions reduction is to combine these policy options, by applying a carbon tax which is used to subsidize fleet renewal. Such a policy would have impacts on many aspects of the aviation system, including demand, fleet composition, traffic delays, and airfares. Therefore, its impacts need to be considered holistically, taking into account likely interaction and feedback effects. In this paper, we apply a model of the global aviation system, the Aviation Integrated Model (AIM), to assess the demand and emissions response from passenger aviation following the application of such an aviation sector policy. We find that by 2050, aviation lifecycle carbon dioxide emissions may be reduced by up to 34% compared to the no-policy case for a policy aimed at retiring aircraft over 20 years old.