Market-Based Instruments for International Aviation and Shipping as a Source of Climate Finance

The international aviation and maritime sectors today enjoy relatively favorable tax treatment, as their fuels are not taxed and the sectors are not subject to any value-added tax or turnover tax. Nor are these fuel uses subject to any global measures to reduce their associated CO2 emissions, even though they represent at least 5 percent of the global greenhouse gas emissions. A carbon charge on fuels for international aviation and shipping equal to $25 per tonne of emitted CO2 could raise about $12 billion from aviation and about $26 billion from shipping by 2020. Market-based instruments ought to be used to raise such revenue, preferably charges based on the carbon contents of fuels. Such charges would also scale back emissions by at least 5-10 percent. Developing countries ought to be able to keep their own tax revenue, and additional compensation to them for the economic burdens of these carbon charges may be warranted. Such compensation would constitute at most 40 percent of the raised global revenue. Implementing these charges can be a challenge, especially for aviation, where a large number of bilateral air-service agreements would need to be rewritten.

Bibliographic Details

Main Authors:	Keen, Michael, Parry, Ian, Strand, Jon
Language:	English
Published:	2012-01-01
Subjects:	AIR, AIR CARGO, AIR NAVIGATION, AIR POLLUTION, AIR SERVICE, AIR TICKETS, AIR TRAFFIC, AIR TRAFFIC CONTROL, AIR TRANSPORT, AIRCRAFT, AIRLINE COMPANIES, AIRLINE TICKET, AIRPORT, AIRPORT CONGESTION, AIRPORT SECURITY, AIRPORT TAXES, AIRPORTS, ALLOCATION, ALLOWANCE, ALTERNATIVE FUELS, ALTITUDE, ANNUAL EMISSION, ANNUAL EMISSION REDUCTIONS, APPROACH, AUTOMOBILE, AVERAGE COSTS, AVIATION EMISSIONS, AVIATION FUEL, AVIATION INDUSTRY, AVIATION SECTOR, BASELINE EMISSIONS, BASELINE LEVELS, BASES, BIO-DIESEL, CALORIFIC VALUE, CAPITAL GAINS, CARBON, CARBON CONTENT, CARBON EMISSIONS, CARBON LEAKAGE, CARBON PRICE, CARBON TAXES, CARRIERS, CARS, CIRRUS CLOUDS, CLEAN TECHNOLOGY, CLIMATE, CLIMATE CHANGE, CLIMATE STABILIZATION, CO, CO2, COATINGS, COMBUSTION, COMPLETE LISTING, CONGESTION, CONGESTION PROBLEMS, CONSUMER PRICE, CONSUMER SURPLUS, CRUDE OIL, CRUDE OIL PRICE, DEMAND CURVE, DEMAND ELASTICITY, DEMAND FOR TRANSPORTATION, DEMAND FOR TRAVEL, DEVELOPED COUNTRIES, DIESEL, DIESEL ENGINES, DIESEL FUEL, DOMESTIC AIR TRAVEL, DOMESTIC AVIATION, DOMESTIC FLIGHTS, ECONOMIC ANALYSIS, ECONOMIC WELFARE, EFFICIENCY IMPROVEMENTS, ELASTICITIES, ELASTICITIES OF DEMAND, ELASTICITY OF DEMAND, EMISSION, EMISSION REDUCTIONS, EMISSION TRADING, EMISSIONS, EMISSIONS ALLOWANCES, EMISSIONS FROM AVIATION, EMISSIONS FROM SOURCES, EMISSIONS GROWTH, EMISSIONS INTENSITY, EMISSIONS MITIGATION, EMISSIONS PER TONNE, EMISSIONS PRICES, EMISSIONS REDUCTION, EMISSIONS REDUCTIONS, EMISSIONS STANDARDS, EMISSIONS TARGETS, EMISSIONS TAXES, EMISSIONS TRADING SCHEMES, EMPIRICAL EVIDENCE, ENERGY EFFICIENCY, ENVIRONMENTAL, ENVIRONMENTAL BENEFITS, ENVIRONMENTAL DAMAGES, ENVIRONMENTAL IMPACTS, EQUILIBRIUM, EQUITY OBJECTIVES, EXCISE TAXES, EXTERNALITIES, FEASIBILITY, FISHING, FLAGS OF CONVENIENCE, FLEETS, FLIGHT PATHS, FOSSIL FUEL, FREE ALLOWANCES, FREIGHT, FREIGHT COSTS, FREIGHT SERVICES, FUEL, FUEL CHARGES, FUEL CONSUMPTION, FUEL COSTS, FUEL ECONOMY, FUEL EFFICIENCY, FUEL EFFICIENCY IMPROVEMENT, FUEL OIL, FUEL PRICE, FUEL PRICES, FUEL PRODUCTION, FUEL TAX, FUEL TAX RATES, FUEL TAXATION, FUEL TAXES, FUEL USE, FUELS, GASOLINE, GHG, GLOBAL EMISSIONS, GLOBAL EMISSIONS REDUCTION, GLOBAL GREENHOUSE GAS, GLOBAL GREENHOUSE GAS EMISSIONS, GREENHOUSE, GREENHOUSE GAS, GREENHOUSE GAS EMISSIONS, GREENHOUSE GASES, GROSS RECEIPTS, HEAVY FUEL OIL, HYDROGEN, IMPORT PRICES, IMPORTS, INCOME, INPUT PRICES, INTERNATIONAL AIR TRAVEL, INTERNATIONAL AVIATION, INTERNATIONAL FLIGHTS, INTERNATIONAL TRANSPORT, IPCC, JOURNEY, LAND USE, LIGHT TRUCKS, LIQUEFIED NATURAL GAS, LOCAL AIR POLLUTION, LOCAL AIR QUALITY, LOW-SULFUR, MARGINAL COST, MARITIME TRANSPORT, MARKET DISTORTIONS, MARKET FAILURE, MARKET FAILURES, MINIMUM PRICE, MOBILITY, MONETARY FUND, MOTOR FUEL, MOTOR FUEL TAXES, NATURAL GAS, NOISE, OIL PRICES, OIL PRODUCTION, OIL PRODUCTS, OILS, OZONE, PASSENGER NUMBERS, PASSENGER REVENUE, PASSENGER TRAVEL, PASSENGERS, PER CAPITA INCOME, POLICY IMPLICATIONS, POLICY SCENARIO, POLICY SCENARIOS, POLLUTION, POWER, POWER STATIONS, PP, PRICE CHANGE, PRICE ELASTICITY, PRICE ELASTICITY OF DEMAND, PRICE FLOOR, PRICE IMPACTS, PRICE INCREASE, PRODUCERS, PUBLIC GOODS, PUBLIC SPENDING, REDUCING EMISSIONS, REDUCTION IN FUEL USE, REDUCTION IN TRAVEL, ROUTE, ROUTES, RUNWAYS, SAFETY, SOCIAL COSTS, SPEEDS, SUBSTITUTION, SULFUR, SULFUR EMISSIONS, SULPHUR, SULPHUR CONTENT, SUNLIGHT, SUPPLY CURVE, SUPPLY CURVES, SURCHARGES, TAX, TAX DESIGN, TAX EXEMPT, TAX EXEMPTIONS, TAX RATE, TAX REVENUE, TAX SYSTEMS, TAXATION OF FUEL, TOTAL COSTS, TOTAL EMISSIONS, TRADING PATTERNS, TRAFFIC MANAGEMENT, TRANSIT, TRANSPORT COSTS, TRANSPORT MARKET, TRANSPORT MODES, TRANSPORTATION, TRANSPORTATION ACTIVITIES, TRANSPORTATION COSTS, TRAVEL COSTS, TRAVEL DEMAND, TRAVELERS, TRIP, TRIPS, VEHICLE, VEHICLE EMISSIONS, WAGES, WELFARE EFFECTS, WINDFALL PROFITS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120117140509 https://hdl.handle.net/10986/3235
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