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The impact of climate policy on U.S. aviation

Researchers find that a federal climate policy would lower total U.S. emissions, but without large reductions in the aviation sector.
Aviation is one of the fastest-growing industries worldwide, and with this growth comes a rise in greenhouse gas emissions. An economy-wide cap-and-trade policy would decrease carbon emissions for all U.S. industries, including the aviation sector. However, researchers from MIT recently found that such a policy would cause only a moderate decrease in aviation-related emissions by 2050. They released their results in a report, “The Impact of Climate Policy on U.S. Aviation.”

Researchers from MIT’s Joint Program on the Science and Policy of Global Change and the Partnership for AiR Transportation Noise and Emissions Reductions, or PARTNER, combined two computer models to develop a unique analysis of the impacts of U.S. climate policy. First, the Emissions Prediction and Policy Analysis (EPPA) model analyzed the global economy and the greenhouse gases linked to economic activity, including the impact of a cap-and-trade policy on fuel prices, emission allowances and the overall economy. Next, the Aviation Environmental Portfolio Management Tool for Economics (APMT-E) modeled the aviation industry’s response to climate policy, estimating changes in aviation-related emissions and operations.

The researchers used these two models to examine the impact of the American Clean Energy and Security Act of 2009 (H.R. 2454), more commonly known as the Waxman-Markey bill. This bill, recently passed by the House of Representatives, proposed a 17 percent reduction in greenhouse gas emissions from 2005 levels by 2020 and an 80 percent reduction by 2050. Although the Waxman-Markey bill was rejected by the Senate, policies that set reduction targets for greenhouse gas emissions are likely to be implemented in the future. The reduction targets in this bill cover the entire U.S. economy, including the aviation sector.

But researchers found that aviation-related emissions would actually increase by 97-122 percent between 2012 and 2050 under the Waxman-Markey climate policy — a relatively small change from the 130 percent increase expected without climate policy. This result indicates that, while the overall policy effectively reduces total U.S. emissions, more emissions are abated in non-aviation sectors. That is, aviation contributes to reducing national emissions mainly by funding, via the purchase of permits, relatively inexpensive abatement options in other sectors, such as electricity generation.

In fact, there are three main reasons the Waxman-Markey bill has only a small impact on aviation emissions. The first is that some sectors, such as the energy industry, are able to reduce emissions easily (i.e., inexpensively), while other sectors, such as the aviation industry, have more costly emissions-abatement options. Currently, there are limited opportunities for airlines to replace carbon-intensive energy sources. Because airlines already operate closer to the fuel efficiency frontier than many other industries, there are cheaper mitigation options, or “lower-hanging fruit,” in these other sectors.

Second, although rising fuel prices — and thus rising airfares — can impact demand, there is still strong growth in demand for aviation in the policy scenarios. Third, the researchers found that the U.S. aircraft fleet becomes less fuel-efficient under the modeled climate policy. Fleet-efficiency changes are driven by two opposing forces: On one side, by demand reductions (relative to a future without climate policy), which cause airlines to delay purchases of new, more fuel-efficient aircraft; while on the other side, higher fuel prices oppose this incentive, inducing airlines to purchase more fuel-efficient aircraft. In the MIT simulations, the first force (reduced demand) dominates the second force (fuel price incentives), causing fleet efficiency to decrease.

Overall, the study shows that aviation emissions-abatement options are costly relative to mitigation options in other sectors. But the results of this research come with several caveats. Because the study focuses on long-term trends, shorter adjustments associated with business cycles are not considered. For example, in economic downturns, airlines may park old aircraft, which are then replaced by new, efficient aircraft in future high-growth periods. In addition, the model did not consider adjustments airlines could make to their existing fleets, such as retrofitting seat configuration, using slower flight speeds, or reducing cabin weight. Changes in air-traffic management may also improve operations and reduce emissions. Future work, which will include such considerations, may show that climate policy has a larger, positive effect on fleet fuel efficiency.

The authors also caution that the small reduction in aviation emissions does not indicate that the policy would be ineffective at reducing national emissions. Faced with high abatement costs, it is cheaper for the aviation sector to fund abatement in other sectors than reduce their emissions; a cap-and-trade system allows this to occur. Additionally, the study does not consider benefits from the climate damages that may be avoided through such policies, so the results cannot be used to assess the overall effectiveness of climate policy.

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