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Does carbon pricing reduce air travel? Evidence from the Australian ‘Clean Energy Future’ policy, July 2012 to June 2014

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  • Markham, Francis
  • Young, Martin
  • Reis, Arianne
  • Higham, James

Abstract

Aviation emissions are an important contributor to global climatic change. As growth in travel demand continues to outstrip improvements in the fuel efficiency of air travel, the aviation contribution to climate change is likely to grow substantially. Consequently, measures that effectively reduce travel demand are required if atmospheric carbon concentrations are to be limited. The efficacy of the Australian Clean Energy Future policy which placed a $23.00AUD (FY 2012) to $24.15 AUD (FY 2013) per tonne levy on carbon-dioxide equivalent emissions from July 2012 to June 2014 is tested. Specifically, time-series regression is used to estimate the effect of this carbon price policy on the level of domestic passenger kilometres flown in Australia, while adjusting for costs of production (i.e. fuel and labour costs), economic activity (i.e. gross domestic product), competitive effects (i.e. airline capacity), and exogenous shocks. There was no evidence that the carbon price reduced the level of domestic aviation in Australia. Carbon pricing measures may have to be levied at a greater rate to affect behavioural change, particularly given the limited potential for future aviation efficiency gains.

Suggested Citation

  • Markham, Francis & Young, Martin & Reis, Arianne & Higham, James, 2018. "Does carbon pricing reduce air travel? Evidence from the Australian ‘Clean Energy Future’ policy, July 2012 to June 2014," Journal of Transport Geography, Elsevier, vol. 70(C), pages 206-214.
    • Handle: RePEc:eee:jotrge:v:70:y:2018:i:c:p:206-214
    DOI: 10.1016/j.jtrangeo.2018.06.008
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    3. Oesingmann, Katrin, 2022. "The effect of the European Emissions Trading System (EU ETS) on aviation demand: An empirical comparison with the impact of ticket taxes," Energy Policy, Elsevier, vol. 160(C).
    4. Adeline Montlaur & Luis Delgado & César Trapote-Barreira, 2021. "Analytical Models for CO 2 Emissions and Travel Time for Short-to-Medium-Haul Flights Considering Available Seats," Sustainability, MDPI, vol. 13(18), pages 1-23, September.
    5. Helmers, Viola & van der Werf, Edwin, 2022. "Did the German Aviation Tax Affect Passenger Numbers? New Evidence Employing Difference-in-differences," VfS Annual Conference 2022 (Basel): Big Data in Economics 264118, Verein für Socialpolitik / German Economic Association.

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