Market-based instruments for international aviation and shipping as a source of climate finance
AbstractThe 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5950.
Date of creation: 01 Jan 2012
Date of revision:
Transport Economics Policy&Planning; Climate Change Economics; Climate Change Mitigation and Green House Gases; Environmental Economics&Policies; Energy Production and Transportation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-25 (All new papers)
- NEP-ENE-2012-01-25 (Energy Economics)
- NEP-ENV-2012-01-25 (Environmental Economics)
- NEP-RES-2012-01-25 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007.
"The Trade Reducing Effects of Market Power in International Shipping,"
NBER Working Papers
12914, National Bureau of Economic Research, Inc.
- Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
- Axel Michaelowa & Karsten Krause, 2000. "International maritime transport and climate policy," Intereconomics: Review of European Economic Policy, Springer, vol. 35(3), pages 127-136, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.