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Greening international aviation post COVID-19: What role for kerosene taxes?

Author

Listed:
  • Jonas Teusch
  • Samuel Ribansky

Abstract

This paper discusses the contribution that kerosene taxes could make to decarbonising international air travel post COVID-19. Reaching climate neutrality by mid-century requires that all sectors, including aviation, cut emissions strongly. The paper argues that clarity on decarbonisation targets, including through carbon price signals in the form of kerosene taxes, will support an orderly transition in aviation. A gradually increasing tax on kerosene can strengthen the incentives for investment and innovation in clean aviation technologies. Taxing kerosene would also provide implementing countries with tax revenues that could be used to support clean investment and innovation, while addressing competitiveness and equity issues. Where legal obstacles to taxing kerosene exist, these can be overcome by renegotiating the relevant air service agreements.

Suggested Citation

  • Jonas Teusch & Samuel Ribansky, 2021. "Greening international aviation post COVID-19: What role for kerosene taxes?," OECD Taxation Working Papers 55, OECD Publishing.
    • Handle: RePEc:oec:ctpaaa:55-en
    DOI: 10.1787/d0e62c41-en
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    More about this item

    Keywords

    Air transportation; Carbon taxes; Environmental externalities; Environmental taxes; Fuel taxes; Greenhouse gas emissions; Policy instruments;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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