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Strategic climate policy in global aviation: Aviation fuel taxes and efficiency standards with duopolistic aircraft producers

Marten Ovaere & Stef Proost

Economics of Transportation2025https://doi.org/10.1016/j.ecotra.2025.100397article
AJG 1ABDC B
Weight
0.46

Abstract

We develop a three-stage game with three governments, a EU-US aircraft production duopoly, and competitive airlines. The model determines the optimal combination of fossil fuel taxes and fuel efficiency standards to decarbonize the aviation sector with imperfect competition and technological spillovers, under various government cooperation levels. We find that without international cooperation, technology spillovers prevent large efficiency investments. Fuel taxes are low but exceed domestic climate damages in regions without aircraft production. Regions with domestic aircraft producers subsidize aviation when the social cost of carbon is low. Second, EU-US cooperation increases fuel efficiency, but fuel taxes are lower than without cooperation, such that carbon emission reductions are limited both with and without cooperation. Third, global cooperation yields the largest efficiency gains, but fuel taxes remain below the world climate damage. Finally, achieving net-zero emissions requires a combination of fuel efficiency, demand reduction through higher fuel taxes, and new aviation fuels. • Three-stage game with three governments and a EU-US aircraft production duopoly. • Optimal fossil fuel taxes and fuel efficiency standards to decarbonize aviation. • Taxes are below/above climate damages in regions with/without aircraft production. • EU-US cooperation increases fuel efficiency but decreases fuel taxes. • Global cooperation has largest fuel efficiency, but taxes stay below climate damage.

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https://doi.org/https://doi.org/10.1016/j.ecotra.2025.100397

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@article{marten2025,
  title        = {{Strategic climate policy in global aviation: Aviation fuel taxes and efficiency standards with duopolistic aircraft producers}},
  author       = {Marten Ovaere & Stef Proost},
  journal      = {Economics of Transportation},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.ecotra.2025.100397},
}

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Evidence weight

0.46

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.37 × 0.4 = 0.15
M · momentum0.60 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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