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In this paper, we provide a novel application of synthetic control methods by offering two major modifications to the existing methodological framework. We provide the first complete ex-post evaluation of the causal impact of carbon pricing on aviation supply, expressed in terms of airline output (i.e., number of seats supplied at the airline-route level). We investigated the policy change in the European Union Emission Trading System (EU ETS), the first large greenhouse gas emissions trading scheme in the world. We distinguish between low-cost, regional and full service airlines, short and medium/long-haul routes, routes towards (or from) hub airports versus non-hub airports, monopolistic versus non-monopolistic routes. The analysis shows that the EU ETS does not have a substantial impact on the average aircraft size, while it has caused a reduction of total airline seat capacity and flight frequency, with the percentage of airline seat capacity reduction reaching above 20% at its peak. The overall effect of the policy has a remarkable impact on low-cost and regional airlines, short-haul routes, spoke–spoke markets and monopolistic routes. Our results are the first empirical confirmation to the theoretical prediction in the aviation literature that emission charges will reduce flight frequency and increase load factors while having no effect on aircraft size. [ABSTRACT FROM AUTHOR]

This paper estimates the potential of fuel tax reforms to curb harmful air pollutants and carbon emissions from road transport in Europe. We provide robust estimates for the responsiveness of fuel consumption to changes in prices, which constitute a key determinant for emissions pathways in response to policy interventions. We show that accounting for the manifest shift to diesel in the European vehicle fleet, as well as slow consumption adjustments over time yield strong evidence that petrol and diesel demand are more price elastic already in the short run than previous studies suggest. In particular, we present evidence that diesel demand in Europe tends to be more price elastic than petrol demand, when instrumenting prices with excise taxes to account for endogeneity. Inspired by recent fuel tax reform proposals, we then show that both (i) a repeal of the preferential tax treatment for diesel and (ii) an introduction of a carbon content-based tax, could avoid considerable amounts of health damaging air pollutant exhaust while at the same time contributing substantially to achieving the EU climate policy goals for 2020. In many countries, abandoning the diesel tax advantage has nearly as strong an effect as a 50€/tCO 2 tax on fuel. Both reforms have significant revenue potential. [ABSTRACT FROM AUTHOR]

This paper analyzes the European Commission's (EC) climate policy package 'Fit for 55′ and its potential impact on cargo ships calling at Swedish ports. Three scenarios are evaluated using the Swedish national freight transport model. The Main Scenario is based on the EC's proposal to i) include ships weighing at least 5,000 gross tons (GT) in the European Emissions Trading System (EU ETS), and to ii) introduce a tax on marine fuel. The Low Scenario includes the EC's EU ETS proposal but assumes no tax on marine fuel, whilst the High Scenario includes the fuel tax but assumes that ships weighing at least 400 GT are included in the EU ETS. Results show that the EC's EU ETS proposal excludes 44% of the cargo ships and 22% of the CO 2 emissions, and even more so given the use of smaller ships to avoid the EU ETS, as indicated by the freight transport model. The High Scenario implies shifts to larger ships since the increase in fuel costs provides incentives to make use economies of scale. Shifts to other transport modes are estimated to be marginal. A policy conclusion is therefore to include smaller ships than 5,000 GT in the EU ETS to further internalize the CO 2 costs from cargo ships. [ABSTRACT FROM AUTHOR]

Concerns about local air pollution and climate change have prompted all levels of government to consider a variety of policies to reduce vehicle dependence and fuel consumption, as the transportation sector is one of the largest sources of local and global emissions. Because many of the policy options under consideration are market-based (e.g., gasoline tax, carbon tax), it is important to consider how the impacts would vary across space and affect different subpopulations. Evaluating incidence is relevant for both the expected costs and benefits of a particular policy, however detailed data on vehicle-miles traveled (VMT) and fuel consumption allowing for the distributions of these variables to be estimated at a fine geographic scale is rarely available. This paper uses a unique dataset with more than 20 million vehicles in California to derive estimates of VMT and fuel consumption in order to examine the spatial distribution of impacts for an increase in the price of gasoline as well as the consequences of using different statistics for policy evaluation. Results show that VMT and fuel consumption distributions are not symmetrically distributed and vary significantly within transportation planning regions. To understand the potential implications of this asymmetry, we do a back of the envelope comparison using the mean and mode of the VMT or fuel consumption distribution for policy analysis. We find that assuming a symmetric distribution can lead to a divergence of 20–40% from the estimates based on the empirical distribution. Our results, therefore, introduce caution in interpreting the incidence of policies targeting the transportation sector based on averages. [ABSTRACT FROM AUTHOR]