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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 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]