Work

Does carbon pricing reduce air travel? Evidence from the Australian ‘Clean Energy Future’ policy, July 2012 to June 2014

Year: 2018

Type: article

Abstract: Aviation emissions are an important contributor to global climatic change. As growth in travel demand continues to outstrip improvements in the fuel efficiency of air travel, the aviation contribution to climate change is likely to grow substantially. Consequently, measures that effectively reduce travel demand are required if atmospheric carbon concentrations are to be limited. The efficacy of the Australian Clean Energy Future policy which placed a $23.00AUD (FY 2012) to $24.15 AUD (FY 2013) per tonne levy on carbon-dioxide equivalent emissions from July 2012 to June 2014 is tested. Specifically, time-series regression is used to estimate the effect of this carbon price policy on the level of domestic passenger kilometres flown in Australia, while adjusting for costs of production (i.e. fuel and labour costs), economic activity (i.e. gross domestic product), competitive effects (i.e. airline capacity), and exogenous shocks. There was no evidence that the carbon price reduced the level of domestic aviation in Australia. Carbon pricing measures may have to be levied at a greater rate to affect behavioural change, particularly given the limited potential for future aviation efficiency gains.

Source: Journal of Transport Geography

DOI: 10.1016/j.jtrangeo.2018.06.008

Authors: Francis Markham, Martin Young, Arianne Reis, James Higham

Institutions: Australian National University, Southern Cross University, Western Sydney University, University of Otago

Language: English

Topic: Aviation Industry Analysis and Trends

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $2,990