Aviation and the EU Emissions Trading Scheme-Lessons learned from previous emissions trading schemes

Designing an emissions trading scheme requires in-depth knowledge regarding several aspects. This paper attempts to clarify some important design points of the forthcoming emissions trading scheme for aviation under the EU ETS. Five general key points of system design are acknowledged and comparisons are made to previous and current emission trading schemes. While it is not meant to be exhaustive it helps to create an understanding of what design elements should be handled with caution. Discussion is provided in regard to the recent implementation of aviation in the EU ETS. Above all, it is argued that initial allocations of emission permits and the trade barrier between the aviation sector and EU ETS need to be carefully examined. (C) 2012 Elsevier Ltd. All rights reserved.