Assessment of carbon leakage potential for European aviation

To address the aviation sector’s growing climate impact, the European Commission has proposed to mandate the use of sustainable aviation fuels (SAFs) and to strengthen CO2 emission pricing (through the EU emissions trading system, the ETS). In order for these policies to effectively address aviation emissions, their scope of application needs to cover all departing flights. But the aviation industry continues to question such climate regulation, notably by claiming that EU and UK airlines would be at a disadvantage to third country airlines if effective policies to reduce their emissions were introduced. If flights were rerouted to avoid EU policies aiming at cutting carbon, this would result in carbon leakage, meaning emissions occurring elsewhere would cancel a portion of emission reductions occurring within the scope of the measure.

This study assesses and quantifies the potential carbon leakage linked to the cost of EU climate measures, namely applying the EU ETS and a SAF mandate on all departing flights in 2030. Whether the carbon leakage and additional emissions would occur depends on the cost to airlines and the passengers’ willingness to take a longer flight. This analysis considers one type of carbon leakage, whereby direct long-haul flights are replaced with an evasion stop-over at a non-EU hub, namely Istanbul and Dubai. The results were then generalised to cover all departing flights from the EU and UK.