Carbon market revenues can fund green fuels for shipping and aviation

Revenues from taxing pollution from planes and ships could be used to bridge the cost gap for new green fuels, a new Ricardo study on behalf of T&E study shows. Using a quarter of the carbon market revenues generated from shipping could cover the cost for the sector’s green fuels for 2040, while the same for aviation could bridge part of the cost gap to complement mandates and help kick-start green fuel production in the sector.

As green fuels for shipping and aviation are currently expensive, T&E calls for a small portion of the carbon market revenues to go back into funding green fuel production which would benefit from economies of scale. To ensure fairness, the EU should remove exemptions in the Emissions Trading System for departing international flights and smaller ships.