Market-Based Measures: The European Union Emission Trading Scheme and the Carbon Offsetting and Reduction Scheme for International Aviation



Market-based measures “address the market failure of ‘environmental externalities’ either by incorporating the external cost of production or consumption activities through taxes, or charges on processes and products, or by creating property rights and facilitating the establishment of a proxy market for the use of environmental services” (OECD). In 2003, within the frameworks of the Kyoto Protocol and Horizon 2020, the European Union put in place the Emission Trading System (EU ETS). From 2012 on, the Emission Trading Scheme has included the aviation sector. Within two years, there will be a new scheme in place: the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), introduced by the International Civil Aviation Organization, will be implemented. Participation in CORSIA will be on a voluntary basis from 2021 to 2026 and will become compulsory from 2027 on. This paper reflects on both the new and old policies, delving into their legal framework, the role of the European Energy Exchange and the Intercontinental Commodity Exchange, and the pricing of carbon.


Aviation policy EU Emissions Trading System Environmental policy Sustainable aviation 


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© The Author(s) 2020

Authors and Affiliations

  1. 1.Department of EconomicsManagement and Business Law, University of BariBariItaly
  2. 2.Department of Economics and ManagementUniversity of FerraraFerraraItaly

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