The potential impact of a European Fuel Tax on fuel demand and on the environment.

Abstract

Aviation emissions are increasing drastically along with an increasing de- mand for aviation globally. Even though energy efficiency has been improved significantly, it is far from enough to meet the desired climate goals. This thesis investigates the potential impact of a hypothetical European- level jet fuel tax on the demand of aviation fuel, and the total passengers carried. We find that average fuel price has a negative and significant impact on aviation fuel consumption as well as passengers carried. The impact of jet fuel tax is not large, but it provides an additional policy instrument to reduce aviation emissions.