Air travel and carbon emissions: global evidence and a UK policy evaluation

This study examines the effectiveness of aviation-related fiscal instruments, particularly the Air Passenger Duty (APD), in mitigating carbon emissions from air travel, using a global panel dataset and a focused UK case study. At the global level, we employ Instrumental Variable Quantile Regression (IVQR) to estimate the causal effects of air passenger departures on emissions, addressing potential endogeneity by using the presence of aviation-related taxes as an instrument. The UK analysis further evaluates how air travel demand responds to changes in APD, distinguishing between short and medium-haul and long-haul routes. The findings highlight the potential of aviation taxation as an effective climate policy tool. In addition, global results show that air passenger departures significantly increase CO₂ emissions, with smaller marginal links in relatively high-emitting country. The UK case also shows that APD does not reduce air travel uniformly. It significantly lowers demand for short- and medium-haul flights and for reduced-fare long-haul travel. This heterogeneity highlights the importance of differentiated aviation tax design for achieving climate objectives.