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The aviation sector has a significant role to play in the reduction of carbon emissions, particularly in light of EU emissions targets. Within the EU, aviation emissions constitute 13.9 per cent of total transport emissions, where under the Green Deal a target of 90 per cent reduction in transport emissions by 2050 has been set. Several tax exemptions apply to the aviation sector due to its international nature, which have contributed to an increasing trend in emissions. Recent movements in EU policy under the 'Fit for 55' package, as well as public and political interest, have focused attention on changing the taxation struc-ture of the aviation industry in order to reduce CO2 emissions. This report focuses on several different potential policies and taxation structures which would attempt to decrease the emissions of the aviation sector: the removal of kerosene taxation exemption (in line with the recent EU proposal), removal of VAT exemption, introduction of a passenger tax, and abolition of free EU ETS allowances by 2026 (in line with the recent EU proposal). Each of these policies, as well a combination scenario, is assessed with respect to the impacts on the aviation industry, spillover effects, macro-economic and government revenue effects, and household effects, as well as the emissions impacts. This analysis applies the Ireland, Environment, Energy and Economy (I3E) model, which allows for the examination of spillover effects of the aviation industry to government, households and other industries. This methodology does not, however, allow for a detailed analysis of different passenger or airline types. In what follows, results are shown as cumulative percentage changes compared to no aviation taxation. Hence a decrease does not present an annual decrease but the build up of a cumulative decrease from 2022 to the given year.

This paper investigates the economic incentives of countries to cooperate on international adaptation financing. Adaptation is generally implicitly incorporated in the climate change damage functions as used in Integrated Assessment Models. We replace the implicit decision on adaptation with explicit adaptation in a multi-regional setting by using an adjusted RICE model. We show that making adaptation explicit will not affect the optimal mitigation path when adaptation is set at its optimal level. Sub-optimal adaptation will, however, change the optimal mitigation path. Furthermore this paper studies for different forms of cooperation what effects international adaptation transfers will have on (i) domestic adaptation and (ii) the optimal mitigation path. Adaptation transfers will fully crowd out domestic adaptation in a first best setting. Transfers will decrease overall mitigation in our numerical simulations. An analytical framework is used to analyse the most important mechanisms and a numerical model is used to assess the magnitude of effects.