According to the article in The Times: The European initiative involves folding aviation into the six-year-old emissions trading system, in which polluters can buy and sell a limited quantity of permits, each representing a ton of carbon dioxide. The legislation requires that airlines account for their emissions for the entirety of any flight that takes off from — or lands at — any airport in the bloc.
The goal, European officials have said, is to speed up the adoption of greener technologies at a time when air traffic, which represents about 3 percent of global carbon dioxide emissions, is growing much faster than gains in efficiency.
I have done research on emission permit trading systems in a series of papers focused not only on reducing pollution of firms but also in transportation. Some of the latter research was done with my former doctoral students, Padma Ramanujam and Kathy Dhanda. Padma, who now works at SAS, in Raleigh, North Carolina, received the Transportation Science Section of INFORMS Dissertation Prize in 1999 for her doctoral dissertation, "Transportation Network Policy Modeling for Congestion and Pollution Control: A Variational Inequality Approach."I have also published papers that one needs to be careful in designing and implementing transportation pollution and congestion abatement policies since if the entire network and user behavior are not captured then the policies may have paradoxical outcomes! One paper that I wrote on the topic is, "Congested urban transportation networks and emission paradoxes," which was published in Transportation Research D and another, joint with June Dong, was "Paradoxes in networks with zero emission links: Implications for telecommunications versus transportation," which was also published in Transportation Research D.
In fact, the major theme of my Sustainable Transportation Networks book, published in 2000, was how to capture rigorously policies for pollution reduction in transportation systems, including the use of cap and trade systems.
Consider now about the following scenario: Suppose that you are a global logistics company and your goal is to minimize total costs and to route your planes and cargo accordingly. If it will cost you more to transport the cargo from Asia directly to Europe because of the "price" imposed on emissions generated you may decide to stop midway and then to proceed, knowing that you will just be charged for the emissions generated on the flight leg (the last one) that ends up in Europe.
The Wall Street Journal in its Wednesday, December 21, 2011 edition has an article that illustrates precisely the above strategy. The article, "UPS weighs EU flyaround," complete with a map, discusses how UPS may add stopovers on cargo flights to Europe in hopes of reducing EU charges for excess carbon emissions. Rather than flying from Hong Kong to Cologne directly, a current route of about 5,700 miles, flights would land in Mumbai, and then head for Cologne, Germany, a proposed alternate route of 6,800 miles, and one with obviously greater emissions not only because of the distance traveled but the increase in the number of takeoffs and landings! But, UPS would reduce the cost of the tax by about a quarter because it could only be charged for the distance flown from Mumbai to Cologne.
I have images of cargo planes being flown just to the border of the European Union, landing, and then taking off again.
The Times article did not capture the above major issue and it is clearly an environmental (and business) one, but The Wall Street Journal article did so and did it brilliantly.
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