Sustainable aviation fuel (SAF) serves as a critical short-term measure for reducing aviation's carbon footprint. Two main policy tools, subsidy and quota, have been developed to support its usage. We build an economic model to compare the environmental and welfare impacts of these two policies. First, we find that if an airline uses the same portion of SAF under both policies, the subsidy approach results in reduced SAF costs, augmented airline output, and heightened emissions. Second, the subsidy policy is better than the quota policy in terms of consumer surplus, airline profits, SAF blender profit, and social welfare, if the traditional aviation fuel is sufficiently inexpensive and the emission regulation under the subsidy policy is adequately stringent. Finally, to demonstrate the empirical relevance of our theoretical framework, we have employed empirically-validated parameters for model calibration. Sensitivity analysis indicates that SAF production costs and market potential are pivotal factors influencing governmental policy formulation. With the reduction in SAF production expenses and the growth of the aviation sector, the government is positioned to adopt a more aggressive policy stance, characterized by higher SAF quotas and increased subsidies, to stimulate the uptake of SAF by airlines.

中文翻译：

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胡萝卜还是大棒？可持续航空燃油政策对环境和福利的影响


可持续航空燃料（SAF）是减少航空碳足迹的一项关键短期措施。已经制定了补贴和配额这两个主要政策工具来支持其使用。我们建立了一个经济模型来比较这两项政策对环境和福利的影响。首先，我们发现，如果一家航空公司在两种政策下使用相同部分的 SAF，则补贴方法会导致 SAF 成本降低、航空公司产出增加和排放增加。其次，如果传统航空燃油足够便宜，并且补贴政策下的排放规定足够严格，那么补贴政策在消费者剩余、航空公司利润、SAF搅拌机利润和社会福利方面都优于配额政策。最后，为了证明我们的理论框架的经验相关性，我们采用了经过经验验证的参数来进行模型校准。敏感性分析表明，SAF的生产成本和市场潜力是影响政府政策制定的关键因素。随着SAF生产费用的减少和航空业的增长，政府将采取更加积极的政策立场，以提高SAF配额和增加补贴为特点，以刺激航空公司使用SAF。