ABSTRACT
This chapter demonstrates both the economic efficiency and ecological effectiveness of voluntary carbon offsetting as a tool to address the challenge of climate change should be considered very limited. Any economically rational climate policy must attempt to reduce greenhouse gas (GHG) emissions at the lowest possible costs to society. In other words, GHG reduction efforts must be truly global in scope, covering all, or at least all major, emitting activities as well as all the countries with the highest absolute GHG emissions. Measures to reduce the CO2 emissions of air transportation may be applied on the demand side or the supply side of the industry. The carbon footprint is the estimated amount of carbon dioxide emissions resulting from a particular activity. If taxes increase the fuel price for air transportation, they will have a dampening effect on air travel demand and as a result reduce the GHG emissions of the airline industry in absolute terms.
