Impact of Carbon Tax Scheme and CO2 Control Technologies on Bangladesh Aviation Industry

Aviation transport action group reported that carbon dioxide (CO2 ) emission of airlines in 2017 was 859 million tons which is 2% of global emissions, (Akça, Z. 2018). It adds that the bank has calculated that “under the worst case ‘carbon intensive’ scenario, living standards will fall by 6.7% for Bangladesh by 2050”. This paper investigates how Bangladesh can respond to best optimize to the EU’s Aviation Carbon Tax Scheme proposed by the Stackelberg game model. The analytic result shows that the strategy “refusal of pay” is the best one which Bangladesh is taking step of. Numerical simulations specify a quantitative visual of the consequences found. The policy is found to be effectively not flying as much would reduce the CO2 emission and consequently, purchase of new aircraft, retrofitting and upgrade improvements on existing aircraft, latest designs in aircraft/engines, fuel efficiency standards and alternative fuels etc. reducing the overall emissions. The main contribution of this paper is to study a new international issue for developing country on aviation carbon tax and CO2 emissions policy suggestions for the aviation technology.