Decarbonizing Aviation: Cash-for-Clunkers in the Airline Industry

The durability of the transportation capital stock slows down the pace of decarbonization since newer vintages feature cutting-edge technology. If older vintages were to be retired sooner, the social cost of travel would decline. This paper analyzes and explores the viability of a potential cash-for-clunkers program for the airline industry, which would help to hasten decarbonization of US aviation. Our estimation and calculations show that airlines can be induced to scrap rather than sell older planes upon retirement with a payment that is less than the forgone carbon damage, yielding net social benefits.