Financial, Ecological and Managerial Impacts of Emission Trading Schemes: the Case of Lufthansa

Commencing in 2012, emissions from flights departing from or arriving at airports within the European Union (EU) will be covered under the EU emissions trading scheme (ETS). This research analyzes the financial and ecological impacts of the ETS for the Lufthansa Group using a simulation model built on the now-fixed system design. The results show that while ecological impacts are modest in the first years after introduction, the ETS will result in much higher emission reductions in the medium and long term. These ecological benefits come at the expense of increased financial impacts. This paper argues that the ETS will have a variety of managerial implications at the company level in fields such as environmental monitoring, financial risk management and marketing. Copyright (C) 2010 John Wiley & Sons, Ltd and ERP Environment.