The ECJ Judgment on the Extensions of the ETS to Aviation : An Economist's Discontent

Few EU decisions have caused more international outcry than the directive extending the EU Emissions Trading System to aviation. A legal challenge brought the directive to the European Court of Justice (ECJ) for a preliminary ruling concerning the compatibility of the directive with international law. This paper discusses the argumentation by the ECJ and the Advocate General from an economic (or at least an economist's) perspective. Economic analysis is warranted since the contested measure is an economic regulation, invoked international laws have economic objectives, and the argumentation uses economic concepts and mechanisms. The paper's general observation is that central parts of the argumentation are questionable when viewed from an economic perspective