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 Euro-pean 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 mid- and long-term. These ecological benefits come at the expense of increased financial im-pacts. The 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.