Abstract: A framework on the Chinese civil aviation participation in the national carbon market is proposed based on the industry’s characters and the development stage of the Chinese civil aviation. It focuses on the establishment of the CO₂ emissions Cap for the Chinese civil aviation and the design on the distribution of the Cap among Chinese aviation operators. With an assessment on the fairness and cost-efficiency, the framework would not cause tangible competition distortion among Chinese aviation operators and would increase the sector’s operation cost by USD 170 million-USD 1.43 billion under different scenarios. However, the framework would not severely impact the growth of Chinese civil aviation if it is taken into account that the industry has the capacity to transfer over 60% of the cost.

Key words: Chinese civil aviation industry, CO₂ emission reduction, carbon market, framework