Airport expansion plans to be based on meaningless Emissions Trading Scheme

Press Briefing issued on behalf of AirportWatch

Environmental groups and airport community groups throughout the UK have joined together to slam the EU’s proposed emissions trading scheme for aviation.

On Thursday 14 December the Government is expected to publish its Progress Report on the Air Transport White Paper. It is expected to announce that plans for new runways and airport expansion will be pushed forward despite mounting concern about dangers of climate change and growing realisation of the disproportionate impact of aviation. The Government will seek to excuse its policy of ‘see no evil’ by relying on a flawed emissions trading scheme.

John Stewart, Chairman of Heathrow campaign group HACAN ClearSkies said: “Air travel is growing at an unsustainable rate and all that this much over-hyped EU emissions trading scheme will do is postpone the projected 2020 level of air travel until the spring or summer of 2021. By that time the volume of European air travel will have quadrupled since the 1990 Kyoto base year. This is another example of the Government talking tough on climate change but doing nothing.”

The EU proposals on emissions trading are due to be published by the European Commission next week. However, the environmental and airport campaign groups have obtained a leaked copy of the Commission’s proposal (1) and have discovered that they will do virtually nothing to solve the problem.

Aviation is the fastest growing source of greenhouse gas emissions and research published by the Tyndall Centre earlier this year has warned that, if left unchecked, aviation emissions will wipe out all the savings that other sectors of the economy could make. However the Commission admits that its proposals would only trim the growth in air travel by between 1.7% and 2.9% over the entire 15-year period from 2005 to 2020. Air travel would still be expected to increase 135% to 138% over that period compared to 142% if nothing was done.

Putting it another way, all that emissions trading would achieve is a delay of between three and six months in reaching the industry’s current growth projection for 2020.

Even this prediction is based on the Commission’s highest price assumption of £73.75 per tonne of carbon but the Commission admits that the price could be as low as £14.75 a tonne depending on the level of allocations (2).

The Stern Review recommended using a value of £238 per tonne of carbon at year 2000 prices (£281 at current prices) and suggested that a figure of between two and four times this should be applied to aviation: “The level of the carbon price faced by aviation should reflect the full contribution of emissions from aviation to climate change … the impact of aviation is two to four times higher than the impact of the CO2 emissions alone. This should be taken into account, either through the design of a tax or trading scheme, through both in tandem, or by using additional complementary measures.” (3)

The UK Government has been pressing the Commission to extend emissions trading to the aviation sector and is understood to have had a major hand in drafting the proposed EU-wide scheme. In its controversial 2003 Air Transport White Paper announcing airport expansion plans that would allow for a near trebling of passenger numbers, the Government also said:

“The Government is committed to taking action to reduce the impact of aviation emissions on climate change. It considers the best means of achieving this is to work with the European Commission and other Member States over the next two years. The aim is to resolve any outstanding difficulties during the UK Presidency in 2005 so that aviation can be included in the EU Emissions Trading Scheme, with effect from 2008.” (4)

The EU proposal now makes it clear that aviation could not be subject to emissions trading until 2011 at the earliest and even then the industry would receive free allocations in respect of 90% of its baseline emissions (5). In addition, the EU proposes to allow the aviation industry to join the existing emissions scheme rather than be subject to a separate scheme to take account of the particularly high climate change impact of aircraft greenhouse gas emissions (6).

The Commission has disregarded the European Parliament. In June 2006 the Parliament voted, by 439 to 74, to set tough criteria for aviation. However, as a result of pressure from the UK Government, the aviation industry and others the Commission has watered down the Parliament’s proposals to such an extent that the scheme now proposed would enable the industry to continue on a business as usual basis. (7).

This has prompted environmentalists to accuse the Government of hiding behind emissions trading as an excuse for doing nothing to combat the rapidly rising climate change impact of aviation emissions.

Brian Ross, Stop Stansted Expansion’s Economic Adviser, said “For the past three years the Government has used emissions trading as a fig-leaf for defending the aviation industry’s tax exemptions on everything from fuel duty to VAT and doing nothing to tackle its climate change impact. We are now being told that it will be at least 2011 before anything happens. Even then, the proposal that is on the table is entirely meaningless.”

Brendon Sewill, who chairs the Gatwick Area Conservation Campaign, added: “The emissions trading scheme is meaningless in terms of reducing the damage done by aviation. Moreover all the claims made by the aviation industry about its economic importance are made false by the huge tax subsidies the industry still receives. Even after the increase in air passenger duty the subsidy for air travel, due to its exemption from fuel tax and VAT, is about £9 billion a year. When that is factored in, there is no economic case for any new runways.”

The most effective measures to cut emissions from aviation are through:

* A far more substantial increase in air passenger duty than that announced by the Chancellor in his pre-budget statement and a fundamental review of the way it is applied with a view to extending APD to cover transfer passengers and air freight;

* A tax on fuel for all intra-EU flights, as approved by the European Parliament; or

* A charge on emissions for all flights using EU airports;

* And the imposition of VAT on all aviation transactions.

NOTES

(1) The key document is the Impact Assessment Report.

(2) Shown in the EU documents as €30 and €6 respectively per tonne of CO2. Multiply by 3.67 to convert CO2 to carbon and multiply by 0.67 to convert euros to pounds sterling.

(3) ‘Stern Review: The Economics of Climate Change’, H M Treasury, Oct 2006, p288 and p341. The cost of carbon as assessed by Stern equates to between £6bn and £12bn a year for UK aviation.

(4) ‘The Future of Air Transport’ White Paper, DfT, Dec 2003, Annex B, p.155. The government originally subsequently weakened even this commitment.

(5) The EU Commission proposes that aviation should not be brought into the emissions trading scheme until 2011. Even that date may slip as a result of the difficulty of getting agreement between 25 (soon to be 27) member states.

(6) Free allocations are contrary to the polluter pays principle, reward airlines that have been slow to move to more efficient aircraft and will create a competitive disadvantage for new entrants and for member states which have a less developed aviation industry. Allowing aviation to join the existing EU emissions trading scheme will enable aviation to continue on a business as usual basis at the expense of other industries. For example, an airline would be able to purchase carbon credits from a Dutch steelmaker which had relocated production to China. In addition, extremely complex bureaucratic mechanisms would be needed to reflect the fact that the climate change impact of aviation emissions is two to four times higher than the impact of the CO2 emissions at ground level.

(7)	European Parliament Resolution	Commission Proposals
	Closed scheme	NO
	All allowances to be auctioned	NO
	Apply to both arriving and departing aircraft	YES
	Allow for extra damaging effect of aircraft emissions	PARTIALLY
	Capped at 2004-6 level	UNCLEAR