Climate Change and Cheap Flights

  • If you have been reading the letters page of the Irish Times for the past couple of weeks you can hardly have missed the claims and counter-claims about this thorny subject.  What gave rise to the debate was a decision by the European Parliament on July 8th to include Airlines in Europe’s emissions trading scheme (EU-ETS) from 2012.
  • What is not in doubt is that this is bad news for Airlines, with the Association of European Airlines (AEA) estimating the potential annual cost to the European industry at €5.3 billion over the initial phase of the scheme. While that’s a hell of a windfall for the taxman, it’s a figure that the European Airlines collectively have not even approached in terms of profit, the AEA point out.
  • And bad news for Airlines translates to bad news for travel and tourism.  In 2007 about 85% of Ireland’s 7.7 million overseas visitors came here by air.  Both Aer Lingus and Ryanair are adamant that this decision, if unaltered, will do serious damage to their respective businesses, and consequently to Irish tourism.
  • What it means is that Airlines will join energy and manufacturing companies in Europe’s carbon emissions scheme. Under the new rules, Airlines will be given carbon dioxide (C02) quotas by the EU and will have to buy permits if their emissions come in above these levels.  The quotas will be based on Airline’s actual emissions between 2004 and 2006.
  • The European Commission says travellers will bear most of the cost through higher ticket prices, which it is thought will range from an additional €10 to €40.  One would have to be very naive indeed not to accept that such increases will dampen demand.
  • The International Air Transport Association (IATA) says that Europe has taken the wrong approach, with the wrong conditions, at the wrong time.  And IATA actually supports the concept of emissions trading but not this decision.  Why?
  • Well, Europe’s approach will apply ETS to all aircraft flying to or from Europe (as well as all intra European flights obviously).  But without international agreement the E.U. cannot enforce the approach on non-European Airlines flying to or from Europe to non-European destinations.  Why should a U.S. carrier have to pay Europe for emissions over U.S. territory?  Makes sense, but if they don’t, what a distortion of competition that would be?  And already several countries including the U.S.have vowed to oppose it.  The proper approach would be to stick with the Kyoto proposal which was for a global scheme brokered through the International Civil Aviation Authority.
  • There is little to suggest that the funds generated will be earmarked for environmental purposes, with the E.U. suggesting that the revenues generated “should” be used to reduce greenhouse gas emissions.  IATA believes that “this is a punitive tax put in place by politicians who want to paint themselves green”, and they have a point.  This tax also comes on top of the U.Ks air passenger duty and the Dutch air passenger tax so member states have not got their act together in any co-ordinated way.
  • As for timing, with oil currently about $130 a barrel and jet fuel at $170 a barrel this additional cost has the potential to return flying to the once lofty position it held, the preserve of the rich.  It may be politically incorrect to question some of the green noise surrounding climate change, but what is needed are sensible solutions that work.  For instance why will the E.U. not move forward quickly with a single European air traffic control system, which by their own admission would save up to 16 million tons of CO2 annually, reduce delays and improve environmental performance?
  • And to that vexed old question, why the unceasing focus on air transportation?  It’s an easy target, and while Aviation taxes carry an environmental label, it is clear that they will do little to reduce overall emissions.
  • So who do you believe in all of this?  The United Nations Intergovernmental Panel on Climate Change (IPCC) are generally thought to be the experts, and independent in their findings.Here is their estimate of human induced CO2 emissions:
    Electricity Generation
    Road Transport
    Other Sectors
    Residential
    Energy
    Other Transport
    Aviation
    35%
    18%
    10%
    8%
    5%
    4%
    2%

    The 2% aviation contribution could grow to 5% of the world’s total emissions by 2050, according to the IPCC (though that makes no allowance for technology advances in the meantime).

  • Now you wouldn’t wish to be sanguine about that, but come on, get real here, does that suggest to you that aviation is the great offender and the biggest problem facing us in relation to the control of CO2 emissions.
  • But, you say, aviation emissions are rising at a faster rate.  Well here’s what the IPCC say about that.  “The fastest emissions growth rate is in power generation at 2% per year – followed by transport at 1.7%.  The industry sector grows at 1.6% per year, the residential/commercial sector at 1% per year, and international marine and aviation emissions at .7% per year”.
  • The E.U. Parliament had a bad day at the office on July 8th.  Their proposal is neither sensible, practical, or implementable.  And even it were, it would do little to impact on the overall issue of CO2 emissions.  But it would severely damage an already weakened travel and tourism industry struggling to cope with unprecedented energy costs.
  • Better a global approach that focuses on technology investment, effective operations, efficient infrastructure and positive economic measures.  Taxes don’t reduce emissions.
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