Download Consultation Questions - Aviation Environment Federation

Emissions cost assessment consultation
Airport Watch response
AirportWatch is the umbrella organisation for bodies concerned about the rapid expansion of
airports and air travel. The membership of the bodies which belong to AirportWatch totals
over 5 million people.1
This response should not be taken as necessarily representing in detail the views of the
individual bodies which are members of AirportWatch.
Summary
We welcome the attempt to assess the environmental cost of aircraft emissions, but note
that the conclusions are far below those indicated by the Stern Review (see answer to
Question 5).
We strongly reject the implied conclusion of the consultation document that the current
level of air passenger duty roughly covers the climate change cost of aviation (see
answer to Question 11).
The climate change costs of aviation are shown to lie between £5.5 billion and £11.3
billion, far higher than the figures shown in the consultation document. On top of
that, air travellers should make some contribution to public services, as do motorists.
Even these figures underestimate the damage because they do not include return flights
by UK citizens; nor the damage caused by cirrus cloud and contrails; nor the need, as
urged by most scientists, to aim for a tougher climate change target.
The consultation
We are shocked that, although over 180 bodies have been consulted, only about 12 are
directly concerned with the environment. This appears at odds with the first paragraph of the
consultation document which states: “this Government believes that [climate change] is the
greatest environmental challenge facing the world today.” The fact that a high proportion of
those consulted are airport owners, airlines or other bodies connected with the aviation
industry reflects the continuing bias of the Department for Transport in favour of promoting
aviation.
1
The consultation document states (page 12) that the emissions cost assessment will be used
by the government “when considering major increases in airport capacity.” We are therefore
amazed that the list of bodies consulted does not include any of the groups which oppose
airport expansion, and which are concerned about the growing impact of aviation on climate
change, such as AirportWatch, HACAN, SSE, or GACC.
Nor does the consultation list include the development groups, Oxfam or Christian Aid,
which are concerned about aviation’s particular impact on the poorer countries. They have a
real interest since the assessment of the cost of UK aviation emissions includes the cost of
floods and drought and famine and starvation in those countries.
Consultation Questions
Question 1: Are the UK emissions inventory carbon figures from
domestic and departing international flights a satisfactory indicator
of the UK aviation carbon emissions?
We support the use of this measure. It is based on the amount of aviation fuel taken on board
in the UK, and is a simple and straightforward measure, and probably the one on which it
will be easiest to get agreement.
The airlines will no doubt argue that some aircraft on short overseas flights may take fuel on
board in the UK for their return flight. That, however, is partly balanced by the fact that some
aircraft will take fuel on board at foreign airports for their return trip to the UK. A survey
would establish the rough magnitude of these two effects.
If, after balancing those two effects, there is still a slight over-estimate as a result of taking
on fuel in the UK for the return trip, that is dealt with in our answer to question 2.
While we support the proposed use of UK emissions inventory carbon figures, we wish to put
on record that this measure seriously underestimates the responsibility of the UK, meaning
the population of the UK, for climate change. If the calculation were based on emissions
created by UK citizens on departing and arriving flights, the results of the emissions cost
assessment would be substantially higher. The Office for National Statistics should be asked
to estimate the level of these emissions.
We recommend that when the figures for the assessment are eventually published, this point
should be mentioned in a footnote.
Question 2: Do you believe an uprating factor should be applied to
the estimated carbon emissions to account for long-haul UK
departing flights with more than one leg? Please explain your
answer.
2
This factor would be difficult to calculate. A practical way forward would be to exclude it on
the basis that doing so would counterbalance the effect of some aircraft taking on fuel in the
UK for return trips, as mentioned in our reply to question 1.
We suggest, however, that the Office for National Statistics should be asked to make a rough
estimate of the size of this factor, based on a sample of journeys.
Question 3: Are you content that the UK emissions inventory
figures for UK domestic and departing international flights provide
a satisfactory indicator for total UK aviation sector activity?
Yes, for the reasons given in the consultation document.
Question 4: Do the proposed values for the factor for non-CO2
effects provide a robust way forward, recognising there are
uncertainties that must be taken into account?
We note the reasons for using a factor of 1.9, within a range of 1.0 to 4.0, as set out in the
consultation document. Nevertheless this figure excludes the climate change impact of cirrus
clouds and contrails created by aircraft. We therefore consider that it would be more
appropriate to use a figure of 2.5 or 2.7, both of which have been used by the Government
recently, for example in the Pre-Budget Report 2006. This would give some rough and ready
allowance for the cirrus effect.
The proposed upper limit of 4.0 also excludes the impact of cirrus.
If the figures of 1.9 and 4.0 are used, we recommend that a footnote is added that they
exclude the cirrus effect.
Question 5: Do the proposed values for the social cost of carbon
provide a robust way forward, recognising there are uncertainties
that must be taken into account?
No.
The figure of £70/tC (now updated to £84) for the social cost of carbon was based on a study
by Clarkson and Deyes.2 They pointed out that it was only sufficient to achieve the modest
Kyoto target for the UK, not the more ambitious target of a 60% cut by 2050. The Treasury
also stated that it did not include the possibility of climate catastrophes such as the melting of
the West Antarctic ice sheet, or Gulf Stream suppression, or the possibility of famine or mass
migration.3
It was just these uncertainties that Sir Nicholas Stern recommended should be included.
Indeed the Stern Review put the social cost of carbon at $85 per tonne of CO2 at 2000
prices.4
3
That figure needs to be converted to pounds sterling, to carbon instead of CO2, and to current
prices. The fairly simple mathematical calculation shows that at current prices the social cost
of carbon is about £280 per tonne (£238 at 2000 prices).5
Stern himself confirmed that his figure was higher than previous estimates, explaining that he
had taken account of the risk of climate catastrophes, famines and mass migration which
scientists are now more certain are real risks, but which were excluded from the previous
£70t/C figure. We are glad to note that the consultation document states that the official
figure for the social cost of carbon is ‘currently being reviewed with revised guidance due to
be published shortly.’
Stern also pointed out that his figure was based on a target of stabilising emissions at 500550pmm which he considered the lowest that would be politically feasible. The
Environmental Audit Committee has criticised the Government for not adopting a tougher
target.6 To achieve the tougher target of 450-500ppm CO2, which many scientists consider is
more desirable, Stern pointed out that the social cost of carbon would need to be three times
as high.7
We recommend that a footnote referring to this point is added to the final emissions cost
assessment.
Question 6: Should APD and duty collected on AVGAS be treated
as contributing to the climate change costs of aviation?
We concentrate on APD as the yield on AVGAS is comparatively small.
The historical evidence is clear that APD was originally seen as a means of raising revenue.
When the tax was first imposed in 1993 the then Chancellor, Kenneth Clarke, stated in his
Budget speech that: “air travel is under-taxed compared to other sectors of the economy. It
benefits not only from a zero rate of VAT; in addition, the fuel used in international air
travel, and nearly all domestic flights, is entirely free of tax.” Again, in his November 1996
Budget statement, the Chancellor stated that “air travel has also been under-taxed, because it
has proved difficult - still proves difficult - to get international agreement to tax its fuel”
According to the Pre-Budget Report 2007, APD “is playing a valuable role in encouraging
behavioral change, reducing emissions from aviation and ensuring that air travel makes a fair
contribution towards the Government’s spending priorities, including public transport and the
environment.”
It may be impossible to reach an economic judgement on how much of APD serves a fiscal
purpose or how much an environmental purpose. What is undeniable is that air travel is
taxed much less heavily than car travel. The figure of around £9 billion a year net tax
benefit for the aviation industry is generally accepted. That is the net benefit after paying
APD.8
Although trains and buses are also not subject to VAT, and pay low rates of fuel duty, we
consider that there are good social reasons for these tax concessions, and that these reasons
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do not apply to aviation. Air travellers, like motorists, should contribute towards the cost of
public services, such as education and health.
Economic theory suggests that welfare is maximised if all different industries have a level
playing field in relation to tax; and that any ‘polluter pays’ tax should be imposed above that
level. Thus we consider that the £2 billion yield from APD must all be attributed towards
creating the level fiscal playing field, and should not be counted as contributing to the
climate change costs of aviation.
Question 7: Are there any other actions, in addition to offsetting
and emissions trading, taken by the aviation industry which you
would regard as relevant to the emissions cost assessment?
We do not accept that offsetting or emissions trading are relevant. A cost assessment should
calculate the climate change damage done by aviation, and has nothing to do with processes,
procedures, trading or markets. Only after the cost has been assessed should the methods of
compensating for that damage be debated.
If the EU emissions trading scheme is to work properly, each industry should start by paying
a fair level of tax. If one industry receives a large ‘tax subsidy’ it will be able to buy up an
undue proportion of emission credits.
Considerable doubt has been cast on the value of many offsetting schemes. We therefore
support the decision not to include individuals’ offsetting decisions.
Question 8: Should the emissions cost assessment be based on
the most recent calendar year for which a full and consistent data
set is available?
We do not agree with the suggestion that the assessment should only refer to a past year.
The main concern that has been expressed about aircraft emissions, by the Intergovernmental
Panel on Climate Change, the Royal Commission on Environmental Pollution, the Tyndall
Centre for Climate Change Research and many others, is that they are growing too fast. And
that they are growing fast at a time when emissions from almost all other sources are set to
decline.
Predictions for the absolute level of emissions for future years are fairly easy to calculate on
the basis of DfT forecasts for the growth in air travel together with predictions of increased
fuel efficiency. Indeed forecasts for aviation emissions were given by DfT in Aviation and
Global Warming,9 and were calculated after the assumption of substantial increases in fuel
efficiency.
Forecasts of the growth in air travel to 2030 are used by the government to predict the need
for airport expansion. Every proposal for new runways is based on forecast demand. If the
emissions cost assessment is to be used for the same purpose, then the two measurements
must be on the same basis.
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We therefore recommend that the assessment should include a prediction of the cost of
aircraft emissions in 2030.
Question 9: Are there any other data sources you believe might be
relevant to carrying out an emissions cost assessment?
We would wish to see figures for the cirrus cloud effect included as soon as these become
available.
Question 10: Should the assessment be carried out by the
Department, or by another Government body?
We consider that the assessment should be carried out by government, so as to have its full
authority, but that Defra not the DfT should have the prime responsibility.
The DfT is unsuited to conduct the assessment. Since one of its stated aims is "to support
the UK's aviation, shipping and logistics industries, nationally and internationally" it is
unlikely to be regarded as impartial.
Question 11: Do you agree that the assessment should be based
on Government data, such as the social cost of carbon, radiative
forcing factor and emissions data, in order to ensure consistency
and credibility going forward?
Yes, but the results need to be presented fairly. The Summary of Results presented in Figure
1 on page 29 of the consultation document, and the conclusions in paragraph 8.3, are
extremely misleading.
The Summary appears designed to create the impression that, in most cases, APD and
AVGAS duty cover the climate change costs of aviation. It is biased and, we fear, a foretaste
of how the emissions cost assessment will be used.
It is biased partly because it is assumed that APD is all set against climate change costs and
has no revenue raising purpose. The answer to Question 6 in the consultation is assumed (in
favour of the aviation industry) before any responses have been received.
It is also biased because it presents a combination of the two lowest variables (RFI = 1 and
carbon cost = £84/tC), but omits the combination of the two largest variables (RFI = 4 and
carbon cost at £163/tC).
We consider that a more accurate way of presenting the results of the assessment would be as
shown in the table below.
In addition to the five scenarios presented in the consultation document: Scenario 6 gives
the figures used in the consultation but which, as mentioned above, were omitted from the
Summary of Results.
6
Scenario 7 uses an RFI = 1, and the Stern figure for climate change cost.
Scenario 8 uses an RFI = 4, and the Stern figure for climate change cost.
The footnote reflects our recommendations for the wording that should be added to the final
presentation of the cost assessment results.
Results
Scenario
Climate change
costs in 2005
£ billion
6. RFI = 4
carbon cost = £163
7. RFI =1.9
carbon cost = £280
8. RFI = 4
carbon cost = £280
Net coverage,
assuming APD (at
£1.8 bn) set against
climate costs
£ billion
Net coverage
assuming APD used
for general
revenue.
£ billion
6.6
- 4.8
- 6.6
5.5
- 3.7
- 5.5
11.3
- 9.5
- 11.3
The figures in the right hand column show the amount by which tax on air travel
should be increased solely in order to reflect its climate change damage.
Footnote. The results above are likely to underestimate the cost of climate change
damage caused by aviation for the following reasons:
1. they exclude return flights by UK citizens;
2. they exclude the probable global warming effect caused by the creation of cirrus
clouds;
3. they are only sufficient to stabilise emissions at 500-550pmm: to achieve the
tougher target of 450-500ppm CO2, which many scientists consider is desirable,
the cost of carbon would need to be three times as high.
Indeed the proposed methodology of the emissions cost assessment shows that, if the
Stern figure for the social cost of carbon necessary to meet these tough scientific climate
change targets were used, it would mean increasing tax on aviation by over £14 billion a
year.10
That would represent an average extra tax on each passenger departing from a UK airport of
about £120, say £60 on short-haul flights and £240 on long-haul. We recognise that tax
increases of this magnitude would not be politically feasible, and so did Stern, but it is the
true measure of the climate change damage done by air travel.
Even these figures are an under-estimate. They do not include return flights; they are based
on an RFI of 1.9; they do not include the cirrus effect; and (in relation to the correct level of
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taxation on aviation) they do not provide for air passengers to make any contribution towards
the finance of public services.
Question 12: Should the methodology be kept under review to take
account of developments in the evidence base and policy?
Yes.
1
Member organisations include CPRE, Friends of the Earth, Greenpeace, The National Trust, RSPB and The
Woodland Trust, together with many local airport groups.
2
DEFRA January 2002
3
Aviation and the Environment 2003
4
Stern Review. Executive Summary page xvi
5
Using the $ exchange rate at the date the Stern Review was published. The figure of £238 has been used by
Defra.
6
Environmental Audit Committee. Fifth Special Report. 19 March 2007
7
Stern Review. Part iii, page 247
8
If aviation fuel were taxed at 50p a litre, as is motor fuel, the yield in 2007 would be £6.4 billion. The
Treasury has refused to give an estimate of the revenue that would be raised if aviation were subject to VAT (or
a sales tax at the same rate), and this refusal has been criticised by the Environmental Audit Committee (Fourth
Report. March 2007). But the yield is thought to be over £4 billion. The aviation industry and air travellers
also benefit from duty-free and VAT-free sales at airports, thought to be worth about £0.5 billion. Deduct the
yield from APD of about £1.8 billion and the result is the often quoted figure of around £9 billion.
9
DfT 2004
10
Scenario 7 with the climate change cost multiplied by 3, and APD at £1.8 billion deducted.
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