Download Directive on Ambient Air Quality

Aviation and climate change
Commission activities and policy statements relating to
the use of economic instruments
Niels Ladefoged
DG Environment, European Commission
December 2004
Overview
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The challenge
Major Commission policy statements
Key Commission studies
The possible control options
– Taxes or charges
– Emissions trading
• Next steps
Aircraft emissions have
grown rapidly…
GHG emissions from international aviation
reported by Annex I Parties to the UNFCCC:
•+ 48 % from 1990 to 2000
•~ 1.2 % of total national emissions
•Note:
– Total radiative forcing of aviation higher than
that of CO2 alone
– Only comprise reported emissions of Annex I
countries (e.g. not Thailand, Brazil, China)
..and air traffic is forecast to
continue growing
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According to ICAO analysis presented in February 2004, the world passenger aircraft
fleet could double by 2020 - an increase from 12317 in 2002 to roughly 25000
aircraft in 2020.
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“Global air freight will average 5.6% growth between 2003 and 2008” (MergeGlobal,
Inc. Global Freighter Capacity & Fleet Model)
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"World air cargo traffic will expand at an average annual rate of 6.2% for the next
two decades, tripling over current traffic levels." (Boeing forecast)
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“With respect to climate change (CO2-equivalents) air transport is dominating the
EU-plus outbound and inbound tourism transport impact with 72% […] The general
trend in tourism towards more frequent, less long and further away trips has a
strong impact on transport demand. [… ]Cheap air transport leads to a combined
mode-destination shift which very strongly influences the environmental impact.”
(Feasibility and preparatory study regarding a Multi-stakeholder European Targeted
Action for Sustainable Tourism & Transport, DG Enterprise)
Major Commission policy
statements of relevance
• COM(96) 549 - Report under Directive 92/81/EEC…
• COM(1997) 30 - Proposal for a Directive restructuring the Taxation of
Energy Products
• COM(1998) 466 - White Paper on Fair Payment for Infrastr. Use...
• COM(1999) 640 - Air Transport and the Environment
• COM(2000) 110 - Taxation of Aircraft Fuel
• COM(2000)821 - Community objectives for 33rd ICAO GA
• COM(2001) 31 - Proposal for the 6th Community Environment Action
Programme (6EAP)
• COM(2001) 370 - White Paper on the Common Transport Policy
• COM(2004) 74 - A Community aviation policy towards its neighbours
• COM(2004) 505 - Financing the European Union
• SEC(2004) 923 - Impact of Int. Aviation on Climate Change – prep.
For 35th ICAO Assembly
Key Commission studies
• Economic incentives to mitigate greenhouse gas emissions from air transport in
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Europe
Bibliographical data: R.C.N.Wit, J.M.W.Dings, P.Mendes de Leon, L.Thwaites, P.Peeters,
D.Greenwood and R. Doganis.
Delft, CE, 2002. Publication number: 02.4733.10
Further information on this study is available from Mr. Ron Wit:
Tel: +31 15 2 150150/e-mail: [email protected]
The final report can be downloaded at:
http://europa.eu.int/comm/transport/air/4733_finalreport-en.pdf
• Analysis of the taxation of aircraft fuel
• Study VII/C/4-33/97
• Final report January 1999, prepared by a Consortium led by Resource analysis, Delft, The
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Netherlands (Tel:+31 15 2191519/e-mail : [email protected])
On the basis of this study, the Commission adopted a Communication on taxation of
aircraft fuel – COM (2000)110 – which can be found at
http://europa.eu.int/comm/taxation_customs/publications/official_doc/com/com.htm#CO
M2000110
1999 Comm. on Aviation &
Sustainable Development
• Proposed long term policy target: to achieve
improvements to the environmental
performance of air transport that
outweigh the environmental impact of
growth
• Noted this was very ambitious, especially for CO2
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emissions, without breakthrough developments
in engine technologies
Recognised new approaches are required
Other reasons to consider
market based instruments
• internalising external costs
• getting fairer treatment between sectors
• the internal market
• general transport and tax policies
• possibly helping finance the EU
Fuel/Emission Tax
• 1996 EC Report on imbalances from the
exemption of international aviation from
excise duty
• 1997 EU Council noted the Report &
requested information on effects of
introducing such taxation
• 1999 Analysis of Taxation of Aircraft Fuel
by Resource Analysis et al published
Main Tax Options Studied
• Taxation Level 245 euros/1000 litres wef 1998
• Option A
All routes from EU
• Option B
Intra-EU routes/EU carriers only
Tax - Results
• Option A
- more environmentally effective
- less economic/competitive impact
- more cost-effective
• Option B
- immediately feasible legally
- but not really effective
Tax - Conclusion
• Confirmed commercial aviation fuel should be taxed as soon as the
international legal situation allows such a tax to be levied on all
carriers, including those from third countries. EU should pursue this
in ICAO.
• Recommended EU Member States should be able to tax fuel used
for domestic flights and, by mutual agreement, fuel used on flights
between such States. [Since given effect by Directive 2003/96/EC]
• Differential en route charges based on environmental impact of
aircraft should be pursued in addition or as an alternative meantime.
Emissions Charges
These could e.g. take the form of
• a levy added to the fare
• a levy based on distance flown/
environmental performance of the aircraft
• a levy associated with airport LTO charges
The revenues
These could
• fund environmental investments
(eg. in R&D, in new technologies)
• fund compensatory measures
(direct or indirect eg. carbon offset)
• be revenue neutral (ie. reward the better
environmental performer at the expense of the
worse)
• be some combination of these
Options studied
• An environmental charge
• A Performance Standard Incentive (PSI)
Incentive Level
• Same for both options
• Based on external costs of climate change
• Mid-range working values of 30 euros per
tonne of CO2 and 3.6 euros per kg of NOx
• Sensitivity analysis: low(10 euros and 1.2
euros respectively) and high (50 euros
and 6 euros)
• Choice of level ultimately a political issue
Environmental charge - impact
Main effects would be
• reduced CO2 emissions in EU airspace of
10 megatonnes (9%) in 2010
• increased ticket prices of 3-5 euros for short flights and
10-16 for long ones
• annual revenues 1-9 billion euros
Revenues could either be
- allocated to Member States, or
- to an EU emission abatement fund
Revenue-neutral PSI - impact
• Reduced CO2 emissions in EU airspace of
6 megatonnes (5%) in 2010
• Impact on ticket price would depend on
the definition of the ‘performance
standard’
• No net financial burden on industry,
though some segments would benefit at
the expense of others
Other findings
• No significant economic distortions
between airlines identified
• No legal obstacles provided the incentive
- has no fiscal aim
- is based on the ‘polluter pays’ principle
- is not directly linked to fuel
consumption
Emissions trading
• Commission is now launching a study
• Will examine the feasibility of including aviation
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in the EU ETS
Terms of Reference available
Final report due 8 July 2005
If aviation were to be included it should be done
in a way that doesn’t compromise the
environmental integrity of the current scheme
Implications for air service
agreements
• Important to ensure that the ongoing reform of the EU’s
external air transport relations does not undermine but
support efforts to mitigate the sectors’ impact on the
environment:
– To allow for the taxation option created by Council Directive 96/2003/EC
and to keep all options for market-based measures open to mitigate the
climate impacts of international aviation, air services agreements
between Member States and third countries should not contain
provisions excluding the option of fuel taxation on flights operated by
third country carriers between two points in the EU
– In future negotiations on comprehensive Community agreements the
services of the Commission are of the view that the Community should
insist on preserving full flexibility as regards aviation fuel taxation.
Next steps
• The Commission may announce proposals to
deal with the impact of aviation on climate
change in 2005. If and when it does so and
what it will consist of will depend on
– The outcome of the study on aviation and
EU emissions trading
– The relative merits of the different options
– How the new Commission sees this