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Time to put the brakes in the growth in air traffic

ImageNo tax on aviation fuel, no VAT on air travel, no halt to the rise in aviation emissions. So how can the European Union slow the trend in air transport?

All around London Stansted are a raft of posters. Each objects to proposals for the airport’s continuing expansion. Each bears the message: “Cheap Flights Cost The Earth.”

That slogan is all too prescient. Up till now, every official inventory of greenhouse gas emissions has carefully excluded what has become the fastest growing area of energy use, bar none. Specifically, international aviation.

European passenger air traffic is growing at a compound rate of over 4% a year. Freight traffic is growing at 6.4%. There is nothing to halt this trend. By 2050, if other energy-consuming sectors reduce emissions as per the present European Union aims, aviation could account for two-thirds of all EU carbon emissions. To cap it all, ticket prices historically have fallen by 1% a year in real terms, but are currently falling far faster.

Despite all this, the aviation industry enjoys tax breaks not given to any other industry. There is no tax on aviation fuel, no VAT on anything to do with international air travel, and no tax on the noise or greenhouse gas emissions caused by aircraft. Meanwhile, the best estimate for the external cost of aviation calculates it at over 50 euros per 1000 passenger kilometres, and 270 euros per 1000/freight tonne km2.

Freight is more damaging largely because usually older, less efficient planes are used, with a higher fuel burn rate. As the Royal Commission on Environmental Pollution concludes: “Air freight is so much more environmentally damaging than other transport modes, that it must be regarded as a luxury reserved for very high-value, usually perishable, goods.’

The reason for aviation’s omission from climate change policy is largely historical. The 1944 Chicago Convention on International Civil Aviation regulates the policy framework for international aviation. Based on this piece of legislation are thousands of bilateral Air Service Agreements, governing the operation of international air services worldwide. The sheer number of such agreements was a primary reason why those who framed the Kyoto Protocol on climate change opted to exclude international aviation.

But for Europe at least, a window of opportunity has emerged. The creation of the Single European Aviation Market supersedes bilateral agreements. And the 2003 Energy Products Directive now enables fuel tax agreements between member states.

So, emissions from international aviation are a problem. What can be done to try to ameliorate it? Technology improvements help. Historically, aircraft fuel efficiency improves by about 1% a year – but this improvement is already built in to all growth forecast models. And as BA’s CEO Rod Eddington admits: “With the growing demand for air travel, efficiency improvements are unlikely to be big enough to prevent the growth of aviation emissions.”

The market for short-haul flights has expanded enormously. Carriers now operate ever-shorter routes. In Europe 40% of flights are below 500 km; such flights use a disproportionate amount of fuel for the distance travelled. A

chunk of these journeys could be switched to rail: where there is a good rail link – for instance, between Brussels and Paris – air really can be forced out of the marketplace.

But if truth be told, the only way to reverse this alarming trend is simply to reduce the amount of flying. Ideally, this would be by offering a better alternative, as between Brussels and Paris. The other alternative is to stop too many people, and goods, going by air. That means either pushing prices up. Or simply refusing permission to fly.

Recognising this threat, some UK airlines have been pressing to join the EU emissions trading scheme. The UK government is making it a priority of its forthcoming Presidency to expedite this, although realistically the sheer mechanics of assessing the appropriate allocations will mean this cannot happen in the next phase, beginning 2008.

Apart from anything else, the thorny question remains of resolving to which National Allocation Plan international flights should be allocated. The point of departure? Or of arrival? Or 50/50? Or based upon the carriers’ nationality? Or where the fuel is bought? Plus the even more complex issue of the different greenhouse gas impact of differing lengths of flight – where in the troposphere do they cruise?

The reason why some airlines are pressing for inclusion within emissions trading is obvious. They believe it will block off other more potentially effective taxation measures.

And they know that, at the present trading price for a tonne of carbon (around 12 euros), trading has been estimated to put no more than a single euro extra upon the cost of a ticket for a 500 km flight. Certainly, not enough to have any impact whatsoever upon the number of tickets sold. And only representing a fraction of the external cost of aviation.

This month the European Commission will publish papers setting out how they might proceed with this option, and others, like emissions charging. As well as fuel taxation. The latter is the subject of a joint proposal from Chancellor Schroeder and President Chirac, as a means of funding the reduction in third world debt. It is not clear whether this is intended as a one-off windfall impost. Or a permanent measure.

Whichever it has no pretence of originating as an ecological measure. But as of now, it is the most serious option on the table. Personally I have long thought that most of the best political decisions are initially taken for quite the wrong reasons. And we most certainly do need to take an axe to this rise and rise of aviation emissions.

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