For more information
Will Howard +44 (0) 7854 239099
14 August 2007
Potential massive EU subsidy for airlines under guise of capping emissions
will also neglect much greater impact of other forms of transport
Climate campaign Cap and Share today exposed plans to take aviation into the European Union Emissions Trading Scheme from 2011 as making little difference to greenhouse gas emissions while landing a potential windfall subsidy of £4.8 billion a year and neglecting to bring all transport emissions under control.
Cap and Share coordinator Dr Will Howard pointed out a recent assessment by Ernst & Young - commissioned by the aviation industry - shows even in the toughest scenario envisaged by 2020 emissions would grow by 83% rather than 86% in a business-as-usual situation. “The aviation industry will be able to claim they are capping their emissions when in reality little has really been achieved” says Dr Howard.
“What’s worse, the EU’s plan is to give existing airlines their emission permits – a policy of “pay the polluter”! The value of these permits can be passed through to customers. At a possible €15 per tCO2 this will put only a few euros on the cost of a flight, not enough to encourage people to make more environmentally friendly choices, but land the airlines a huge yearly subsidy.”
“The story gets worse again because the EU is not treating transport emissions as a whole to provide transport companies with a level playing field to compete under one emissions cap. Road transport, for instance, increased in absolute terms by 163,703 ktCO2e compared with aviation’s 5,825 ktC02e between 1990 and 2004, making road transport a far greater polluter, even if it is grew at 26% compared to aviation’s 33%.”
Cap and Share is proposing that the EU adopt a new scheme to control transport emissions where all adults over 18 receive a number of transport fuel supply permits which would be denominated according to the greenhouse gas content of the fuel, when burned. The suppliers of transport fuels would have to have these permits before they can sell their fuels and would buy them from the public via banks and post offices. For example, a litre of diesel gives off 2.4 kg CO2, so transport diesel suppliers would need permits to that amount for every litre of diesel they sold. By capping the number of these permits and reducing the cap over time it would bring transport emissions under control.
“This would be fair both to the transport industry and to consumers” says Dr Howard. “The real environmental cost of emissions would get built into transport. People using below the average would gain, while those using a lot would have to pay much more - all under a cap that would decline year by year to safeguard the climate.”
For more information
Will Howard +44 (0) 7854 239099
Reports and briefings for more information
Using Cap and Share to control emissions from the EU transport sector – Report, Feasta – June 2007
http://www.capandshare.org/pdfs/Transport2.pdf
Including Aviation in the EU’s Emissions Trading Scheme (EU ETS) – Briefing, Transport and Environment (T&E) - Updated June 2007
http://www.transportenvironment.org/docs/Publications/2007/2007-06_aviation_euets_background_briefing.pdf
Analysis of the EC Proposal to Include Aviation Activities in the Emissions Trading Scheme – Report, Ernst and Young – June 2007
http://www.aea.be/dbnetgrid2//htmleditor/UploadFiles/Impact_Assessment.pdf
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Text of leaflet, Cap and Share – August 2007
Pdf version here 
Fairer Skies versus the EU’s fraudulent aviation and climate policy
Aviation has been in difficulties in recent years - which would be good news for the climate if it were to continue. However the European Union is suggesting a policy which will subsidise aviation while pretending to do something about its climate impact - by bringing it into its Emissions Trading Scheme. A Fairer Skies approach is needed to really cap transport emissions in a way equitable to all.
Although aviation has been growing over the long-term, these have been a difficult few years for the industry. Recession at the beginning of the decade and then terrorism hit passenger numbers, while rising fuel prices hit costs. For a number of years the industry made big losses. So far in 2007 passenger numbers have been stagnant, even before the terrorist attacks at Glasgow airport. Fuel prices remain high and rising. A recession stemming from a financial crisis might bring fuel prices down, but would bring passengers numbers down too.
Governments, aviation companies and the European Union will not like this. Aviation is a sacred cow in the world economy. It not only symbolises the consumption affluenza of the duty-free-travel and holidays that governments like to be able to offer their citizens, but also expanding aviation is seen as crucial to participating in globalisation. Build an airport near you, or extend the runways of an existing one to take bigger jets, and inward investment will flood into your region - this is the theory that local governments everywhere like to believe. Also, of course, there are lot of lucrative contracts building those runways, terminals and road links .
This is the context in which policy has been framed for cutting aviation emissions in Europe. European governments and the EU Commission want air travel to continue to grow. That’s why they are planning airport expansions. And because the aviation industry is struggling, the growth maniacs think it needs a helping hand. What better way to do this than by the new policy innovation pioneered by the European Union - the “pay the polluter” approach to emissions trading.
A fraudulent policy to promote the growth of aviation while pretending to protect the climate
As a recent briefing by the European Federation for Transport and the Environment explains, putting aviation into the EU Emissions Trading Scheme will do next to nothing to prevent aviation emissions. The briefing quotes an assessment by Ernst & Young commissioned by the industry. This shows that even in the toughest scenario envisaged, by 2020 emissions would grow by 83% rather than 86% in a business-as-usual situation.
“The reason why integration in the ETS will not change the emissions of the sector is that the CO2 prices in the system will be around 15 euros per tonne, which is a significant amount for powerplants, steel mills and the like, but translates into an insignificant 3.8 cents per litre of kerosene (the fuel used in aircraft).”
http://www.transportenvironment.org/docs/Publications/2007/2007-06_aviation_euets_background_briefing.pdf
Although this policy will not significantly affect air emissions it will hand the airline industry a subsidy of perhaps 3.5 billion euros a year (about 4.8 billion US dollars.) Compare this figure with the $5 billion losses that aviation made globally in 2005 and you can see what a help it would be to aviation.
How the subsidy works - the “pay the polluter” principle
The subsidy works like this. The airlines will be given most of their emission permits for free, but when they have to use these permits they will charge their customers for them. How come? The argument goes like this: although the companies are given most of the permits for free, when they are obliged to use them in their operations they can charge their customers for the market value of the used permits because they lose the opportunity to sell them for cash. That lost opportunity is the so called “opportunity cost” which is used to justify the extra charge to customers.
The EU commission is well aware that it is subsidising the airlines in this way. Exactly the same thing happened with the rest of the European Union’s Emissions Trading Scheme. Until the bottom fell out of the carbon market, companies that had been given emissions certificates were making lots of money from it. If aviation is included on the same basis, whereby permits are given to the airlines for free, then they will make a nice little earner out of it too.
That’s not all. The European Commission is also aware that if they require new entrants into aviation to buy all their permits (when existing companies get 97% of theirs for free) this will give an advantage to existing airlines.
The evidence is clear - the EU Commission is currently incapable of delivering climate protection and is incapable of delivering fair policies. It is in the pocket of big corporate lobbies and governments hell bent on growth. Perhaps the Eurocrats believe they are helping the environment. Addicts believe, after their latest fix, that they will eventually be able to give up their self-destructive habits.
Some people draw the conclusion from this that all emissions trading is a dishonest scam that can never deliver climate protection. When the architecture of emissions trading is drawn up by officials working closely with powerful corporate lobbies they may well be right. However, any policy framework is going to be distorted if shaped by corporate lobbies in back rooms away from the public gaze. Without powerful public engagement and awareness about carbon trading, we will get no further forward.
Towards a Cap and Share transport emissions system
It doesn’t have to be like this. It is possible to implement a genuine cap to drive down aviation and other transport emissions in a way that is fair - if the political will can be found backed by public concern and mobilisation. As a matter of fact, this ought to include all transport emissions, not just aviation. This is for two reasons:
Firstly, aviation is in competition with other forms of transport which are themselves sources of emissions. There is no basis for discriminating against aviation or marine on the basis of their CO2 emissions since the weight of carbon emitted per passenger per kilometre is sometimes as much or higher with some ground based transport modes (e.g. heavier vehicles with only one passenger) as with some flights. A similar overlap applies to air and ground freight. (An allowance would need to be made for the fact that high altitude emissions have a much greater impact on the climate than those at ground level - and for the other greenhouses gases like the N2O emitted.)
Secondly, the growth of emissions from road transport is currently more significant than emissions from aviation. Although aviation has been growing faster than road transport, it is from a much smaller starting point. In terms of the absolute volume of emissions, it is an urgent priority to tackle road transport emissions and not just aviation.
Campaigning for Fairer Skies
The total emissions in the EU from transport could be capped and brought down year by year using a system of permits. Before companies are allowed to sell transport fuels they could be required to have permits for the greenhouse gas content of their fuels when burned. With air fuels, a suitable conversion factor would be added to allow for the greater damage of burning fuel at altitude. The permits would not be given to the companies however. The airline companies do not own the right to use the earth’s atmosphere as a greenhouse gas dump. We the people do, and fuel suppliers should be required to buy their permits from us. The permits would be first issued to Europe’s citizens on an equal per capita basis and companies wanting to supply fuels would have to buy them from the people. This would compensate people not companies. Moreover, people with a below average level of transport emissions would get more money from selling their permits than the extra price of fuel. They would gain, rather than being penalised while energy companies made windfall profits.
For a briefing on a transport Cap and Share scheme see www.capandshare.org/pdfs/Transport2.pdf
