House of Commons - Environmental Audit

Select Committee on Environmental Audit Written Evidence

APPENDIX 4

Memorandum from the Council for the Protection of Rural England (CPRE)

INTRODUCTION

1. CPRE exists to promote the beauty, tranquillity and diversity of rural England by encouraging the sustainable use of land and other natural resources in town and country. We promote positive solutions for the long-term future of the countryside and to ensure change values its natural and built environment. We have a long standing interest in the development of air transport policy, and the role of economic instruments to send the right price signals to promote environmentally sustainable development. With the Government currently consulting on the future of air transport policy, we believe that the Committee's inquiry is timely and welcome the opportunity to contribute to it.

2. The Government's options for the expansion of air transport capacity, as presented in the seven Regional Air Studies published in July 2002, threaten to cause significant damage to both the environment and communities. While the White Paper will need to develop a package of measures which includes regulation, investment in public transport, education and technological improvement, there is a particularly important role for economic instruments. CPRE believes the forthcoming White Paper should place demand management measures centre-stage in order to avoid and reduce the damaging effects of aviation.

IDENTIFYING AVIATION'S ENVIRONMENTAL COSTS

3. The main areas where attempts have been made to put a monetary value on environmental damage are in terms of climate change, local noise pollution and local air pollution, as reflected in The Future Development of Air Transport: A National Consultation and Aviation and the Environment: Using Economic Instruments. This does not, however, capture the full range of externalities caused by air transport. CPRE argues that a more comprehensive range of environmental costs includes:

— climate change caused by greenhouse gas emissions;

— local noise pollution from air and surface transport;

— local air pollution from air and surface transport;

— erosion of rural tranquillity;

— loss of land from new airport development;

— additional pressures on the consumption of natural resources (such as water) as a consequence of airport development and operation;

— loss of land from wider development pressure for new houses, industrial and leisure development;

— congestion of local surface transport infrastructure;

— environmental damage as a result of new transport infrastructure required as a consequence of airport expansion; and

— visual and audible intrusion to wildlife, landscape and heritage sites.

4. CPRE believes that the Government's list of environmental costs of aviation is unduly narrow and urges the Committee to inquire how these wider issues (such as the loss of tranquillity) will be addressed by the Government.

PLACING A MONETARY VALUE ON ENVIRONMENTAL COSTS

5. The Treasury working paper restricts the placing of monetary values on external costs to climate change, local noise pollution and local air quality. The consultation does list other environmental impacts caused by the expansion options, in terms of land lost to infrastructure; the direct and indirect impact on designated wildlife and heritage sites; surface access congestion; and effects on water quality and supply. A summary of the impacts from the options presented, collated by CPRE, is attached as an Annex. No attempt is made in the consultation documentation to cost these damaging impacts and the frame of reference is largely to mitigate adverse environmental impacts at a local level while allowing expansion in air travel to continue. We believe such an approach is inconsistent with delivering an environmentally sustainable air transport policy.

6. CPRE recognises that there are difficulties involved with attempting to cost these impacts. Some by their very nature are less amenable to crude monetary valuation techniques, yet should still be addressed by government policy. This is recognised in the Treasury's revised Green Book, and will need to be included in the Government's analysis of the environmental impact of aviation. We warmly support the concerns expressed by the Environmental Audit Committee in its report, Pre-Budget Report 2002, that there is a danger of an over-emphasis on the need for monetary valuation to justify action to protect the environment.

7. There is also a danger that economic models which are based on linear relationships do not adequately reflect environmental trends, and in particular, the potential for limits to be breached with catastrophic implications. This is especially important as the cost of damage is likely to rise exponentially as an ecosystem's ability to function properly is degraded over time. In our view, this requires the Government to embrace, more effectively, the guiding principles in its Sustainable Development Strategy—A Better Quality of Life 1999. We draw the Committee's attention, in particular, to a selection of the guiding principles (see Box 1) which we believe have an important bearing on how the Government should proceed in this area.

8. We hope the Committee will press the Government on how the principles in the Sustainable Development Strategy will guide future decisions.

Box 1: Guiding Principles for Sustainable Development

Taking a long term perspective: Sustainable Development thinking cannot restrict itself to the life of one Parliament, or the next decade. Radical improvements have to begin now to safeguard the interests of future generations.

Taking account of costs and benefits: Decisions must take account of a wide range of costs and benefits, including those which cannot easily be valued in money terms.

Respecting environmental limits: Serious or irreversible damage to some aspects of the environment and resources would pose a severe threat to global society. Examples are major climate change... In these cases, therefore, there are likely to be limits which should not be breached. Defining such limits is difficult, so precautionary action needs to be considered.

The precautionary principle: The Rio Declaration defines the precautionary principle as "where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation".

Making the polluter pay: Much environmental pollution, resource depletion and social cost occurs because those responsible are not those who bear the consequences.

Source: Quoted from A Better Quality of Life,

A Strategy for Sustainable Development for the UK 1999.

9. CPRE generally welcomes the attempts by the Treasury to place monetary costs on climate change and local noise and air pollution impacts. These can help inform the debate on air transport. However, this will only be effective if the costs are not undervalued. We are concerned that this is currently the case, and critical if the terms of reference of the debate are to have regard to the need to manage demand, rather than allow high levels of growth to continue. This includes using the monetary values to introduce credible economic instruments and signals as part of a package of market based and regulatory measures designed to reduce the environmental and social damage that air transport imposes. CPRE's policy recommendations are outlined in paragraph 36.

10. We note that there is a significant variance in the estimates of total external costs. The Airline industry has generally in the past argued that its costs amount to approximately £1 billion per annum, and is covered by the payment of Air Passenger Duty. The Government's working paper indicates a total figure of £1.4bn for climate change in 2000, rising to £4.8bn in 2030. CPRE would like to draw the Committee's attention to research undertaken by the European Environment Agency which concludes that (using data from 1995) the external costs of transport are 8% of Europe-wide GDP, with air transport being 6% of that. On a simple pro rata basis, and with UK GDP in 1995 being £719bn, this would mean that the total external costs of aviation would amount to £3.4bn in the UK. This is a significant increase on the estimates included in the Treasury working paper.

TOTAL COSTS OF AVIATION

11. A key issue which the Government needs to address is the tax status of air transport. At present, this includes the absence of a levy on aviation fuel, an anomaly recognised by the Government[13], and the absence of VAT. Market based and regulatory measures should be working to introduce a fairer tax regime for air transport as well as beginning to internalise the full range of external costs.

TC = T + EC

Total costs = Ending tax exemptions and internalising external costs

12. The Government's forecasts for air transport are based on the assumption of continuing falls in the cost of air travel. Critically, this assumes the current tax regime, with a significant series of tax exemptions, continues. A failure to address this issue will mean that demand will be artificially stimulated, as it is now, and is likely to seriously undermine any action taken to internalise the external costs of aviation. Comparisons can be drawn with surface transport, where the Government's Ten Year Transport Plan assumes a 30 per cent reduction in the cost of motoring in the next decade, which contributes to traffic forecasts assuming significant growth in road transport.

13. Without action, the total amount covered by the tax exemption will grow substantially. The current Air Passenger Duty (APD) should be viewed in this light. This tax, introduced in 1993, was justified on the basis that air travel was under-taxed[14]. The £0.9 billion it brings in every year is also small compared to the overall £9.2 billion worth of tax breaks that the industry benefits from at current levels[15] (see below).

THE TAXATION BALANCE SHEET

No excise duty on aviation fuel -£5.7bn

No VAT on aviation fuel, tickets etc -£4.0bn

No excise duty on consumer goods -£0.4bn

Air Passenger Duty paid +£0.9bn

TOTAL TAX DEFICIT = -£9.2bn

CLIMATE CHANGE

15. The Treasury calculates that the external costs of climate change caused by aviation to be £1.4 billion in 2000, rising to £4.8 billion in 2030. This recognises that the average climate change impact of aviation emissions is 2.7 times greater than that of CO2 alone due to the radiative forcing effect. The paper also uses the Royal Commission on Environmental Pollution's (RCEP) illustrative cost of carbon of £70 per tonne, rising at £1 per tonne per annum.

16. CPRE welcomes the findings of the Government Economic Service (GES) Working Paper 140, as described in the Treasury document, which underlines that the figure of £70 per tonne of carbon is undervaluing the full costs of climate change effects. In particular, it does not take into account uncertainties, including the probability of:

— climate change catastrophe, for example the melting of the West Antarctic ice sheet or Gulf Stream suppression;

— socially contingent impacts, for example famine and mass migration; and

— the costs of impacts post 2100. These could grow at an ever faster rate if climate change emissions are not significantly reduced as climate change effects become more aggravated and extreme.

17. We believe that the precautionary principle should be adhered to with regard to climate change and that policy decisions should seek to take into account these uncertainties, and the likelihood that current estimates on climate change impacts may well be under-estimates. An important starting point should be the Government's recent Energy White Paper and its target to reduce CO2 emissions by 60% by 2050. The White Paper highlights that CO2 emissions from aviation could increase from 9MtC at present to 14-16MtC by 2020, but leaves any decisions on how to tackle this trend to the Air Transport White Paper. The Environmental Audit Committee has already commented on the difficulty which the Government is experiencing in meeting its domestic climate change targets, and trends in aviation seriously risk undermining this further.

18. Some goals could be achieved through emissions trading if a credible scheme is put in place. Principally, CPRE believes any scheme would need to:

— have a finite cap on emissions that falls over time;

— aim to reduce actual emissions;

— include mandatory participation and global coverage;

— auction emissions permits; and

— cover all greenhouse gas emissions, not just CO2 emissions, to account for the radiative forcing of aviation.

19. Any scheme will take several years to reach operational capability and progress at ICAO has not been encouraging. Some form of Europe wide emissions charge should, therefore, be introduced without delay based on emission levels and distance flown. CPRE sees the forthcoming UK Presidency of the EU (from 1 July 2005) as a clear target date for reaching agreement on such an emissions charge. We believe that the Government should take the lead in ensuring the necessary preparatory work is undertaken to make this possible.

LOCAL NOISE POLLUTION

20. Noise pollution is a significant issue around most airports, Heathrow and East Midlands being particularly problematic. Heathrow Airport creates significant problems because of its proximity to the residential area of west London, and East Midlands Airport due to the unrestricted 24 hour freight operations that seriously disrupt people's sleep. Analysis undertaken for CPRE by TRL Consultants (to be published) shows that the Government's consultation has seriously under-estimated the effects of noise which would result from air expansion at Alconbury, Cliffe, and the Rugby/Coventry site.

21. The Treasury paper gives a figure of £25 million in 2000 for the monetary value of local noise pollution, based on the hedonic pricing methodology of the study by D.Pearce and B.Pearce (2000). This equates to 36-40 pence per passenger at Heathrow, while calculations at other South East airports did not rise above five pence per passenger. However, house prices are derived from many factors, of which aircraft noise is but one variable. We believe, therefore, that such analysis should be complemented by other data on the impact of noise on communities quality of life and the environment.

22. Noise around airports can affect learning ability and health. A study by Rosenlund (2001) concluded that people exposed to average aircraft noise levels of 55 decibels or higher were 60 per cent more likely to be diagnosed with high blood pressure. Other studies of young children at schools situated under the flight paths of busy airports show that the reading age may be up to nine months behind children in less noisy locations[16].

23. The World Health Organisation (WHO) embraces a wider definition of noise related impacts than that used by the UK Government. Its definition includes:

— interference with communication;

— sleep disturbance;

— annoyance responses;

— noise induced hearing loss;

— learning acquisition;

— performance effects; and

24. In addition to a narrow definition of noise impacts, CPRE believes that the Government has seriously under-estimated the spread of noise pollution which could occur if aviation is allowed to expand as forecast. The Government uses the 57 Leq (dBA) noise contour to indicate the onset of significant community annoyance. WHO Guidelines, however, advise that significant annoyance can occur between 50-55 Leq (dBA). Bearing in mind the logarithmic nature of the Leq scale, an increase in 3 Leq (dBA) is actually a doubling in the level of noise experienced. We believe this underlines the importance of the preparation of the Air Transport White Paper to be informed by a full Health Impact Assessment.

25. The impact of air travel, as previously discussed, incorporates considerable disturbance and damage from surface transport. While the need for additional infrastructure is identified in the Government's consultation process, the noise generated from an increase in surface traffic, and new road building, has not been adequately addressed.

26. Additionally, the Treasury working paper and the consultation do not capture the effect of aircraft noise on rural tranquillity. Areas further away from airports are becoming increasingly affected by noise as increases in the volume of air traffic causes flight paths to fan out over the surrounding area. In the national Enjoyable aspects of the British Countryside: 2001 survey, published by the Department for Environment, Food and Rural Affairs, tranquillity was the most mentioned positive feature of the countryside, mentioned by 58% of respondents. An unconstrained increase in the volume of flights can only have an increasing negative impact on tranquillity, and therefore on people's enjoyment of the countryside and on their quality of life. In order to capture the environmental impacts of aviation on tranquillity, the most relevant research suggests that noise contours covering 50 dB(A) should be produced. An assessment of these new contours should then feed into the overall examination of the external costs generated by air travel. CPRE hopes that the Committee will investigate how, and to what extent, the impact on tranquillity of the countryside from air travel will be considered in framing the total external costs of aviation?

27. In summary, the monetary value placed on noise values is a significant underestimate of the full range of effects caused by noise intrusion by air travel. Economic instruments can be used to encourage quieter aircraft in the future, but the huge growth in air travel forecast has the potential to seriously offset any benefits gained. It is important that the effects of noise are incorporated into calculations on external costs, and that the monetary values used represent a more realistic assessment of the damage caused. Policy should recognise too, however, that any market measures need to be complemented by continued and strengthened regulation to limit noise levels. This should include realistic fines on airlines and airports that exceed limits and deviate from any flight paths designed to avoid excessive nuisance to communities, unless safety would be compromised by doing so. Policy should also prohibit disturbance from night flights, the most intrusive type of flights.

LOCAL AIR POLLUTION

28. The cost of local air pollution has been estimated as being between £119-236 million for all UK passengers, taken from a study by CE Delft in 2002 that covered a range of health and environmental impacts. Nitrogen dioxide is the principle pollutant measured, the consultation itself stating that this aggravates asthma, reduces lung function and causes lung disease. Amending prices in order to incorporate the health impacts of aviation is required, but should not be seen in isolation of regulatory mechanisms that should be in place to monitor and reduce local air pollution at source.

THE GOVERNMENT'S ENVIRONMENTAL POLICY OBJECTIVE FOR AVIATION

29. Ensuring that the aviation industry pays its environmental costs would be a welcome addition to a range of policy tools designed to reduce the environmental damage currently caused by air transport. However, to be effective in managing demand, this will need to incorporate a wider set of environmental and societal impacts (paragraph three); ensure monetary values are set at realistic levels (paragraph 10); include the ending of unfair tax exemptions (paragraphs 11-14); and be part of a wider package of policy reforms and investment decisions. A clear strategy along these lines will also ensure the industry receives the correct market signals and quicken the introduction of newer, less polluting forms of technology.

30. The Government's policy objective is that the aviation industry should, "where appropriate" pay for its environmental costs. This is at odds with the polluter pays principle, as set out in its Sustainable Development Strategy—and begs the question when the industry should be allowed to pollute or damage the environment without paying for the costs. CPRE hopes the Committee will seek clarification as to circumstances when the Government believes the aviation industry should be exempt from the polluter pays principle?

31. A further key issue is whether it is desirable for policy to allow continuing environmental damage to occur if it is paid for? This approach, which allows growth in air travel and then attempts to mitigate and compensate those affected for damage, does not answer the critical need for the environmental and social damage to be reduced at source. Arguably it also fails to integrate economic, social, resource and environmental objectives as required to be sustainable, and raises significant issues over the distribution of impacts—between developed and developing countries, and between generations.

32. If climate change policy was developed so that aviation should pay to continue to emit growing volumes of greenhouse gases, without there being a constraint on the total volume of emissions, this could have serious implications for the Government's long term objective of a 60% reduction in CO2 emissions by 2050. If aviation does not reduce it's own emissions, other industries will have to make even more strident cuts in their own greenhouse gas emissions to achieve the Government's target, potentially shifting a significant cost burden to other industries, affecting their competitiveness in their own field, and seeking further reductions to an extent which may be inefficient while aviation continues as a "free-rider".

POLICY MEASURES TO ACHIEVE ENVIRONMENTAL SUSTAINABILITY

33. Ensuring that the air transport industry pays it's full environmental costs alone will not deliver an environmentally sustainable policy. CPRE argues that a range of policy tools need to be implemented to achieve sustainability both in environmental and economic terms.

34. In economic terms, the Government should end the unfair tax exemptions currently enjoyed by the aviation industry. It is a mature industry which does not warrant them. This could have a significant impact on the demand for air travel, and the subsequent infrastructure that might be required. In February 2003, CPRE, the Aviation Environment Federation and Friends of the Earth requested that the Department for Transport re-run its air traffic forecasting model—SPASM—using different policy assumptions. This included a scenario which involved introducing a fairer tax regime with aviation fuel being taxed at the same rate as motor fuel, the introduction of VAT, and the phasing out of Air Passenger Duty in 2020. According to the Department's model, this would reduce demand in 2030 from the current forecast level of 501 million passengers a year to 315 million passengers a year. This could be handled by current infrastructure and would also address many of the other environmental problems which would be generated by unconstrained growth.

35. In environmental terms, the damage to the environment is inextricably linked to the volume of flights and any policy that is attempting to be environmentally sustainable should therefore manage the demand for air travel. CPRE advocates the economic measures below to achieve this. These would operate as part of a broader package of regulatory tools, strong land use planning policies, investment in electric high-speed rail alternatives and the use of limits, enforceable through realistic fines on levels of noise and air pollution.

36. Economic measures include:

— ending the global tax anomaly of no taxation of aviation fuel. While international convention makes this goal unlikely in the short term, a tax on domestic flights could be introduced. A Europe wide fuel tax could also be introduced and should be strongly pursued by the UK Government. Revenues could be used to invest in competitive high-speed electric rail alternatives to domestic and short haul flying;

— end the current anomaly of the zero-rating of VAT for air transport through the introduction of VAT on all flights leaving the UK;

— the introduction of a Europe wide emissions charge based on emission levels and distance flown to internalise some of the external costs of air travel;

— strong pursuit at the European level of measures to allow slot auctioning, particularly at congested airports, to ensure slots and aircraft are used more efficiently;

— the further raising of landing fees to end the current artificial stimulation of demand, particularly at major congested airports like Heathrow;

— move towards a dual tilling system to separate airport charges from retail income to ensure that retail operations cease to cross subsidise the maintenance of airport infrastructure which enables landing charges to be set at unrealistically low levels;

— the pursuit of a European wide greenhouse gas emissions trading scheme, with falling caps that will progressively lead to reductions in emissions levels over time;

— the potential to introduce road user charging schemes near airports and/or non residential parking levies to reduce the proportion of users and visitors who travel to the airport by car and the excessive car parking frequently associated with airports; and

— a programme of continuous monitoring to ensure that the monetary values and total costs of aviation on the environment reflect the most up to date evidence on the impact of aviation on the environment.

CONCLUSION

37. The recognition by Government that air transport should pay its external costs is welcome. However, there is a danger that a policy approach based on paying external costs alone will not deliver the reductions in environmental damage that are needed. It is therefore essential that the need to pay external costs is part of a wider range of policy tools that are working together to manage the demand for air transport and reduce environmental damage at source.

April 2003

Annex

Total Cumulative Impact of the Government's Air Transport Expansion Options

CPRE's analysis is based on the Government's own assessment of damage and impacts described in the four Regional Air Study (RAS) documents for England[18]This is the first time that all the impacts have been put together. The inconsistent format of the documents, and the fact that the effects of airport expansion are spread across different chapters, tables and annexes makes it difficult to appreciate the total scale of the threat. While the Government's Air Transport White Paper will not approve the expansion implied by all the options now under consideration, the data does show what is under threat.

The Threat Impact Examples

New runways 17 Including two brand new airports, Cliffe in Kent and Rugby/Coventry in Warwickshire; the re-use of a currently disused airfield at Alconbury in Cambridgeshire; and up to three new runways at Stansted in Essex.

Noise—extra people exposed to significantly annoying daytime noise[19] 344,500 144,300 extra people (33,700 now) would be exposed around Birmingham airport with a new wide spaced runway. 66,200 extra people would be affected by options for expansion in the North (at Manchester, Liverpool, Newcastle, Teeside, Leeds Bradford and Humberside).

Air Pollution—people exposed to levels of NO2 above safe legal limits 44,770 33,000 people (10,000 households) would be exposed to air pollution above legal limits with a new short runway at Heathrow.

Road works (Motorways) 12 Expansion at Manchester and Liverpool airports would require "improvements" to the M56, M60 and M62. A second runway at Birmingham would require "upgrading" of the M42.

Road works (A roads) 25 Cliffe would require "strategic improvement" of the A13, a lower Thames crossing to the A13 and A128, and two new link roads to the A2.

New Housing[20] 194,370 New runways at Stansted would require 83,000 homes for airport workers, with 21,000 needed for Coventry/Rugby, urbanising existing rural land between the two conurbations.

Loss of agricultural land and Green Belt 7,317 ha
(73 km2) 2,837ha, 28km2, of the agricultural land at risk is Green Belt. Gatwick would lose 530ha of Green Belt with a wide spaced runway. Coventry/Rugby would entail the loss of 1,600ha of agricultural land, of which 1,400ha is Green Belt.

Wildlife 44 Expansion in the South West alone (Bournemouth, Bristol, Exeter, Newquay and Plymouth) threatens 22 of the 44 Sites of Special Scientific Interest.

Landscape 7 Expansion options in the South West threaten 7 Areas of Outstanding Natural Beauty.

Heritage 368 319 listed buildings and 49 Scheduled Ancient Monuments are at risk. Three new runways at Stansted would impact on 64 Grade II listed buildings. Expansion at Newquay would account for impacts to 25 SAMs

Water shortages 4 Four options, Cliffe, Heathrow, Luton and Stansted, would demand so much local water that this would outstrip supply.