APPENDIX 9
Memorandum from the Royal Society for
the Protection of Birds
1. SUMMARY
1.1 The RSPB considers that Government's
approach to devising aviation policy is inappropriate for finding
solutions to the environmental problems posed by the sector. Their
approach, as represented by consultations issued by the Department
for Transport (DfT) and the Treasury (HMT), is theoretically compelling
in environmental terms. It is to implement the "polluter
pays" principle, under which aviation should pay its full
environmental costs. In theory, the identification and calculation
of all the external costs of aviation, in the context of similar
costs imposed on activities in other sectors, would make it possible
to impose those costs on aviation. A socially desirable level
of aviation activity, and acceptable level of environmental damage,
would be the theoretical result. In practice, however, it is extremely
difficult to identify or accurately calculate what those costs
are. The practical challenge is actually impossible in the context
of an environmental problem, like climate change, the severity
(and costs) of which change as carbon emissions go up or down,
and the impacts of which are potentially catastrophic and irreversible.
Even if it were possible to calculate the costs, it is difficult
then to design policy instruments that capture them efficiently.
1.2 In this situation, the primary driver
of policy is the scientific imperative to achieve or avoid certain
practical outcomes. In the case of climate change, that imperative
is significant carbon reduction, relatively quickly. In recognition
of this imperative, the Government has already undertaken a commitment
to reach progressively stringent targets over the next fifty years:
a 12.5% reduction in greenhouse gases by 2008-12 (Kyoto Protocol);
a 20% reduction in carbon dioxide by 2020; and a 60% reduction
in carbon dioxide by 2050.
1.3 Were we to rely solely on the imposition
of the theoretically-derived costs of aviation to achieve these
targets, we would almost certainly fail to meet them, and fail
to encourage aviation itself to make an appropriate contribution.
Indeed, in all probability, aviation-related emissions would still
rise steeply and the costs of reducing overall national emissions
in line with the targets would have to be borne by other emission
sectors.
1.4 The key, practical way forward is therefore
to develop a policy framework that ensures delivery of targeted
emission reductions in the most cost-effective manner possible.
Target delivery can be guaranteed by imposing emission caps on
all sectors, including aviation, which contribute to the relevant
problem—climate change. Cost-effectiveness can be guaranteed
by allowing emissions trading among actors. In the context of
aviation, which incurs all sorts of other significant costs, including
noise, air quality, land take and habitat destruction, growth
should also be constrained for a variety of reasons, by physically
restricting airport capacity so that it cannot meet unsustainable
demand, and by increasing the costs borne by aviation via a basket
of financial instruments.
1.5 In conclusion, the RSPB considers that
it is not practically possible to accurately determine the environmental
costs of aviation, although we agree that it is necessary to try
to approximate them when devising the basket of financial instruments
for managing demand. In this context, however, we note that the
DfT and HTM estimates for the cost of carbon are likely to be
too low because they have tended to employ forecasts of demand
that are lower than the median of their own growth forecasts.
Turning to the specific issues outlined by the
Committee:
2. Can the Full Environmental Costs of Aviation
be Identified? What are the Main Issues of Principle and Methodological
Difficulties in Attempting to do so? Can Remote but Potentially
Catastrophic Risks be Properly Reflected in such an Approach?
2.1 The full environmental costs of aviation
cannot be identified. Indeed, it is hard to identify the full
environmental costs of any area of human activity. This is especially
so when it comes to assessing some processes, like climate change,
with potentially catastrophic or irreversible consequences. Climate
change is likely to result in significant loss of human life and
at least some species and ecosystem extinctions. These practical
limitations are implicitly recognized, but not addressed, in the
HMT/DfT consultation entitled "Aviation and the environment:
using economic instruments", which notes that it "takes
no account of uncertainties including the probability of...
climate catastrophe...socially contingent impacts or... the costs
of impacts post-2100".
2.2 Whilst acknowledging that it is hard,
if not impossible, to estimate full environmental costs, the RSPB
agrees that it can be useful to try to do so. Clearly, when trying
to devise economic instruments intended to limit particular human
activities, some estimate of environmental costs is helpful. As
the HMT/DfT consultation is intended for just this purpose, it
is appropriate to attempt to estimate costs, as long as the limitations
of such estimates are borne in mind, and those limitations determine
the use to which the estimates are put.
2.3 Because of the uncertainties inherent
in such estimates, where they are attempted it is always best
to employ a range of costs, and other sensitive assumptions. Given
this methodological principle, and the fact that HMT/DfT accept
that catastrophic climate events are "probable", it
is surprising that a higher figure for the cost of carbon was
not adopted at the top of the range. The consultation uses an
illustrative cost of £70/tC, rising at £1 tonne per
annum. Yet DEFRA, in the study looking at the social costs of
carbon from which the figure of £70/tC was derived, advise
using an upper estimate value of £140/tC and a lower value
of £35/tC (all at 2000 prices) for performing sensitivity
analyses that reflect the range of risks associated with climate
change damage[27].
Whilst the HMT/DfT consultation mentions this range in Annex A,
the estimates made in the analysis are all based upon the median
forecast. Similarly, we note that the radiative forcing from aviation
carbon emissions is assumed throughout to be 2.7 times that of
ground-based emissions- again, a range of values, of which 2.7
is a median, should be employed.
2.4 Whilst employing a median cost for carbon
(and a median value for radiative forcing) makes presentation
simpler, it obscures the fact that costs (and forcing) could be
(far) higher or, indeed, lower. Given that the UK Government subscribes
to the precautionary principle when tackling environmental problems,
there would be a good case for employing the upper ends of both
ranges both for presentational purposes and when designing economic
instruments for minimising environmental damage.
3. How Comprehensive and Accurate are the
Environmental Costs Included in Aviation and the Environment:
Using Economic Instruments, and in the Department for Transport's
consultation The Future Development of Air Transport in the United
Kingdom.
3.1 An underlying concern about both consultations
is that the DfT have not conducted a full set of demand forecasts
to the year 2030. Their most recent set of forecasts (Air Traffic
Forecasts for the UK 2000) only extends to 2020. The 2030 values
are merely extrapolations from the 2020 figures. We question the
wisdom of basing extensive analysis of costs, and the need for
increased airport capacity, on a simple extrapolation exercise,
however well performed.
3.2 We also have concerns about some of
the assumptions that underlie the DfT's 2020 (unconstrained) demand
forecasts. Whilst none of these assumptions is obviously unreasonable
in itself, we note that, according to the DfT's own sensitivity
analyses, the forecasts are extremely sensitive to small changes
in certain key factors, such as GDP, market maturity and changes
in air fares. If any of the assumptions made about these factors
change significantly over the next 30 years, as they may very
well do, then the forecasts will also change significantly. For
example, in the median scenario, the model assumes that fares
will decrease at a rate of 1% per year. According to the DfT sensitivity
analysis, if fares were to remain constant then passenger numbers
in 2020 will be 301 million per annum as opposed to 401 million
in the median forecast, and would thus be significantly lower
even than the "constrained" forecast of 349 million.
Similarly, the DfT may have underestimated the impact of growth
in low cost carriers by over-estimating the maturity of that section
of the aviation market. If the market is less mature than the
model assumes, then there would be higher growth than predicted
in all scenarios. There is thus a significant probability that
the demand forecasts could be in error by a considerable margin.
3.3 To deal with this possibility, in line
with the precautionary principle, we would advocate working on
the basis of the higher estimates. In fact, estimates used in
both consultations to calculate future carbon emissions, and consequently
future environmental costs, derive from the low estimates of air
traffic growth. Specifically, they are based on a scenario that
assumes that no new runways will be built anywhere in the UK between
now and 2030, and consequently represent what is arguably the
lowest feasible emissions future. Employing this low-capacity
scenario, the HMT/DfT consultation estimates that aviation in
the UK will emit 19 million tonnes of carbon in 2030. This figure
is then used to calculate the environmental costs of air travel
to be £4.8 billion in 2030. However, if the high airport
capacity scenario is used, carbon emissions would rise to 25 million
tonnes by 2030, at a cost of £6.25 billion, see Table 1.
Table 1
CLIMATE CHANGE COSTS IN 2000 AND 2030
| Year | Carbon emitted
million tonnes
| Radiative
Forcing Factor
|
Effective Carbon
million tonnes |
Cost of carbon £
per tonne |
UK cost
£ billion |
|
| 2000 | 8.2 | 2.4
| 20 | 70 | 1.4
| |
| 2030 | Low Capacity Scenario*
| | | |
| |
| 19 | 2.5 |
48 | 100 | 4.8 |
|
| High Capacity Scenario**
| | | |
| |
| 25 | 2.5 |
62.5 | 100 | 6.25 |
|
| 10% reduction from high capacity scenario***
| | | |
| |
| 19.6 | 2.5 |
49 | 100 | 4.9 |
|
*415 million passengers per annum (mppa)
**480 million passengers per annum
***432 mppa
Source: Adapted from "Aviation and the Environment"
Table C1, HMT 2003
4. Has the Government Defined the Correct Environmental
Policy Objective for Aviation—that, where Appropriate, the
Industry Should Pay for its Environmental Costs? How does this
Relate to the Government's Primary Objective for Airports—to
Maximize the Significant Social and Economic Benefits, whilst
Seeking to Minimize the Environmental Impacts?
4.1 Chapter 16 of the DfT consultation paper (The Future
Development of Air Traffic) states the Government's commitment
to aviation and airport policies that are sustainable and "find
and maintain a balance between economic, social and environmental
objectives". The HMT/DfT consultation goes further adding
that "Policy for airports should aim to maximise the significant
social and economic benefits [of aviation], whilst seeking to
minimise the environmental impacts. Within this framework, the
polluter should pay and aviation, like other industries, should
meet its external costs, including environmental costs."
4.2 In theory, the RSPB subscribes to the view that the
polluter should pay but, as stressed earlier, we are deeply concerned
about relying too heavily on this approach because, in practice,
it is hard or impossible accurately to evaluate full environmental
costs, especially for activities like aviation, and environmental
problems like climate change. Moreover, on the basis of the methodologies
in current Government consultations, it is likely that existing
estimates of costs are significantly too low.
4.3 In practice, for problems with long-term, potentially
catastrophic or irreversible consequences, we must set policy
goals and targets based on scientific need, and meet them in the
most cost effective way possible. Those targets have already been
set, through a process of scientific investigation, international
negotiation, and UK national policymaking. The UK has an internationally
agreed 12.5% greenhouse gas reduction target by 2010 (Kyoto commitment)
and a nationally agreed long-term objective of a 60% reduction
in CO2 by 2050. Simply requiring aviation to pay estimated external
costs would not necessarily ensure either that the targets were
met, or that aviation would make a proportionate contribution
(compared to other emission sectors) to meeting them. More effective
will be the establishment of overall emission caps, and the opportunity
for aviation, along with other relevant sectors, to trade its
emissions allowances with others. This would be a more reliable
way of achieving agreed targets, and would do so at lowest cost.
4.4 In light of these concerns and the fact that climate
change is likely to cause an unacceptable degree of damage, the
RSPB considers that it will also prove necessary to restrict demand
considerably below the Government's unconstrained forecasts. We
consider that growth in aviation should be further constrained
using two main approaches: pricing to reduce demand and providing
insufficient capacity to meet environmentally unsustainable demand.
5. Would the Incorporation of Environmental Costs be Sufficient
to Achieve Sustainability in the Air Transport Sector? What Additional
Measures, if any, Would Need to be Taken if this were to have
Little Impact on Rates of Growth? To What Extent is there a Tension
Between the Policy of Incorporating Environmental Costs (Especially
of Carbon) and the Government's Long-Term Objective of a 60% Reduction
in CO2 by 2050?
5.1 This section examines the questions of whether the
incorporation of environmental costs would be sufficient to achieve
sustainability in the air transport sector, and how far this would
go to help achieve the Government's long-term objective of a 60%
reduction in CO2 by 2050. The question of which additional measures
would be needed is addressed in section 5.
5.2 The HMT/DfT consultation paper concludes that "Meeting
the cost of climate change would have the effect of reducing demand
by around 10%, depending on demand responses and technical improvements
and supply-side effects". We do not believe that a 10% demand
reduction would be sufficient to achieve sustainability, firstly,
because we do not consider that it is possible to fully take into
account all environmental costs and, secondly, because the particular
DfT/HMT cost estimates are low, for the reasons outlined earlier.
Moreover, and most importantly, a 10% cut in demand against a
background where all forecasts indicate a far more rapid growth
in demand would have little effect on the UK's overall greenhouse
gas emissions. It would therefore make it extremely difficult
to meet the Government's targets to cut UK carbon emissions by
20% by 2010 and 60% by 2050, and would certainly not represent
a requirement for aviation to make an appropriate contribution
to those targets.
5.3 To illustrate these points, we need only look at
the scenario forecasts themselves. National CO2 forecasts for
2030 were carried out for two scenarios: a low capacity scenario,
with no new runways in the UK, yielding a figure of 415 million
passengers per annum (mppa), and a high capacity scenario, with
new runways at Heathrow, Gatwick, Stansted, Birmingham, Manchester
and Edinburgh, giving a national throughput of 480 mppa. If the
higher estimate (480 mppa) were cut by 10%, this would result
in about 48 million fewer passengers, giving 432 mppa, ie more
than double current passenger numbers. Unfortunately, a CO2 forecast
for a passenger growth scenario of around 432 mppa was not undertaken
and so it is only possible to estimate carbon emissions by assuming
a similar proportional relationship between mppa and CO2 emissions
as used by HMT for the other scenarios[28].
However, by this means, it is possible roughly to estimate that,
were air travel in the UK to reach 432 mppa in 2030, the resulting
emissions would be about 72 million tonnes of CO2 (about 19.6
million tonnes of carbon[29]).
5.4 The most detailed overall greenhouse gas emissions
forecast for the UK[30]
only goes to 2020. Under this forecast, greenhouse gas emissions
(all greenhouse gases, not just carbon) from all sources are estimated
to reach the equivalent of about 160 million tonnes of carbon
equivalent by 2020 (taking into account the estimated effect of
existing and newly introduced policies and measures). This figure
is down from 208.4 MtC in 1990, a decrease of about 23%. Aviation,
by contrast, according to the HMT analysis, would actually increase
by 11-17 million tonnes of carbon (see Table 1) by 2030, and more
than double compared with today. Even assuming that the imposition
on aviation of estimated costs resulted in a 10% fall in demand,
as the consultation suggests, this would still mean, other factors
being equal, that aviation emissions would increase by more than
11 million tonnes of carbon, more than double today's levels.
Across all sectors, this means that aviation would be responsible
for an increase in UK carbon emissions of between 5 and 8%. Clearly,
this rise compares very unfavourably indeed with the Government's
long-term objective of a 60% overall emission reduction in CO2
by 2050, and can scarcely be called a fair contribution, or sustainable.
5.5 The mismatch between the Government's stated environmental
objectives on the one hand and the effects of imposing estimated
environmental costs on the other, reveals that economic valuation
techniques alone will not adequately capture all the costs to
society of a major environmental problem such as climate change.
Consequently, we should manage aviation mainly according to environmental
necessity, not just on the basis of valuations of environmental
costs.
5.6 In addition, we question the DfT and HMT's reliance
on at least some "technical improvements" to cut emissions.
We consider that policies and measures to manage demand will play
a much more significant role in determining how much carbon will
be emitted by the aviation sector for the foreseeable future.
Technical improvements in fuel efficiency are unlikely to provide
sufficient cuts in carbon emissions, partly due to the time-delay
in bringing more efficient aircraft into service[31].
5.7 In conclusion, for aviation to play a full role in
helping meet the UK's target of a 60% CO2 reduction by 2050, a
variety of economic and other measures will be needed to reduce
growth in demand. These measures are detailed in section five.
6. Given the International Context, what Practical Options
for Incorporating Environmental Costs are Really Available to
the Treasury and the Department for Transport, and How Should
any Revenues be Used?
6.1 The international context
In terms of limiting greenhouse gas emissions, the best option
would be to have a global cap and trade scheme covering all emission
sectors. Imposing an increasingly stringent cap over time should
ensure that overall emissions were reduced whilst enabling individual
firms to trade between sectors. This would be fair and could allow
aviation emissions to increase as long as its emissions were offset
elsewhere. It would put a global price on carbon, enabling business
and industry to assess the true environmental costs of their activities
and internalise them. A global cap and trade scheme would also
avoid the possible problem of loss of UK competitiveness sometimes
associated with unilateral action. From an environmental perspective,
it would avoid the issue of exporting the problem.
6.2 However, the best place to have a global cap and
trade scheme is under the Kyoto Protocol, from which aviation
and marine-related emissions are currently excluded. Emissions
from these sectors are being dealt with by the International Civil
Aviation Organisation (ICAO) and the International Maritime Organisation
(IMO), respectively. ICAO has tentatively agreed to have an "open"
cap and trade scheme, in which aviation emissions would be traded
with other sectors. However, it is not yet clear how this would
work, in practice, other than by effectively including aviation
emissions under Kyoto. A particular concern is whether, and how,
ICAO would set a cap (target). Given its remit and membership,
it seems unlikely that ICAO would be prepared to set a cap at
levels that are appropriate or necessary.
6.3 The long-term aim of the UK Government should thus
be to bring aviation-related emissions back within the remit of
Kyoto, preferably along with the USA. However, we appreciate that
for obvious reasons this is likely to take time, perhaps a decade
or more. Quite apart from the purely political difficulties involved,
we appreciate that there are technical questions to be resolved,
notably how to allocate emissions. (We consider that the only
fair and practical method of allocation would be to the point
of sale of the fuel.)
In the medium term, the UK should therefore work both to
optimise any ICAO trading scheme and work for the introduction
of a fuel levy on internal flights within the EU, as a matter
of urgency. In addition, the UK should investigate whether and
how aviation-related emissions might be included in the EU cap
and trade scheme, possibly via so-called "opt-ins."
6.4 In the short term, the UK should introduce a number
of demand limitation measures within the UK itself, and advocate
them in the EU. Any fiscal measures introduced need not be onerous.
Sensitivity tests performed by DfT on the Air Traffic Forecasts
2000 indicate that merely keeping air fares constant would reduce
demand by 100 million passengers per annum by 2020; this represents
a halving of the forecast increase in demand from 1990 levels.
The basket of fiscal measures should have the overall effect of
slowly increasing airfares each year. Some specific measures that
might be included in a basket of quite modest measures (and the
possible effects that they might have on demand) are outlined
below.
6.5 A fuel tax
It would be possible to levy a fuel tax on internal UK flights
and it should not be impossible to agree a EU-wide fuel tax on
internal EU flights. In the climate negotiations, the EU has long
maintained that such a tax is EU policy, in the absence of a global
cap and trade scheme. The Deputy Prime Minister, Mr Prescott,
made this point at the Kyoto climate change talks in 1997.
6.6 However, fuel accounts for only about 10% of aviation
costs and so any tax levied on fuel must be high to have any significant
effect. DfT estimate that a fuel tax phased in at 10% per annum
over 10 years from 2006 rising to 100% by 2016 would only reduce
demand by 10% from the mid-range forecast by 2015—a reduction
of 40 million passengers per annum (mppa) between 2000 and 2020[32].
Likewise, a recent study for the European Commission has concluded
that an intra-EU carbon charge of
30 per tonne of CO2 would reduce growth in demand for air travel
by only 4.5%[33].
6.7 This raises the question of the level at which an
aviation fuel tax will have a significant effect on constraining
demand. One study has estimated, using the DfT's sensitivity analysis
as a guide, that if aviation fuel were taxed at 25p a litre, half
the rate applied to motor fuel (ie around 140%), this might cut
demand to 344 mppa[34].
This would mean a fall in numbers of 57 million, or just under
30%, from the forecast increase in demand between 2000 and 2020.
This would be a significant effect.
6.8 Value Added Tax (VAT)
VAT (or a sales tax) on all flights could be introduced,
preferably as a standard tax across the EU but, in the first instance,
certainly in the UK. Simply applying VAT at the standard rate
of 17.5% could reduce demand by as much as 70 mppa whilst delivering
£2.5 billion in revenue[35].
Germany has recently taken the lead by announcing that flights
from Germany to other EU nations will no longer be exempt from
the Value Added Tax. Another option would be to add an environmental
surcharge to the Air Passenger Duty.
6.9 Auctioning Slots
Take-off and landing slots for aircraft are valuable but
are currently allocated free of charge. This not only adds to
the duty-free status of aviation but also deprives the service
provider (ultimately the public) of revenue. Auctioning slots
could help to reflect the true cost of aviation, helping to limit
demand, and provide an additional source of revenue.
6.10 Introducing "Dual Till" regulation
Currently, take-off and landing fees at UK airports are subsidised
by highly profitable retail activities via a "single till"
regulation that caps total revenue from airport charges and retail
sales combined. Under a "dual till" approach, new take-off
and landing charges could be set according to aircraft size and
other factors affecting their environmental impacts. It is estimated
that a 50% increase in airport charging could reduce demand by
about 30 mppa, or 15% of the forecast increase in demand between
2000 and 2020[36].
6.11 Providing insufficient capacity to meet demand
The RSPB considers it entirely reasonable that Government
should simply decide not to authorise the provision of airport
capacity to meet unconstrained demand, given the implications
for the environment, globally and locally. Indeed, to do so would
undermine the UK's otherwise commendable approach to climate change,
as well as creating noise and air pollution, taking land, and
destroying habitat.
April 2003
27
Estimating the Social Cost of Carbon Emissions (January 2002),
Richrd Clarkson and Kathryn Deyes, DEFRA. Back
28
See Annex D, Table D6 for HMT methodology and forecasts. Back
29
3.67 tonnes of CO2 = 1 tonne of carbon. Back
30
UK's Third National Communication under the United Nations Framework
Convention on Climate Change, DEFRA 2001. Back
31
See Royal Commission on Environmental Pollution, The Environmental
Effects of Civil Aircraft in Flight, Special Report, RCEP 2002. Back
32
ATF2000, paragraph 7.10. Back
33
Wit, R.C.N. and Dings, J.M.W, Economic incentives to mitigate
greenhouse gas emissions from air transport in Europe; CE Delft
2002. Back
34
Sewell B 2000 Tax Free Aviation. Publ. by the Aviation Environment
Forum. Back
35
Grayling T & Bishop S 2001 Sustainable aviation 2030. Discussion
document. Publ. IPPR. Back
36
ATF2000, Paragraph 7.11. Back
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