Select Committee on Environmental Audit Written Evidence


APPENDIX 11

Memorandum from the Stop Stansted Expansion Community Campaign Group

1.  INTRODUCTION

  1.1  We welcome this opportunity to make a submission to the Environmental Audit Committee ahead of its evidence session with John Healey MP, Economic Secretary to the Treasury, on Wednesday 30 April 2003.

  1.2  Stop Stansted Expansion is a community campaign group, formed in August 2002, following the publication of the Department for Transport's consultation on "The Future of Air Transport in the United Kingdom: South East" which includes proposals for between one and three additional runways at Stansted and traffic projections which would make Stansted the biggest airport in the world. Stop Stansted Expansion has overwhelming local support in opposing these proposals, and the development they would inevitably induce, due to the devastation they would inflict on the local community and on the environment across Hertfordshire and Essex.

  1.3  One of our key arguments is that the rapid growth in air travel is in large measure due to its favourable tax position relative to other modes of transport and that this is unsustainable. Stansted Airport is very much dominated by the budget airlines and we have the perverse situation where you can buy an air ticket to other countries in Europe on most days of the week for less than the cost of a train ticket to London.

  1.4  We are surprised and disappointed that we have been excluded, as have all local airport communities, from the list of stakeholders who are to be invited to contribute to the discussions on "Aviation and the Environment: Using Economic Instruments." We believe we are significant stakeholders in relation to the issues that are up for discussion and we wish our protest at this exclusion to be noted.

  1.5  We would also point out that the Treasury/DfT discussion paper focuses only upon the operational impacts of air travel. It fails to address the major impact on the local environment arising from airport expansion such as destruction to homes, countryside and wildlife habitats and widespread urbanisation. We will return to this point later.

  1.6  We also wish to record our concern that, notwithstanding Government policy pronouncements towards a sustainable aviation policy, there is very little evidence that the Department for Transport is genuinely committed to anything other than the expansionist agenda of the aviation industry. This is evidenced in the tone and content of the consultation document and its accompanied questionnaire (which consistently exaggerate the economic benefits of aviation and under-emphasises the environmental impacts); in replies from DfT Ministers and officials to letters from our members; and in meetings with DfT officials. As an example of this, we recently met with the DfT UKREP in Brussels, principally to make enquiries about progress within the EU on the taxation of various aspects of air travel. Instead of a progress report we received a long explanation of the reasons why it was either "all too difficult" or "inappropriate" to tax aviation fuel or other aspects of air travel. After we pointed out that the Government was committed to such policies we were told that there was "little likelihood of progress in the short to medium term"; that it was "not high on the list of priorities"; and that there was "no Ministerial will" to pursue such policies with any vigour.

  1.7  We will now turn to the five specific issues upon which the Committee is particularly interested to receive comments and we will deal with these in turn.

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  There are enormous difficulties in identifying the full environmental costs of aviation although many academics have tried to quantify them. We are not qualified to comment on the validity of such estimates but clearly there are particular difficulties in quantifying the cost of climate change. What price can be attached to the right of people living on islands in Bangladesh for their land not to be submerged as a result of global warming?

  2.2  "Aviation and the Environment: Using Economic Instruments" only deals with three aspects of the environmental impact of aviation, namely CO2 emissions, noise nuisance and the damage to local air quality. No attempt is made to quantify the cost of concreting over the countryside and this is an issue that is of particular relevance to Stansted, which is a very rural and picturesque part of England.

  2.3  What price, for example, does one place on the destruction of 2,500 acres of ancient woodlands currently under direct threat from the proposals in "The Future of Air Transport in the United Kingdom"? Ancient woodlands are, by definition, at least 400 years old. They are home to more threatened species than any other habitat in the UK and now cover only 2% of the UK and they are irreplacable.

  2.4  What price does one place on the destruction of historic buildings? The area around Stansted contains some of the finest historic buildings in the country—with barns, moated farmhouses, ancient thatched cottages, timber-framing and pargeting—all irreplacable. Three separate public enquiries since the Second World War have recognised and ruled against proposals for a second runway at Stansted. The most recent of these described the prospect of a second runway as "an unprecedented and wholly unacceptable major environmental and visual disaster".

  2.5  DfT is now proposing not one—but three—additional runways at Stansted and 65 grade I and grade II listed buildings would be lost if this were to go ahead. Two scheduled ancient monuments would also be lost as well as four entire villages, 326 homes and part of the SSSI at East End wood, that is not mention the adverse impact on nearby Hatfield Forest and the many other listed buildings . What price can be attached to such a loss of irreplacable heritage? According to "Aviation and the Environment: Using Economic Instruments", the answer is that there is no price. The aviation industry would not be charged for this.   

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 OF AIR TRANSPORT IN THE UNITED KINGDOM"?

  3.1  Omission of the environmental impact of airport development, as described above, demonstrates that the environmental costs identified in "Aviation and the Environment: Using Economic Instruments" are not at all comprehensive. The DfT's consultation: "The Future of Air Transport in the United Kingdom" identifies the main environmental impacts but makes no attempt to quantify their costs. This stands in stark contrast to the level of detail applied in the consultation to estimating the value of the economic benefits (using highly questionable methodology).

  3.2  "Aviation and the Environment: Using Economic Instruments" identifies carbon emissions as the main cost. Indeed this accounts for between 84% and 91% of the total cost identified. The cost applied per tonne of carbon emissions is therefore of key importance and this is put at £70. In arriving at this figure, reliance has been placed on guidance from DEFRA which was based on (a) Working Paper No.140 prepared by the Government Economic Service (GES) "Estimating the Social Cost of Carbon emissions" (2002) and (b) a study of the academic literature entitled "Global Warming Damages, Final Report of the ExternE Global Warming Sub-Task", Eyre et al, (1999). Working Paper No 140 prepared by the GES concluded that the Eyre Report was "the most sophisticated study of the existing literature".

  3.3  While proposing a figure of £70 per tonne of carbon value (at 2000 prices), the paper also recommended the use of between £35 and £140 as a sensitivity range.

  3.4  The Sustainable Development Commission points out that "vehicle transport diesel fuel is taxed at £158/tCO2, petrol a little lower and biodiesel at £198/tCO2, well above the value proposed to the Government for internalising the external costs of emissions of £19/tCO2 (£70/tC)..." [Note that there is a conversion factor of 3.67 between carbon dioxide emissions and the carbon value of emissions.]

  3.5  The Intergovernmental Panel on Climate Change (IPCC) estimates that the global warming potential of emissions from aviation is 2-4 times that of the carbon emissions alone, because of the effects of water vapour and NOx at high altitudes. This suggests that if road transport is taxed at (on average) £160 per tonne of carbon dioxide, if aviation were to be taxed on an equitable basis in relation to the impact upon climate change, the tax should be between £320 and £640 per tonne. Instead the effective level of taxation proposed is only around £50 per tonne*

  *This is derived by taking the illustrative £70 charge per tonne of carbon, dividing this by 3.67 to give the tax rate per tonne of CO2 (=£19) and then multiplying by between 2.4 and 2.7 (the radiative force adjustment) to give an effective rate of c.£50 per tonne of CO2. The radiative force adjustment is intended to reflect the "greenhouse" impact of emissions other than CO2. This is higher for long haul flights than for short haul because it varies according to altitude.

  3.6  Comparisons between the taxation of road transport and the taxation of air travel demonstrate an incoherence in Government policy, a point which we will return to later.

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 Maximise the Significant Social and Economic Benefits, whilst Seeking to Minimise the Environmental Impacts?

  4.1  As a signatory to the Treaty of Amsterdam (signed 1997, effective 1999) the Government is committed to the principle that "the polluter should pay". The phrase "where appropriate" (above) appears to be a liberal interpretation of what is now Article 130 of the Treaty on European Union and states:

    "Community policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Community. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay."

  4.2  The Government states its primary aviation policy objective as being "to maximise the significant social and economic benefits, whilst seeking to minimise the environmental impacts". This suggests that "seeking" to minimise the environmental impacts is subordinate to "maximising the significant social and economic benefits". Also, it is interesting that the word "significant" is used on the one hand but not on the other.

  4.3  The aviation policy objective also seems in conflict with the policy objectives set out in relation to sustainable development, which the Government has defined as "a better quality of life for everyone, now and for generations to come" and it has identified four key objectives "which have to be met at the same time if it is to be achieved". These are:

    —  social progress which recognises the needs of everyone;

    —  effective protection of the environment;

    —  prudent use of natural resources;

    —  maintenance of high and stable levels of economic growth and investment.

  4.4  It is difficult to identify a serious commitment to the "effective protection of the environment" when there is such reluctant progress on applying the "polluter should pay" principle to the aviation industry and in view of the scale of destruction of ancient woodlands, historic buildings and other irreplacable parts of our heritage, as proposed in "The Future of Air Transport in the United Kingdom".

  4.5  The Royal Commission on Environmental Pollution has endorsed the IPPR approach and stated that: "if no limiting action is taken, the rapid growth in air transport will proceed in fundamental contradiction to the Government's stated goal of sustainable development."

THE OFFSHORE AIRPORT OPTION

  4.6  A further indication that the Government attaches more weight to maximising the economic benefits than to minimising the environmental impacts is its reluctance to include offshore airport options in the consultation or even to provide a proper assessment of the costs and environmental impact of an offshore airport, for example, in the Thames Estuary. Clearly, an offshore airport makes no difference in terms of the impact upon climate change but it has significant advantages in terms of much reduced noise and less damage to local air quality for local communities. And it would avoid the need to destroy people's homes and precious countryside.

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  Whether or not the incorporation of environmental costs could be sufficient to achieve sustainability in the air transport sector very much depends on the scope and extent of the environmental costs applied to air travel and on the extent of future cost reductions and efficiency improvements.

  5.2  The DfT forecast assumes that the price of air travel will decline 2% a year over the next 30 years if the industry is not expected to meet its environmental costs and 1% a year if the industry is required to meet its environmental costs to the extent set out in "Aviation and the Environment: Using Economic Instruments". And DfT estimates that a 1% decrease in costs results in a 1% increase in demand.

  5.3  The DfT forecast for 2000 to 2030 is for an increase in demand from 181 mppa to 501 mppa—ie an average annual growth rate of 3.5%. On the basis that £1.6 billion of environmental costs (at 2000 prices) has already been allowed for in the DfT forecasting model and has the effect pf trimming 1% a year off the growth rate, the implication is that £7.2 billion a year in environmental costs would neutralise growth in the UK aviation sector. And presumably, improvements in technology would lead to reduced environmental impacts year on year.

  5.4  Coincidentally, the figure of £7.2 billion is around the mid-point of various similar estimates that have been made, for example, by the Institute of Public Policy Research (IPPR), the Aviation Environment Federation (AEF) and the Royal Commission on Environmental Pollution (RCEP) on the value of the tax exemptions and subsidies currently enjoyed by the UK aviation sector. It is equivalent to around £35 to £40 per single air ticket.

COMPARISON WITH ROAD TRANSPORT

  5.5  Road transport and air travel have many similarities in terms of their environmental impact. Both are dependent upon fossil fuel as their energy source; both produce similar pollutive emissions; both have a damaging effect upon the environment in terms of building the necessary infrastructure (roads/airports); and both have a damaging effect upon local communities in terms of the day to day noise and health impacts arising from road and air travel. A key difference between the two is however the approach to taxation.

  5.6  For the year 2002, UK road vehicle carbon emissions were 35 MtC and UK aviation emissions (including UK international aviation) were some 9 MtC.

  5.7  In terms of taxation, road travel and transport contributed some £42 billion to the Exchequer in 2002, in fuel duty, road fund licence, VED, company car tax and VAT. Aviation contributed around £1 billion, arising almost entirely from air passenger duty plus a small amount of VAT. Aviation is, of course, exempt from fuel duty and from almost all forms of VAT.

  5.8  Allowing for £4 billion infrastructure costs for investment and maintenance of roads, the "surplus" to the Exchequer from road transport was £38 billion in 2002. Aviation receives no (or very little) public investment in infrastructure and so the £1 billion tax which it pays can be taken as its net contribution. Even so, the net tax contribution from road transport is 38 times greater than the tax contribution from air travel.

  5.9  Road transport currently produces 3.8 times the carbon emissions produced by UK aviation. Crude arithmetic on the basis of carbon emissions suggests that aviation would be contributing £10 billion a year in taxation rather than the £1 billion it currently contributes, if it were to be taxed on a similar basis to road transport.

  5.10  It is worth also repeating that the IPCC estimates that the global warming potential of emissions from aviation is 2-4 times that of the carbon emissions alone, because of the effects of water vapour and NOx at high altitudes.

  5.11  Aviation carbon emissions increased from 4.0 MtC in 1990 to about 9 MtC in 2002 and on the basis of traffic growth projections they will reach between 19 MtC and 22 MtC by 2030 and between 40 MtC and 45 MtC by 2050. By that time, UK carbon aviation emissions will have overtaken UK carbon emissions from road transport and will account for about 40% of all UK carbon emissions.

  5.12  The Institute for Public Policy Research (IPPR) estimates that the tax exemptions enjoyed by the aviation industry are equivalent to about £35 per single ticket and that such a tax can be justified on the basis of its environmental cost and the need to develop a basis for sustainable development.

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  Government is prevented from taxing aviation fuel by international treaties dating back to the 1944 Chicago Convention. It will be a long and complex process to undo these restrictions through negotiation at the International Civil Aviation Organisation (ICAO) and even then, unilateral action could damage the UK's competitive position and may even not be effective. At the European level, although there is an EU commitment to "internalise the external costs of aviation", here again, implementation is fraught with practical difficulties and the timetable is not within the hands of the UK Government. But there are three economic instruments which the Government is at liberty to introduce at any time:

  6.1.1  In March 2003 member states agreed the "Community Framework for the Taxation of Energy Products". This specifically permits member states to tax aviation fuel for national use. It also permits the taxation of aviation fuel on journeys between member states where bilateral agreements have been reached.

  6.1.2  Passengers departing from UK airports presently pay Air Passenger Duty ("APD") at the rate of £5 for EEA destinations (broadly, European and domestic) and £10 for destinations outside the EEA (ie transatlantic and long haul). APD is applied at higher rates for first class and business class travel and altogether generates about £950m a year for the Exchequer. The Government could significantly increase the rate of APD without any material impact upon the competitive position of aviation in the UK or any significant scope for avoidance.

  6.1.3  The auctioning of "slots" at major airports.

  6.2  With regard to the use of such revenues, it is not the normal practice for revenue to the Exchequer to be hypothecated and so it would be for the Government of the day to determine priorities for spending (eg schools, hospitals, pensions, public transport) or to decide to reduce the general level of taxation). The only sure point is that £7 billion a year would be much appreciated by the Chancellor.

  6.3  It is however worth noting that in "Aviation and the Environment: Using Economic Instruments" the value attributed to the noise impact of aviation is based on a quantification of the reduction in the value of houses which are near to airports.

  The loss here is, of course, to the homeowner and there is a reasonable case for any revenues collected from the aviation industry on this basis to be returned to the homeowner. A similar—but slightly less direct—link applies in the case of the damage to local air quality that is quantified on the basis of the additional costs of health treatments to people who live near airports.

April 2003


 
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