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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