Select Committee on Environmental Audit Written Evidence


Memorandum from the United States Federal Aviation Administration

  1.  The Federal Aviation Administration (FAA) is the United States counterpart to the United Kingdoms Civil Aviation Authority, regulates aviation noise and emissions (in cooperation with the U.S. Environmental Protection Agency) in the United States, and represents the United States at the Committee on Environmental Protection (CAEP) within the International Civil Aviation Organization (ICAO).

  2.  Thank you for the opportunity to provide some information on the matters before the Committee. In addressing the use of economic instruments in dealing with aviation's impact on the environment, we believe a number of points should be kept in mind.

  3.  In our view, there remain tremendous uncertainties in the science dealing with the nature and impacts of CO2 on climate change. To mention a few issues, there remains scientific debate on the level of observed warming, the sensitivity of the earth's climate, water vapor feedback mechanisms and impact, the impact of NOx versus CO2, and the size and role of the anthropogenic portion of the greenhouse effect vs. other mechanisms. Further, estimates of the impact of aviation CO2 are imprecise because of uncertainties in predicting the amount of emissions that commercial aviation will produce in the future as well as the inaccuracies of current methods for quantifying their impact on the atmosphere.

  4.  Translating uncertainties into models which try in turn to transform it into economic valuation only increase the scope for ambiguity and error. Economic models of CO2 costs are very sensitive to selection of discount rates and intergenerational equity, assumptions about technological change, differing valuations of the actual damage incurred from increases in CO2 as well as the benefits of removing CO2.

  5.  The uncertainties in basic understanding of CO2 impacts and economic valuations only increase once you place this in an international setting. The economic valuation for carbon emissions used in the UK Department of Transport report does not adequately reflect the range of uncertainties in such a valuation. Studies, including those produced in the United Kingdom, show a much wider range than indicated in the Department of Transport report. For example, the £70 per ton of carbon suggested valuation for year 2000 can be converted into $29 per ton of carbon dioxide. According to some of the literature published globally over the past decade, estimates of CO2 emissions costs range from $2-$127 per ton before adjusting for a discount rate. Depending on the discount rate employed, these values would then change yet again. As can be easily seen, there is no general international consensus on the economic valuation of CO2 emissions that could be applied in internalizing any externality.

  6.  Further, the Committee of Aviation Environmental Protection (CAEP) of the International Civil Aviation Organization (ICAO), of which the United Kingdom is an active participant, is currently studying the use of market-based options. This includes emissions charges as well as voluntary agreements and emissions trading approaches as a means for addressing environmental cost issues related to CO2 emissions from aircraft engines. CAEP has reached no conclusions from its studies as it is dealing with the many complex issues mentioned above as well as intricate legal and administrative issues that arise in grappling with the international aviation system. Consequently, possibly applying a CO2 charge to international aviation activity is premature. What should be noted here is that prior ICAO cost/benefit analysis has shown that charges were as much as 40 times more expensive than an "open" emissions trading regime to achieve the same emissions reductions.

  7.  It seems ill-timed to institute a CO2 charge on the aviation industry—whether judged from a financial standpoint or their actual CO2 emissions. Having lost over $20 billion in the last two years and enroute to another staggering loss, this does not appear to be an appropriate time to place an additional cost on the industry, especially when CO2 emissions are already down. While many forecasts had assumed aviation to be the fastest growing source of transport CO2 prior to September 11, changes in operations and fleet structures have resulted in CO2 emissions from aviation actually decreasing over the past two years. For example, compared to 2000, the U.S. commercial fleet consumed 12 per cent less fuel in 2002. Given the size of the U.S. aviation sector in the world, it is not hard to see that this resulted in a substantial reduction in CO2 emissions from aviation worldwide.

  8.  If the United Kingdom judges some action is required, I believe it should confined its application to its own aviation sector. For example, a CO2 emissions charge could be applied to its domestic commercial airline operators—just as in the United States we have had a fuel tax applied to our domestic operators for the last decade. In the meantime, we look forward to continuing to work with the United Kingdom within the ICAO process to study and develop guidance on a variety of market-based options to address cost-effectively CO2 emissions reductions internationally.

April 2003

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