Memorandum submitted by BAA plc (U5)
BAA is the world's leading airports operator.
In the UK, BAA owns, develops and operates seven airports: Heathrow,
Gatwick, Stansted, Southampton, Edinburgh, Glasgow and Aberdeen.
Overseas we either manage contracts at, or have interests in,
airports in the USA, Australia, Italy, and Oman.
BAA's submission will focus primarily on aviation
and climate change, which is where BAA's expertise and efforts
can add most value to the debate on policy development.
1. EXECUTIVE
SUMMARY
1.1 BAA believes in the long-term responsible
and sustainable growth of aviation. BAA has two sets of interests
in climate change policy: in addition to being a major player
within the aviation industry, we also have substantial energy
interests, as one of the UK's top 20 consumers of industrial energy.
1.2 BAA supports the UK Government's leadership
position on climate change and recognises the importance of effective
international action to address this issue. We support the delivery
of targets adopted by Governments within the framework of the
Kyoto Protocol, and favour the mainstreaming of all aviation within
EU public policy on climate change, noting that at present only
climate change emissions by airports and domestic air transport
are included within the Kyoto targets; international air transport
emissions are not currently included.
1.3 BAA supports the UK Government's Air
Transport White Paper commitments both to responsible expansion
and to addressing aviation's climate change impact through linking
intra-EU flights with the EU Emissions Trading Scheme by 2008,
a declared priority for the UK Government's 2005 EU presidency.
1.4 While aviation's current climate impact
is significant (11% of the UK's total climate impact), it is nevertheless
still smaller than the climate impact arising from other sectors
of the economy, such as power generation (29% of UK's total climate
impact in 2000). However, BAA supports the precautionary approach
to climate change policy, and accepts the responsibility of aviation—like
all industries—to address its climate change impacts.
1.5 BAA believes that industrial climate
change impacts are most effectively dealt with by harnessing market
mechanisms and corporate self-interest, where possible, since
these are powerful drivers and are likely to produce faster, better
results than blunt regulation. BAA rejects policy approaches for
aviation which are aimed simply at reducing demand by raising
the cost of flying through taxes and charges, the revenue from
which simply flows to Government and is not hypothecated to addressing
the impacts. We believe the right approach, as in all industries,
is to target the impacts of the activity, rather than the activity
itself. We recognise that the consequence of a regime of smart,
well-targeted instruments for aviation may be higher costs and
reduced demand.
1.6 The UK aviation industry, most notably
BAA and BA, has led the EU debate on aviation's climate change
impacts and obligations, and BAA believes that industry co-operation
should be built on by policy-makers and Governments. BAA believes
that the debate is moving in the right direction in the EU, but
that there is weak global political will to tackle this issue,
so BAA believes that the Government should focus on the wider
international arena through the G8 concurrently with addressing
aviation within the UK and EU.
1.7 BAA believes EU-level action can provide
an effective interim policy response, as a first step towards
the development of more co-ordinated global frameworks. We believe
that the EU is an appropriate level for action, since unilateral
action by individual EU Member States would raise market distortion
and competitiveness issues.
1.8 BAA will be participating in the EU
Emissions Trading Scheme from January 2005, since domestic airport
emissions arising from substantial power use (energy infrastructure
in excess of 20 megawatts) are included in the Scheme.
1.9 We believe that partial integration
of intra-EU flights with an environmentally-credible EU Emissions
Trading Scheme (where airlines can buy EU emissions allowances
from the open EU market, but not sell to that market) is deliverable
by 2008, and that full integration (where both buying and selling
are allowed) is achievable by 2013.
1.10 We accept the IPCC assessment that
aviation's total climate impact is some 2.7 times that due to
CO2 alone, due mainly to the climate-warming effects
of NOx and water vapour emissions (contrails) in the atmosphere
and to cirrus cloud enhancement effects. We further accept that
aviation should address these total climate change impacts. However,
we urge a smart, targeted approach to this, which may require
a mix of measures, to avoid unintended consequences of a measure
adopted to tackle one impact (CO2) leading to increases
in another (NOx), where there is a known technological trade-off.
1.11 For the 2008-12 phase, the allocation
methodology linking aviation with EU emissions trading should
therefore be on the basis of both aircraft CO2 and
NOx emissions. It is not yet possible to effectively differentiate
aircraft operations in terms of the en-route climate impacts of
aviation contrails and cirrus cloud enhancement, or yet to resolve
these impacts. We believe that the long-term future of aviation
and the potential to reduce aviation's climate change impacts
will therefore be best served by a programme of international
research, funded by the aviation industry, to find climate solutions
within the sector.
1.12 This is consistent with BAA's belief
that all industries should meet the external costs of their activities—but
only once. Therefore, once smart, effective policy instruments
(such as the EU Emissions Trading Scheme), which are targeted
at reducing aviation's specific impacts, enter into force and
cover aviation's external costs over time, the existing blunt
instruments, such as the UK Air Passenger Duty (APD), should be
phased out, as they are currently intended to capture some or
all of aviation's external costs. This approach could also work
to address the climate impact of long-haul flights. For example,
reduced rates of UK Air Passenger Duty (APD) could be applied
to airlines agreeing, on a voluntary basis, to link their long-haul
flights with the EU emissions trading scheme to deliver specific
climate change targets.
2. BAA AND THE
CLIMATE CHANGE
DEBATE
2.1 BAA is the world's leading airports
operator. We believe in the long-term responsible and sustainable
growth of aviation. Our position in the industry—planning
airport infrastructure developments over 30-year time horizons—requires
us to take a long-term view.
2.2 BAA has two sets of interests in EU
climate change policy. In addition to being a major player within
the aviation industry, we also have substantial energy interests,
as one of the UK's top 20 consumers of industrial energy.
2.3 BAA supports the UK Government's leadership
position on climate change and recognises the importance of effective
EU and international action to address this issue. We support
the delivery of targets adopted by Governments within the framework
of the Kyoto Protocol, and favour the mainstreaming of all aviation
within public policy on climate change, noting that at present
only climate change emissions by airports and domestic air transport
are included within the Kyoto targets; international air transport
emissions are not currently included. While aviation is perceived
as receiving special treatment, we believe there remains a material
risk that national governments, or the EU, may seek to apply blunt
taxation to reduce demand, and curb the growth of aviation's emissions,
thereby putting at risk the substantial economic and social benefits
that aviation brings.
2.4 BAA is committed to making a significant
contribution to reducing greenhouse gas emissions arising from
energy use at our seven UK airports, through a new CO2
strategy announced in July 2003. Our aim is to reduce absolute
CO2 emissions from energy consumption by 15% by 2010,
compared to 1990 levels. This objective is particularly challenging
in the face of passenger numbers rising substantially over the
same period. The strategy is set to save 110,000 tonnes of CO2
every year. This objective represents a step change in targets
from the company's previous commitment of a 5% reduction on 1990
levels.
2.5 We believe that airports are on the
public frontline on all of aviation's negative impacts—principally
climate change, local air quality, noise, and surface access congestion.
While we do not fly the planes, we firmly believe that unless
we take aviation's negative impacts seriously, and deliver performance
improvements, airports will not be allowed to grow. BAA therefore
accepts its responsibility to lead change within the industry,
talking with our airline customers, our communities, and our other
stakeholders.
2.6 During 2003, therefore, BAA led a process
of engagement with Government, airlines, aerospace manufacturers
and environmental NGOs to inform and develop our thinking on a
smart approach to addressing aviation's climate impact, as an
alternative to increasing blunt taxation. Building on this dialogue,
we updated our public policy position on aviation and climate
change in October 2003.[1]
3. AVIATION AND
CLIMATE CHANGE:
A BAA PERSPECTIVE
Climate change in context: sustainable development
and aviation
3.1 BAA believes the debate on aviation
and climate change needs to be seen in the wider framework of
UK, EU and international commitments to sustainable development.
Like many companies, we work within the UK Government's policy
approach, which entails meeting four objectives at the same time:
— maintenance of high and stable levels
of economic growth and employment;
— social progress which recognises
the needs of everyone;
— prudent use of natural resources;
and
— effective protection of the environment.
3.2 BAA believes that responsible air transport
and airport growth should take place only where it is in accordance
with these sustainability objectives. BAA further accepts that
there are certain known environmental limits, such as the earth's
capacity to handle greenhouse gases, which demand a clear and
specific response.
3.3 However, in keeping with the emphasis
placed by a sustainable development framework on policy integration,
BAA believes the debate on aviation needs to recognise both the
realities of environmental limits and aviation's socio-economic
benefits. Economically, aviation plays a crucial role in promoting
the high-knowledge and high-value-added industries, such as electronics,
pharmaceuticals, insurance, and finance.
3.4 Socially, air travel is a facilitator—for
people to visit friends and family scattered around the world,
to seek new cultural experiences, to learn, to visit parts of
the world inaccessible to their parents or grandparents. Sustainable
development rightly places emphasis on improving quality of life
for all. In this context, the fact that aviation is now accessible
to most people, at least in the more prosperous countries, is
both significant and welcome.
3.5 BAA regards the emphasis placed by a
sustainable development framework on policy integration as fundamental,
and we therefore reject approaches to tackling aviation's environmental
impacts, including greenhouse gas emissions, which are aimed simply
at reducing demand by raising the cost of flying through taxes
and charges. However, we do recognise that the consequence of
a regime of smart, well-targeted instruments may be higher costs
and reduced demand. We believe this approach—of targeting
the impacts of the activity rather than the activity itself—is
the right approach.
Climate change and aviation: the overall challenge
3.6 BAA supports the UK Government's leadership
position on climate change. We note the commitment of the UK and
Swedish Governments to a target of 60% CO2 emissions
reductions against 1990 levels by 2050. Moreover, BAA notes the
EU's publicly stated long-term climate change policy objective:
"a long-term objective of a maximum global
temperature increase of 2 Celsius over pre-industrial levels
. . . In the longer term this is likely to require a global reduction
in emissions of greenhouse gases by 70% as compared to 1990, as
identified by the Intergovernmental Panel on Climate Change (IPCC)"[2]
3.7 Globally, the IPCC analysis on aviation
indicates that aviation is responsible for approximately 3.5%
of total human radiative forcing, or climate change impact[3].
For the UK, in the year 2000, aviation's total climate impact
amounted to about 11% of the UK's total climate impact. Thus,
while aviation's current climate impact is significant, it is
nevertheless still smaller than the climate impact arising from
other sectors of the economy, such as power generation (29% of
UK's total climate impact in 2000)[4].
3.8 However, BAA recognises that aviation's
climate impact is set to grow, and grow significantly, while a
UK economy-wide total reduces in line with the requirements of
the earth's global environmental capacity, and that in line with
the precautionary principle, aviation must accept its responsibility
to address the climate effects of this growth. In addition, as
recognised by Governments at the Johannesburg Sustainable Development
Summit, the priority to meet key human development needs such
as clean water, food, and sanitation (in both developed and developing
countries) will rightly use up a significant proportion of the
earth's environmental capacity.
3.9 BAA believes there is a powerful economic
and social case for aviation to take up some of the remaining
capacity, given the absence of short-term technological solutions
within the aviation sector, compared with the availability of
solutions in other sectors of society. Importantly, this would
only be permissible by users of aviation paying for emissions
reductions (clean development) in other economic sectors—in
developed countries, in transition economies, or in developing
countries.[5]
Solutions to aviation's climate change impacts
3.10 BAA believes that effectively addressing
climate change requires action at all levels—local, regional,
national, EU and international. While climate change is a global
problem and unified global action is the ideal, BAA recognises
that regional political and trade blocs such as the EU have a
key role in shaping public policy on climate change, and BAA is
pleased that the EU is engaging seriously and constructively on
the issue of aviation and climate change. In particular, EU-level
action can provide an effective interim policy response prior
to the development of more co-ordinated global frameworks.
3.11 BAA supports the EU Emissions Trading
Scheme, and points out that domestic airport emissions arising
from substantial power use (energy infrastructure in excess of
20 megawatts) are already included in the first phase of the EU
Emissions Trading Scheme from January 2005. To meet our obligations
under the EU Emissions Trading Scheme, BAA has therefore registered
three sites: the two Gatwick terminal buildings and the Heathrow
central boiler house, which supplies Terminals 1, 2 and 3. In
addition, we would like to register a fourth site (Terminal 5)
for entry into the scheme during 2005-06. The EU Emissions Trading
Scheme does not apply to our other sites, as the energy plants
are below the threshold of 20 megawatts.
3.12 BAA very strongly supports the UK Government's
objective to try to extend the EU Emissions Trading Scheme, by
linking intra-EU flights within the scheme by 2008, and we welcome
the Government's intention to make this a priority for the UK's
EU presidency in 2005. We believe that this will help to bring
aviation within the club of climate-responsible industries. We
believe that all intra-EU flights should be linked with the EU
Emissions Trading Scheme, irrespective of the nationality of the
airline (including EU and non-EU airlines). The full legal allocation
of international aviation's climate change impact to country governments
should therefore be urgently addressed, so there is clarity over
which countries are responsible for which aviation emissions.
3.13 BAA believes that partial integration
of intra-EU flights with EU emissions trading (where airlines
can buy EU emissions allowances from the open EU market but not
sell to that market) is deliverable by 2008, and that full integration
(both buying and selling) is achievable by 2013.
3.14 BAA believes that an environmentally-credible
emissions trading scheme should embrace a number of key principles,
and these should guide EU public policy on addressing aviation's
climate change impacts. These principles include deliverability,
environmental effectiveness, economic efficiency and equity.
3.15 BAA believes that linking intra-EU
flights with EU emissions trading must be seen as a first step
towards including all aviation within a global system of open
emissions trading. Parallel pressure should therefore be brought
by EU member states on the US, Russia, and other non-EU regions
across the whole climate change agenda, including on aviation.
BAA welcomes the UK Government's declared intention to use its
Presidency of the G8 to press for further international progress
on the climate change agenda, and hopes that this will lead to
non-EU nations taking a more constructive, international approach
to resolving the issue of aviation's climate change impacts.
3.16 The Future of Air Transport White
Paper highlighted:
"The Intergovernmental Panel on Climate
Change report Aviation and the Global Atmosphere included a central
estimate that the impact of aviation emissions was 2.7 times the
impact of CO2 alone" [due mainly to the climate-warming
effects of NOx and water vapour emissions (contrails) in the atmosphere
and cirrus cloud enhancement effects] . . . "A decision would
be needed on how the extra impact of aviation should be taken
into account when designing the sector's participation in the
trading regime"[6].
3.17 To the maximum extent practicable,
BAA would like to see the allocation methodology take a smart,
targeted approach and not adopt an allocation methodology based
simply on multiplying CO2 emissions by a radiative
forcing factor of 2.7. We believe that a CO2 x 2.7
approach could send perverse incentives to the aviation industry
to reduce CO2 at the expense of other non-CO2
climate impacts. For instance, there is a known trade-off between
CO2 and NOx, and it would be perverse to encourage
an increase in NOx in order to achieve reductions in CO2.
In addition to this being a problem from a climate change perspective,
it could also compromise progress towards the delivery of EU public
policy objectives on NOx and local air quality.
3.18 BAA has therefore suggested that, for
the 2008-12 phase, aviation should be linked with EU emissions
trading on the basis of both aircraft CO2 and NOx emissions.
Provided airlines were prevented from selling Aviation Allowance
Units into the open EU trading market, the targeting of both CO2
and NOx would not compromise the EU Emissions Trading Scheme's
compatibility with the Kyoto Protocol. It should be noted that
this is true even though NOx is not yet legally designated as
a greenhouse gas within the Kyoto Protocol basket.
3.19 From 2013, BAA would also like to see
aviation's contrail and cirrus impacts directly, separately, and
fully integrated into EU emissions trading. The legal designation
of aviation's non-CO2 impacts should be prioritised
as a step towards enabling the direct, separate, and full integration
of aviation's CO2 and non-CO2 impacts within
emissions trading. However, while it is possible to differentiate
aircraft in terms of CO2 and NOx emissions performance,
further scientific research is necessary in order to move towards
differentiating aircraft operations in terms of contrails and
cirrus effects. Without advances in scientific understanding,
contrail and cirrus impacts could only be incorporated within
EU emissions trading on the basis of an averaged "per kilometre"
impact. BAA would therefore welcome international research, funded
by the aviation industry, to develop a predictive system capable
of assessing, to a reasonable degree of accuracy, the CO2,
NOx, contrail and cirrus impact of any given flight.
3.20 We strongly oppose alternative policy
instruments of blunt taxes and charges, where the revenue raised
flows into the public purse for general government expenditure
and is not exclusively and entirely hypothecated to purchasing
emissions reductions in other parts of the economy. Such instruments
offer limited positive environmental benefit, impact negatively
on competitiveness, and essentially act to tax away demand and
the positive benefits that aviation brings.
CONCLUSIONS
3.21 Aviation has a small, but significant
and growing impact on climate change, and this must be addressed.
3.22 Aviation should be brought within the
mainstream of industry and climate change policy within the UK
and the EU, as quickly as practicable. The most effective way
of achieving this is for intra-EU flights to be linked with the
EU Emissions Trading Scheme from 2008.
3.23 EU policy to address aviation's climate
change impacts is a welcome and necessary first step to global
solutions, but the UK Government and the EU must rigorously pursue
this agenda internationally through the G8 and other bodies.
23 September 2004
1 "Aviation and climate change: A BAA perspective",
October 2003. The position can be downloaded by clicking on "Aviation
and climate change seminar" within: http://www.baa.co.uk/main/corporate/sustainable_development_frame.html Back
2
Article 2, the 6th EU Community Environment Action Programme,
adopted in co-decision in 2002. Back
3
Based on 1992 data. IPCC (1999) Aviation and the global atmosphere.
Cambridge University Press. Back
4
2000 figures, based on: Climate change: The UK Programme, Defra,
February 2001 and Aviation and Global Warming, DfT, January 2004. Back
5
The Kyoto Protocol (KP) provides for three "flexibility
mechanisms", to assist Annex B countries (those taking on
legally binding emissions reduction targets) to deliver against
their targets. These flexibility mechanisms are: Joint Implementation
(article 6 of the KP), the Clean Development Mechanism (article
12 of the KP), and Emissions Trading (article 17 of the KP). It
is recognised that the JI and CDM mechanisms will help facilitate
clean development in transition economies and developing countries. Back
6
Paragraph 8, Annex B, The Future of Air Transport, Department
for Transport, 16 December 2003. Back
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