Examination of Witnesses (Questions 89
- 99)
WEDNESDAY 12 JANUARY 2005
MR MIKE
CLASPER CBE, MR
STEPHEN HARDWICK
AND MR
MATTHEW GORMAN
Q89 Chairman: Could I call the meeting
to order and welcome our first group of witnesses from the British
Airports Authority: Mr Mike Clasper, their chief executive, Mr
Stephen Hardwick their director of public affairs and Mr Matthew
Gorman, the group sustainability manager. Gentlemen, you are welcome
and thank you for your written evidence. I looked with interest
at your evidence and I am grateful for its succinctness, but one
thing which struck me about it, particularly in the context of
BAA being a major user of energy, never mind about the aviation
aspects which we will come onto in a moment, was that you were
long on supportive statements about the need to reduce energy,
in fact you point out that you have doubled your own internal
target in terms of energy reduction and that in itself is very
impressive, but you are very short on telling us how this is going
to be achieved. Perhaps you could deal with my intrigue as to
what programmes you are actually going to adopt, because you do
not actually mention any of those in the evidence.
Mr Clasper: Obviously we felt
that the Committee's major interest was in the whole area of climate
change from the airline activity rather than the airport activity,
but we are basically doing three or four things which we think
will allow us to achieve our targets of reduction. The first area
is that we have a lot of old estate, some of you probably travel
through it, called Heathrow and Gatwick. We are going through
a capital replacement programme of a lot of that equipment, probably
adding up to about £15 million in which we are taking out
old equipment and putting in much more energy efficient equipment,
particularly in things like air-conditioning and heating. The
second thing is that we are planning to use an existing CHP plant
at Heathrow to fuel Terminal 5 which will add to our efficiency.
We are in partnership with the Carbon Trust who are helping us
to design more energy efficient buildings from the outset. Probably
the final area where we have had quite a lot of success over the
last three years is that we have had quite considerable growth
in passengers and new facilities and yet over the last three years
we have had zero growth in our energy usage. There has been some
very basic stuff like sub-metering. Traditionally we had a meter
for the whole site almost and therefore you did not actually know
where you were using energy and therefore where to target reduction.
We have probably put hundreds of meters in our Heathrow estate
for example, so that we can understand where the energy is being
used on a zone basis and then just encourage the basic sort of,
I do not want to make it as simple as this, but the turn-out-the-light
type of activity which produces conservation through behaviour
and therefore partly through our successes and partly through
a belief that we should try and do better, we have dramatically
upped our own internal CO2 target.
Q90 Chairman: You are quite right
in saying that one of the principal areas of concern to the Committee
is the fact that transport is a weak link sector in terms of meeting
greenhouse gas emission targets and also the fact that aviation
is as yet an uncontrolled area in this. One of the problems though
is clearly, you cannot just look at it on a national basis: it
is international. The United States is not a signatory of the
Kyoto Protocol, other serious players are. From your contacts
with the world of aviation, other international airport operators,
what sense do you get that there is an international mood that
aviation should be brought into this whole process? The only show
in town from the evidence supplied seems to be some kind of emissions
trading arrangement specially tailored for the needs of the aviation
industry, but if that is not done on a global basis then it seems
to me to be a rather limp stick.
Mr Clasper: A little bit of history;
I want to be reasonably brief. Probably four or five years ago,
the aviation industry, partly because international aviation emissions
were excluded from the Kyoto Protocol, as you are probably well
aware, was not really talking of it as an issue. Two or three
years ago, we and British Airways in particular started to see
the fact that, despite not being part of the Kyoto Protocol, we
needed to start addressing the issue. Our view is that the best
way of attacking the issue is not actually to have specialised
activity specific to aviation, but almost to mainstream aviation
into, as you rightly say, the start of the EU Emissions Trading
Scheme (EU ETS) in 2008. British Airways and ourselves were relatively
lone voices two to three years ago. Today, we have just seen both
Rod Eddington write saying that he was supportive of joining the
EU Emissions Trading Scheme and Virgin, similarly supportive.
Our expectation is that we have literally just gone through a
policy committee of the collection of European airports where
the recommendation will be that they will support aviation moving
into the EU Emissions Trading Scheme. I think that is a step of
leadership for the world. I think that it is much more likely
that the US will come along eventually if it is a market mechanism
driven solution like emissions trading. We already know that the
international ICAO body has accepted that emissions trading is
the right sort of way of addressing the issue. We have gone from
almost nowhere to a position of leading within the UK and now
leading within Europe and I think that is probably the only way
that will eventually get America involved, but you are more aware
than I am of the fact that getting America involved in this issue
is very difficult on a broader scale than just airlines.
Q91 Chairman: Just before I hand
over the questioning to other colleagues, I had a look at the
websites for Boeing and Airbus this morning to see what they were
saying about reductions in terms of fuel usage. Boeing sort of
say "Give us any problem in the world and we'll fix it",
they seem to be very optimistic about it, Airbus talk about different
types of construction of aircraft with the aim of reducing all-up
weight as a way of reducing fuel usage. How do we deal with the
paradox that if you go into emissions trading, it is effectively
adding a price in some way to the cost of air travel in the hope
that you will damp down the usage. However, there does seem to
be a tremendous demand pressure: more people want to fly, cheap
airlines are encouraging a tremendous growth in the use of the
aeroplane as a transport medium, both within the United Kingdom
and in the rest of the world, particularly in terms of Europe.
There seems to be a danger that whatever technological improvements
the airline manufacturers and engine makers may be able to make
over quite a long time period, will be cancelled out by an almost
insatiable demand to travel. What should we do about the insatiable
demand and do you think that it does block out the technology
contribution?
Mr Clasper: I do not like to answer
in three parts, because I know you like brevity, but there are
three elements to what you have just asked. The first one is that
there is a tremendous inherent driver for fuel efficiency that
is in the basic cost of the fuel that would encourage innovation
and you are right, aircraft manufacturers are working on composite
technologies instead of aluminium to reduce wear etcetera, flying
patterns and so on, which will be further encouraged by the cost
of carbon on top of the basic cost of fuel. That is the first
point. The second point is that it is not just the burning of
carbon, but it is also some of the upper atmosphere effects. Those
upper atmosphere effects, unlike carbon, are not a law of physics
given. You need a lot of energy to get a plane in the air, but
once you are in the air it is possible actually to influence dramatically
the upper atmosphere effects, but it requires long-term scientific
understanding and technology investment to be able to achieve
that. If we go down this route, there is a real possibility that
we can get, not just continuous improvement, but actually step
change in the climate change effect of any given flight. The third
point I would make is that there is tremendous demand for air
travel for all of the social and economic benefits that it creates
in a global world and we do want to make sure that any measures
in this sort of area, mainstream aviation, do not cause a distortion
of economic activity. To price away the demand to solve the problem
would require a level of pricing that would dramatically distort
the market. Therefore, you are right, as a pure demand measure,
there is almost nothing that is going to solve the problem and
that is why a smart set of policy instruments is a much better
way than some crude taxation process.
Q92 Joan Ruddock: You are suggesting
the distortion of a market, but is the cheap airline industry
in itself not a distortion of a market?
Mr Clasper: You would only say
the market was distorted if there were some form of mass subsidy
and you could argue, I will use as an example, that the American
market at the moment is distorted by the fact that a lot of US
airlines are in Chapter 11 and some of those processes are a distortion
of the normal economic effect. If you look at the low cost airlines,
the reason that they are able to offer these low prices is not
a distortion caused by subsidy; it is the efficiency of their
operational practices which has allowed them to offer these lower
prices. Now, what I do agree with is that if there is an external
cost, like the one we are talking about now, that should also
play in the equation, but it should play in the equation in a
way which is mainstreamed with the rest of the economy. I would
argue, and do argue, and some of my airline business partners
might not agree with me, that that external cost should come into
aviation and it should come into it in a market efficient form
like emissions trading. I will not affect the fundamental shift
that has occurred in the aviation industry through outstanding
efficiency and operational practices. The flights would still
be cheap but not very cheap.
Q93 David Taylor: The existing environment
market, through which aviation flies is seriously distorted at
the moment is it not? You are a polluter that is not paying at
all.
Mr Clasper: Not paying at all
for what?
Q94 David Taylor: For the climate
change and other effects that you are creating and the social
and environmental issues that they have.
Mr Clasper: I do not know how
you would describe that we are not paying in any different way
that any other—
Q95 David Taylor: It is a largely
tax free zone over alternative forms of transport.
Mr Clasper: Well no, versus other
alternative forms of transport, aviation is the only one within
the UK, and we could get you actual numerical data on this, I
do not have it with me, aviation is the only form of transport
in the UK that is actually a net contributor to the exchequer.
All other forms of public transport in the UK are net subsidised
by the exchequer.
Q96 David Taylor: I am dubious about
that, but we are not here to argue the toss on that. Flights up
to say 1,000 kilometres, which could easily in many circumstances
be provided by high speed rail links within the UK and within
Europe are surely an example of an alternative that would have
a much less damaging environmental effect than the alternative
flights which your airports—
Mr Clasper: I do not know how
long we want to go down this track, but if you were to look at
the way that rail travel is subsidised within the UK relative
to air travel, you would find that already there is a very strong
subsidy to encourage those 1,000 kilometres rail travel. For example,
we are a total private sector company. There is not a single aspect
of the infrastructure that aviation uses that is not paid for
by the passenger, not a single aspect. The whole of Terminal Five
which is being built for £4.2 billion will be paid for by
the passenger.
Q97 David Taylor: Your environmental
costs are paid for by the taxpayer, and the taxpayer and the passenger
are not necessarily coincidental groups.
Mr Clasper: I would agree with
the fact that the whole of the economy has to take a look at its
external costs and wherever possible internalise them. What I
am advocating very strongly, and I am proud that BAA has led,
is that that approach should be mainstreamed in the EU Emissions
Trading Scheme. As far as I understand it, the climate does not
understand the difference between CO2 from a power
station versus CO2 from an airline. Therefore by mainstreaming
it, we are then paying our external costs and that then needs
to be brought into the pricing equation. I think it is very important
that we all understand though, that versus other forms of public
transport, aviation is not subsidised in the UK, it is a positive
contributor to the exchequer and therefore provided these external
costs of CO2 are internalised for everybody, including
the rail industry, then any distortion of the choice will be eliminated.
Q98 David Taylor: I think aviation
tends to overstate its contribution to the economy, and understate
its costs to the environment. We will have to move on from that.
Thirteen months ago, Alistair Darling launched the White Paper
on the future of air transport in the chamber just a few yards
away and that anticipated almost a tripling of passenger numbers
between 2000 and 2030. Set against that sort of backdrop, you
are still suggesting that you can achieve a 15% reduction in CO2
emissions. How on earth are you going to do that?
Mr Clasper: We made a commitment
that by 2010, we will have reduced our emissions by 15% over 1990,
which is where the whole thing has been benchmarked. That does
assume that over that time period our business in the UK, the
number of passengers that we serve, will grow by four to 5% a
year. We are fairly confident of that target. I do not like setting
targets in an important area like this that you know you can make
for sure, but we do have the programmes and investment plans that
we think will deliver that sort of efficiency.
Mr Hardwick: And there is one
element that Mike missed out in his earlier summary and that is
that we are sourcing 20% of our energy from renewable sources.
That is part of our commitment to reducing our emissions.
Q99 David Taylor: These are the airports
themselves, we are not talking about aviation generally?
Mr Hardwick: The airports.
Mr Clasper: We are talking about
the point the Chairman raised, that was the airports themselves,
not the airlines.
|
