Memorandum submitted by WWF
WWF's submission addresses our views on:
2. Carbon capture and storage (CCS).
3. The Environmental Transformation Fund.
1. AVIATION AND
THE PBR
Aviation is a new area of engagement for WWF-UK
and we welcome this opportunity to set out our views on the approach
the Government has taken in the Pre-Budget Report 2007. Below
we briefly outline our vision for the aviation sector, followed
by detailed comments on the changes announced in the PBR.
A vision for a sustainable aviation sector
Aviation is the fastest-growing contributor
to the climate change in the UK and as such presents a huge threat
to the Prime Minister's vision for a low-carbon UK.
In order for the UK to play its fair part in
limiting global temperature rise to 2 deg C, the latest climate
science tells us the UK will have to make carbon dioxide reductions
of at least 80% on 1990 levels by 2050. Together with the RSPB
and the ippr, WWF-UK recently published an analysis of how the
UK could achieve such a reduction target (which included the emissions
from aviation), using the macro-economic models behind the Stern
Review and the 2007 Energy White Paper.
Emissions from aviation (uprated using a multiplier
of 2.5 to account for non-CO2 effects) presented a
huge challenge to meeting these targets, due to the rapid growth
and high abatement costs of the sector. The models suggested that
it would only be possible to achieve the necessary overall reductions
at reasonable cost if aviation emissions were capped at 2010 levels.
This represents a measure of special treatment of the aviation
industry, as it requires very deep decarbonisation of virtually
every other sector. Aviation is still able to grow after 2010
under this approach, but growth must be matched by efficiency
improvements to ensure that emissions do not increase.
The requirement to stabilise aviation emissions
at 2010 levels frames WWF's approach to the sector. We support
the inclusion of aviation emissions within the EU's Emissions
Trading Scheme (ETS), but are concerned that the ETS will not
provide a robust enough carbon price to manage demand, or accelerate
technological improvements, in the short-to-medium term. The result
is likely to be lock-in to long-lived, high carbon infrastructure,
with the proposed expansion of Heathrow being a perfect example:
a key part of the Government's justification is that ETS "caps"
aviation emissions, and the aviation industry have even claimed
that the runway is therefore effectively "carbon neutral".
It may take a decade or two before carbon markets
are mature enough to ration demand effectively. In the meantime,
WWF believes that we need urgent action to constrain the growth
in aviation emissions. In addition to demand management through
taxation (explored in more depth below) WWF is calling on the
Government to:
— set a moratorium on airport expansion;
— invest more in alternatives to air
travel (in particular high-speed rail and video-conferencing);
and
— promote measures to reduce demand
through behavioural change. The Government, for example, should
promote awareness of the environmental impact of flying, for instance
by requiring advertisements for flights to display the associated
carbon emissions, as happens with cars.
Aviation and the 2007 PBR
Aircraft also contribute to climate change
through high-altitude emissions of nitrogen oxides, contrails
and the formation of cirrus clouds. The Government's policy, as
set out in the 2003 Air Transport White Paper, is that aviation
should pay the costs it imposes on society at large. The Government's
priority has been to work to include aviation in the EU Emissions
Trading Scheme ... (7.54)
It will not be possible to assess the true scale
of these costs without assessing the true scale of aviation's
non-CO2 effects. There is inconsistency across Government
in that the Treasury uses a multiplier of 2.5 (PBR 2006 7.82),
whereas the Department for Transport (in its recent consultation
on the proposed Emissions Cost Assessment[2])
used a "central case" multiplier of 1.9. No multiplier
is used in Defra's advice to businesses on calculating carbon
footprints (and presumably the same methodology is used for calculating
the Departments' own emissions).[3]
Crucially, the UK Government has never backed the use of a multiplier
on aviation emissions in the EU Emissions Trading Scheme. Without
a multiplier, the climate impact of aviation growth will be only
partially offset by the purchase of credits from ground-based
sources.
WWF recognises that the science of aviation's
non-CO2 impacts is a complex topic. However, the precautionary
principle states that scientific uncertainty should not be used
to justify inaction where the impacts are potentially large. An
effect that potentially quadruples the impact of one of the fastest-growing
contributors to climate change clearly falls into this category.[4]
WWF recommends that the Government commissions urgent research
to derive a policy-robust multiplier, and to apply this multiplier
consistently across its aviation policy.
Climate change is not the only cost aviation
imposes on society. Aircraft noise blights the lives of many thousands
of people in the UK. The Government recently published a comprehensive,
peer-reviewed study into annoyance caused by aircraft noise,[5]
including monetisation of these effects. However, the Government
appears to be distancing itself from the conclusions of this report—perhaps
because it identified a lower threshold for annoyance than that
used in current policy. Current policy is based on non-peer reviewed
studies that are over 20 years old, so it can hardly be said that
the present study is insufficiently robust for policy purposes.
WWF is keen to know the Government's reasons for not accept the
findings of this report, which has implications both for aircraft
noise policy and for fiscal policy.
The Government believes that domestic air
passenger duty (APD) is playing a valuable role in encouraging
behavioural change, reducing emissions from aviation and ensuring
that air travel makes a fair contribution towards the Government's
spending priorities, including public transport and the environment.
(7.55)
WWF welcomes the Government's recognition that
aviation should make a contribution to public revenue above and
beyond covering its environmental costs, and that demand management
through behaviour change should be an objective of taxation, not
merely increased efficiency (ie that taxation should have both
supply and demand-side effects).
If taxation is to have a significant effect
on behaviour, it will have to be raised considerably overall.
The proposed move to per-flight taxation is likely to reduce public
opposition to such an increase, as the focus is on the polluter,
not the passenger. But it will also be important to demonstrate
to the public that the revenue is being put to good use—polls
have repeatedly shown public acceptance of "green" taxes
if the money raised is spent on the environment. While WWF understands
the Treasury's resistance to the hypothecation of tax revenues,
significant tax rises in one area will have to be part of a package
including significant investment in carbon-saving measures elsewhere.
WWF believes that encouraging alternative transport options will
be a key part of reducing the unsustainable growth in aviation.
The Government, therefore, should provide adequate financial support
for domestic rail. Such a shift in resources would be progressive,
as aviation users tend to be wealthier than bus or train users.
Alternatively, aviation revenues could be used to fund tax cuts
in unrelated areas, such as income tax. The numerous possibilities
are beyond our remit, but WWF would stress that any such tax balancing
must be done in a totally transparent manner, to dispel widespread
public and media suspicion of green taxes as "stealth taxes".
Following an earlier consultation, with effect
from 1 November 2008, the Government will correct an anomaly to
ensure passengers on "business class only" flights are
liable for the standard rate of APD. (7.55)
WWF welcomes this change.
Therefore from 1 November 2009, the Government
proposes to replace APD with a duty payable per plane rather than
per passenger, and will begin a consultation shortly. The consultation
will consider ways to make aviation duty better correlated to
distance travelled and encourage more planes to fly at full capacity.
In introducing this duty, the Government will also take into account
the impact on freight and transit and transfer passengers, consistent
with its wider economic and social objectives. (7.56)
WWF welcomes this sensible change, which has
cross-party support. The tax should include freight aircraft (although
it may need to be phased in to avoid a shock to business models),
as well as private jets used commercially. WWF does not anticipate
any serious impact on transit or transfer passengers (currently
exempt from APD) as these do not make up a significant proportion
of passengers on any one flight, and so WWF would oppose any special
dispensation for them.
WWF believes that it is important that the new
per plane tax is set at the right level and designed to encourage
the most optimum environmental outcome.
WWF has noted above that the tax would need
to be raised overall to affect behaviour, and WWF believes per-flight
taxation is better suited than per-passenger taxation, as it is
less open to negative emotional interpretations. WWF recommends
that increases are stepped annually (an "escalator"),
to give airlines time to plan and to reduce the newsworthiness
of each increase.
The ideal tax for aviation (to encourage the
greatest environmental outcome) would be a C02 tax. Carbon dioxide
emissions, however, are directly proportional to the amount of
fuel burnt and a fuel tax is currently prohibited on international
flights by bilateral air service agreements.[6]
WWF is in favour of a fuel tax for domestic flights and would
encourage the Government to explore the possibilities of bi- or
multi-lateral fuel taxation with progressive European partners.
The Government's proposed per plane tax should be fashioned to
mimic the benefits of a C02 tax by addressing three factors: distance
flown, size of aircraft, and engine efficiency. Multiplying these
factors, as described below, together would give a number related
(but not directly proportional) to fuel burn and should form the
basis of the tax.
Distance: WWF recommends that the bands in
the per plane tax are more differentiated than the current short/long
haul system. The emissions from a trip to Australia are around
three times those of a trip to New York, but both are currently
classed simply as long-haul. WWF does not, however, believe the
tax should be proportional to distance, as this could result in
a very low tax on short-haul flights, which are more carbon-intensive
per passenger km, more easily substituted for other modes of travel,
and have (approximately) the same noise impact as long-haul flights.
A very high tax on the longest flights would also risk encouraging
passengers to switch flights at a near European destination. A
balance needs to be struck—perhaps three bands would be
most appropriate.
Size of aircraft: A key advantage of per-flight
taxation is that it will discourage half-empty flights. To maximise
this benefit (by encouraging denser seating configurations), the
tax should be varied according to the available capacity
of an aircraft—the standard measurement of "payload"
(in tonnes) is suitable.
Efficiency: Ideally the tax should encourage
the purchase of newer and cleaner planes. Although it would
complicate the tax slightly, WWF feels that it is important for
this incentive to be built in. Figures are available for all commercial
aircraft for the fuel burnt at maximum payload, which, divided
by the payload, would give a suitable efficiency factor.
2. WWF-UK'S POSITION
ON CCS TECHNOLOGY
Environmental Audit Committee enquiry:
In this year's inquiry, the Environmental Audit
Committee (EAC) would welcome views, from organisations or individuals,
on the following:
— The Government's announcement
on the competition to design and build a pilot Carbon Capture
and Storage project, and policy towards funding and developing
CCS more generally.
DBERR CCS Competition:
The Government has announced that it will provide
up to 100% of the additional capital and operating costs for the
CCS part of a project incurred by the developer in successfully
demonstrating the technology on a long-term commercial scale.
The pre-qualifying period for the competition will be led by DBERR
and will end in March 2008. Companies that successfully pre-qualify
will be invited to take part in the next stages of the competition
in April 2008, with the aim of announcing the competition winner
by May/June 2009.
WWF-UK's views on CCS and the current competition:
WWF-UK supports the development of carbon capture
and storage as long as it is developed as a mitigation measure
and truly contributes to net carbon emissions reductions (rather
than being used to legitimise high emissions elsewhere, or to
prolong reliance on fossil fuels through enhanced oil recovery).
However, CCS needs to occur in the context of a robust regulatory
regime, with full provision for liabilities. The permanence and
safety of the CO2 stored in a geological reservoir
needs to be independently monitored and verified by a competent
third party in order to check for leakage. In addition, CCS, as
a waste disposal measure, should be licensed in the UK by the
proposed Marine Management Organisation (to be established by
the Marine Bill).
To meet the clear and urgent threat of climate
change, as recently set out by the Intergovernmental Panel on
Climate Change, WWF is clear that the UK needs to reduce its emissions
of CO2 by at least 80% by 2050 from a 1990 baseline.
In his November speech on climate change, Prime Minister Gordon
Brown acknowledged that the targets under the Climate Change Bill
will probably need to be tightened to 80% from the proposed 60%.[7]
In this context, WWF-UK believes that it is
not justifiable for the Government to allow the building of any
new coal-fired power stations in the UK which do not have CCS
installed from the outset and which also make maximum use of waste
heat. WWF-UK is calling on the Government to enforce an immediate
moratorium on all new build of unabated coal-fired power stations
in the UK. Without such action, it is hard to see how we can
meet our emission reduction targets under the Bill. There is a
precedent for such action—in the late 1990s, the Government
imposed a moratorium on new gas-fired power stations without full
use of waste heat.
We broadly welcome the Government's intention
to provide some funding for a CCS demonstration project in DBERR's
competition, as it is important to demonstrate whether, and under
what conditions, CCS has a viable role in delivering a low-carbon
economy. However, we are disappointed that it has opted to only
allow post-combustion CCS technology in this competition. This
restriction means that many companies' plans for more advanced,
and cleaner, pre-combustion CCS projects—such as those put
forward by Centrica and SSE—have been suddenly made ineligible.
WWF-UK is concerned that by supporting only
post-combustion capture, the Government is legitimising a "CCS
retrofit" mindset which is being used to justify the construction
of a whole generation of highly polluting coal-fired power stations
in the UK. We are concerned that the claim that stations are "carbon
capture ready" may be being used as a figleaf—there
are no guarantees over when, if at all, CCS would be fitted. Moreover,
very significant emissions would arise in advance of any such
retrofit—at precisely the time when UK emissions need to
be placed onto a steep downward trajectory.
The Government argues that it wishes to develop
experience in post-combustion CCS technology as this is most easily
retrofitted to existing power stations, particularly in developing
countries such as China, and that Norway and the US are already
working on pre-combustion technologies. If the Government wishes
to pursue a post-combustion demonstration project, it should only
do so in the context of parallel demonstrations of large-scale
pre-combustion technology and also of large-scale transportation
of CO2 by pipeline.
Finally, WWF-UK is very concerned by the Government's
view that CCS will be encouraged by the EU emissions trading scheme
alone. WWF does not believe that the EU ETS by itself will provide
sufficient price certainty at the appropriate levels to facilitate
the introduction of CCS. The Government's position reflects a
widespread over-reliance on the ETS to deliver policy objectives—which
carries a severe risk that we lock ourselves in to high-carbon
infrastructure because of the low cost of carbon credits in the
near-term. In our view a range of complementary policies are needed
to overcome technological, infrastructure and other barriers.
We note that the Stern Review of the economics of climate change,
published in October 2006, made clear that carbon pricing (through
tax and regulation as well as trading), technology policy and
behaviour change were all needed to overcome market barriers—particularly
in the case of emerging technologies.
In our view, the EU ETS needs to be complemented
by other measures to discourage the lock-in to new high carbon
investments. On top of an immediate moratorium on new coal stations
in the UK without installed CCS, the UK Government should legislate
to mandate CCS on all new coal plants. This could either take
the form of a carbon dioxide efficiency standard—a CO2
limit per unit of useful energy similar to that now employed in
California—or a direct mandate that all new coal-fired power
stations in the UK must be fitted with CCS (with a firm deadline
for retrofit to existing fossil-fuel stations). Similar legislation
should then be championed by the UK Government at the EU level.
The UK Government might argue that this would undermine the ETS
but WWF disagrees. In our view there is no reason why complimentary
policies should not be deployed. For example, action on energy
efficiency appliances involves incentives to encourage the take
up of the most efficient appliances supplemented by standards
which remove the least efficient appliances from the market.
3.THE ENVIRONMENTAL
TRANSFORMATION FUND—INTERNATIONAL
WINDOW
WWF-UK welcomes the settlement for the £800
million Environmental Transformation Fund—International
Window (ETF-IW), with £400 million each allocated to DFID
and DEFRA. The fund was announced in the Treasury budget report
as follows: "a £800 million international window
for the Environmental Transformation Fund to finance overseas
development projects that deliver both poverty reduction and environmental
benefits in developing countries".[8]
The settlement shows the commitment of this
Government to fund the major environmental challenges faced internationally
and by developing countries, and shows recognition of the fact
that the environment underlies human wellbeing and is essential
for international development.
However, WWF also have a number of concerns
with regards to the fund, as well as with the process that has
taken place so far.
The fund, while welcome, appears to have been
declared in advance of a clear strategy or objective being in
place and this has had a negative impact on communication and
process. Information on strategy for delivery, rationale and management
was patchy and often contradictory especially in the early stages.
The fiscal restrictions to be imposed on the Fund mean that the
funds will have to be capital funds and, as a consequence, that
the large majority of the funds will have to be loans. This will
severely restrict the possibility of what can be done with those
funds, as most environmental issues do not lend themselves to
be funded through loans, as they are public goods and not profit
making assets. This means that the parameters for what can be
funded through the ETF-IW are potentially very restrictive.
WWF notes that Ministers have used the creation
of the ETF as proof that the Government is acting on various issues,
from biodiversity to energy, to forests and adaptation, while
realistically only a set of issues can be addressed with a loan
structure. The fund has been mainly set up in response to climate
change, and focuses on mitigation and adaptation. Using a broad
term such as "environmental transformation" is, therefore,
potentially misleading as expectations have been raised which
cannot be addressed, and, even more problematically, fudges the
fact that there are still very large funding gaps elsewhere that
are not being addressed.
Furthermore, the pre-Budget report and Comprehensive
Spending Review in October further specified that the Government
will establish a fund at the World Bank, which will be the mechanism
for using the ETF-IW. WWF is concerned that in response to the
challenge of climate change, a plethora of funds is being set
up by a variety of actors, and we are concerned that setting up
yet another new fund will muddle the already trampled field of
separate funds even more, and will not help to promote coordination
and coherence in approaches.
WWF are also concerned with the choice of the
World Bank as the manager of this Fund. The World Bank has not
proven itself to have taken the climate change challenge seriously.
The Bank, for example, continues to disproportionately fund the
fossil fuel sector as opposed to the new renewable energy sector
despite calls from the World Bank's own Extractive Industries
Review[9]
(2003) to phase out lending by 2008. Furthermore, developing country
governments, who will be impacted most by climate change, still
are barely represented in the governance structures of the World
Bank. These issues highlight that currently much of the international
institutional framework is inadequate to deal with the global
challenges of achieving a true "environmental transformation"
that works for developing countries, and, therefore, needs to
be reformed. In the context of ensuring the governance of this
fund is adequate and efficient, WWF believes there should be substantive
consultation by the UK Government with the intended beneficiaries
of the fund to ensure that the funding mechanism and institution
responds to the needs of the recipient governments.
Lastly, WWF, like other NGOs, is concerned about
the implications of the ETF-IW money on the UK's development agenda.
The ETF-IW has been set up in response to the challenge of climate
change and focuses on mitigation and adaptation, but is still
counted as Official Development Assistance (ODA). While tackling
climate change is essential for poverty reduction, funds for climate
change should be additional to the 0.7% commitment, which was
based on costings for the Millennium Development Goals, not taking
into account climate change. WWF is also keen to ensure that the
aid effectiveness standards to which DFID signed up to are being
respected and held up as an example in this new Fund. If this
were to happen this could be a precedent for ensuring that future
funds for climate change mitigation and adaptation avoid many
of the existing problems with effectiveness in the current aid
system, as well as support the effectiveness of other aid. Furthermore,
WWF calls on DFID to ensure that the capital nature of this Fund
does not contribute to further debt burdens for poor countries,
which are already causing serious constraints for countries to
invest in public goods like health, education and the environment.
WWF recommendations:
— The Government should specify more
clearly what exactly the objectives of the ETF are, what the linkages
will be between the ETF, existing funds as well as new climate
change related funds, and how the coordination between funds will
take place.
— To ensure the Fund is truly transformational,
it also needs to be accompanied by the reform of the very institutions
that will manage and dispense it, otherwise those institutions
may perform a contradictory role.
— The Government should undertake full
consultation with the intended recipient countries on the fund
management and governance mechanisms, to ensure that the agenda
of the Fund is developed and shaped by country governments themselves
rather than imposed from the outside.
— The Government should specify which
portion of ODA is climate change related funding, and ensure that
climate change related funding is not reported as counting towards
the 0.7% commitment. It should also put in place assurances that
new loans will not further add to the debt burden of developing
countries.
4. RESPONSE TO
"THE ANNOUNCEMENT
OF FUNDING
FOR THE
CONGO FOREST
CONSERVATION INITIATIVE"
WWF welcomes the UK Government's announcement
to support Congo Forest countries to help them protect the Congo
Basin's forests and people. WWF believes that this funding will
be a great contribution to the Congo Basin Forest Partnership
and to the Council of Ministers in Charge of the Forests of Central
Africa (COMIFAC) Regional Action Plan (Plan de Convergence).
WWF has a couple of specific concerns with regards
to the administration of this funding:
1. Proposed governance structure
During the Congo Basin Forest Partnership (CBFP)
meeting in Paris in October 2006, an outline of the initial Congo
Basin Governance Fund (CBF) to be established to manage the UK
funding was presented by Professor Wangari Maathai (Co-Chair of
the Congo Basin Fund). The following constituents of the governance
structure of the CBF was proposed:
Technical review Committee.
Host Institutions (World Bank and the African
Development Bank).
Donor/Investment Committee.
WWF is concerned that this proposed governance
structure, will use an excessively large amount of the fund up
for administration. This concern has also been voiced by regional
constituents.
WWF recommends that there is further consultation
with people from the region before moving forward with this proposed
governance structure.
2. Involvement of multilateral institutions
As can be seen from the governance structure,
it is also proposed to involve two "Host Institutions"
(the World Bank and the African Development Bank) to manage the
UK funding. There has already been some speculation with regards
to the World Bank, that the money could be administered through
their Global Forest Partnership (GFP). The governance structures
for the GFP have not yet been drafted. However, elements that
have been discussed suggest the following constituents:
A multi-stakeholder governing council.
A technical advisory group.
A unified forest trust fund.
Supplementary provisions.
Significant inclusion of developing countries
in GFP governance.
WWF has yet to find out what the proposed governance
structure for the African Development Bank would be.
As per our first concern, WWF fears that the
proposed involvement of these two institutions will result in
excessively high overhead costs which would appear to be additional
to those proposed for the governance structure of the CBF. This
would still further reduce the amount of money going to the field.
In addition, WWF feels that such a heavy governance
structure to administrate the UK funding is neither justified
either conceptually or operationally. While we whole heartedly
endorse the UK Government's support for forest conservation in
the Congo Basin, we believe that it is vital that this heavy governance
structure is addressed so that the benefits which this funding
will provide in delivering forest conservation in the region are
maximised.
WWF recommends building on existing models which
are already in place which could be used to manage the UK funding.
There are a number of potential alternative structures that should
be considered and WWF would be happy to discuss some of these
further.
27 November 2008
2 http://www.dft.gov.uk/consultations/closed/emissioncostassessment/consultationpaper Back
3
http://www.defra.gov.uk/environment/business/envrp/pdf/passenger-transport.pdf,
note to Table 6, page 9. Back
4
The 1999 IPCC Special Report Aviation and the Global Atmosphere
found that aviation's total climatic impact was between 2 and
4 times that of its CO2 alone-and that excluded the
effects of cirrus clouds. See http://www.grida.no/climate/ipcc/aviation/index.htm Back
5
http://www.dft.gov.uk/pgr/aviation/environmentalissues/Anase/ Back
6
This does not apply domestically or within Europe, where bilateral
treaties no longer exist. Back
7
A joint report by WWF, the RSPB and the ippr entitled "The
80% Challenge", shows that the 80% reduction target is technically
feasible, economically affordable and environmentally sustainable.
http://www.wwf.org.uk/filelibrary/pdf/80percent_report.pdf Back
8
http://www.hm-treasury.gov.uk/media/F/D/bud07_chapter7_273.pdf Back
9
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,contentMDK:20306686[tilde]menuPK:336936[tilde]pagePK:148956[tilde]piPK:216618[tilde]theSitePK:336930,00.html Back
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