Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 24 - 39)

TUESDAY 23 JANUARY 2007

MR ROGER WILTSHIRE, MR ANDY KERSHAW, MR ANDREW BARKER AND MR BARRY HUMPHREYS

  Q24  Chairman: Good morning, and welcome to this evidence session. Starting with Mr Humphreys, perhaps you would introduce yourselves for the record.

  Mr Humphreys: I am Barry Humphreys, director of external affairs and route development at Virgin Atlantic Airways.

  Mr Wiltshire: I am Roger Wiltshire, secretary general of the British Air Transport Association.

  Mr Kershaw: I am Andy Kershaw, manager of environmental issues at British Airways.

  Mr Barker: I am Andrew Barker, director of planning at easyJet.

  Q25  Chairman: We sent out invitations to everyone. We are glad that easyJet has come along. Mr Michael O'Leary of Ryanair decided that he did not want to appear with the rest of you. I do not know the reason for that. I sent him a nice letter explaining to him that House of Commons committees had the power to call any witnesses it wished, but considering that easyJet has been keen to come we are delighted to see its representative here. Maybe we will have Michael O'Leary here at another time. This inquiry is about the Stern Review and environmental factors. I know that a number of you have been and are exercised about the passenger duty, but this session is not concerned with that; it is to do with environmental taxes. You will know that in our Pre-Budget Report we questioned the Chancellor on that matter. We shall be releasing that report and our comments on that issue in the next day or two, but it is forward-looking. This matter started with Sir Nicholas Stern's review on climate change. You probably heard from the previous witness that the issue of climate change on the political agenda is one that has to be yet developed. There are pro and anti camps in terms of that review. If I may quote Mr O'Leary, he said recently of Sir Nicholas Stern's review that a lot of lies and misinformation had been put about by eco-nuts on the back of a report by an idiot economist. Do you consider Sir Nicholas Stern to be an idiot economist?

  Mr Wiltshire: I will not respond directly to that.

  Q26  Chairman: I am asking you to respond to it because it is very important to our debate.

  Mr Wiltshire: If you do not mind my introducing our position, that would automatically deal with it.

  Q27  Chairman: I am asking you to respond to my question, and then you can put your position.

  Mr Wiltshire: The UK aviation industry has a very responsible attitude to environmental matters. We have been leading in that field.

  Q28  Chairman: I understand that. I am asking you about Sir Nicholas Stern. If you answer that you can come on to your position.

  Mr Wiltshire: We welcome the Stern Review; we think that it is a very considered view.

  Q29  Chairman: Do you think it is a measured report?

  Mr Wiltshire: Yes. A very important point to make is that we are predominantly an international industry. Nine out of every 10 air journeys from the UK are international. We compete in the international industry. The Stern Review put the spotlight on the fact that to address a global issue like climate change one needed to consider economically efficient international measures.

  Q30  Chairman: So, it is a measured report by a well-respected economist?

  Mr Barker: Chairman, perhaps I may say that in your introduction you referred to easyJet relative to Ryanair. We endorse that fully. When Sir Nicholas Stern announced and presented his report to the Royal Society before Christmas our chief executive, Andy Harrison, made a presentation alongside him and had a very good discussion with him afterwards. We think that it is an excellent report.

  Q31  Chairman: That is a good start. Do you believe that the Stern Review makes a strong enough case for the UK Government to adopt a system of taxation and incentives to combat climate change? If not, what are the major weaknesses of Stern?

  Mr Wiltshire: I believe that the Stern Review addresses the issue and the way it should be dealt with structurally, internationally and in an economically efficient way, which means fairly sophisticated instruments. It does not ignore taxation but it does not necessarily recommend it as a way forward internationally. It points to emissions trading as the most efficient way to deal with international issues. As we are an international industry, we believe that this is the right way forward. As the Government are taking a lead internationally in trying to persuade other countries that aviation should be part of an emissions trading scheme, we in the UK industry are taking the lead in persuading our colleagues in the rest of the industry that this is the right way forward.

  Q32  Mr Breed: The Stern Review suggests that while aviation CO2 emissions account for 1.6% of global greenhouse gas emissions the impact of that activity is two to four times higher than the impact of CO2 emissions alone. First, do you agree with that analysis? Second, it is undoubtedly true that aviation is a growth industry and therefore Stern's projections suggest that aviation's contributions to global greenhouse gas emissions will be 2.5% by 2050. Have the airlines funded or undertaken any research at all into the non-CO2 impacts of aviation?

  Mr Kershaw: There is no doubt that there are other effects in addition to CO2 emissions. Those effects are different in nature. They are, for example, over a much shorter lifetime. Equally, the scientific understanding of those impacts is far less than we have for CO2 emissions. In addition, the metric used to generate multiples of CO2 has recently been questioned by the scientific community as an appropriate way to quantify those non-CO2 effects. While undoubtedly there are other effects and the industry takes the view that it needs to address them appropriately, there is a lot of uncertainty surrounding them. What is of prime importance for those effects is to improve the scientific understanding. The industry is involved in programmes to take forward that understanding. For example, there is an EU-funded programme called IAGOS in which British Airways and Airbus look to improve the way we collect information about the atmospheric chemistry and some of the processes that occur in the atmosphere. These issues could be important. We need to understand them better. Once we have understood them better we can assess the most appropriate mechanisms to manage those effects. As to the growth projections you mentioned, certainly aviation is expected to grow in future to meet the demand for international air transport. I do not think we disagree with the projections outlined by Stern, apart from saying that any assumptions about growth in the distant future must have uncertainties associated with them. We will not know precisely what levels of emissions from various sources will be in the future, and I think that does depend hugely on the policy measures put in place and the way the international community deals with the issue of climate change.

  Q33  Mr Breed: But it is not an unreasonable assessment at the present time?

  Mr Kershaw: I do not think it is unreasonable.

  Mr Humphreys: Even if one accepts that there is a double multiplier effect taking it from 2.5% to 5% one is still left with a relatively small proportion of total emissions accounted for by aviation, which is a very different impression that one often gets from press reports in which, to be honest, aviation has become a bit of a whipping boy. We are delighted to see that in the Stern Review there is a more considered approach to that.

  Mr Barker: The Stern Review mentions the targets of the Advisory Council for Aeronautics Research in Europe (ACARE) for aviation in 2020 to which we have all signed up. We intend to participate in the development of aircraft that will reduce CO2 emissions by 50% and NOx emissions by 80%, so we are all fully participating in the developments of the new technologies and we are glad that Stern highlights the potential for them.

  Q34  Chairman: The UK aviation sector currently accounts for about 5.5% of the UK's total CO2 output, and it could rise to about 15% by 2030, according to Stern. He also goes on to say—the Government accept this—that the effect of all aviation emissions is at least two to four times greater than the effect of CO2 emissions alone. How seriously does the aviation industry take the problem of climate change given the fact that aviation emissions are at least two to four times greater than others?

  Mr Wiltshire: I think the specific response to that is the answer given by my colleague Mr Kershaw when he was referring to multipliers. The industry in this country, the airlines, airports, manufacturers and air traffic control, produced a sustainability strategy in the middle of 2005 called Sustainable Aviation which clearly accepts and describes those effects. Clearly, they are very different from the effects of CO2. We need to understand the science and issues better. We also need to understand the way in which those effects have an impact on the climate. The current metric is not robust enough to enable us to do that.

  Q35  Chairman: But the science is that aircraft are responsible for high altitude emissions of NOx and the formation of water vapour, clouds and other things. Therefore, it is that which contributes to the two to four times, so there is in a sense a uniqueness about the aviation industry compared with other industries that emit CO2.

  Mr Wiltshire: I think that other land-based industries also have what are called non-CO2 effects. The same metric of radiative forcing that is used to develop the multiplier in aviation is used for land-based industries.

  Q36  Chairman: But do you accept that point?

  Mr Wiltshire: What we do not accept is that the science points to multiplying the carbon. The nature of the impacts is so different that one cannot readily multiply. I understand that various reports have mentioned the multiplier. We feel that the impacts other than carbon are so different as to require their own specific and appropriate measures.

  Q37  Mr Mudie In its paper British Airways mentions Sustainable Aviation. Can you say something about that?

  Mr Kershaw: The group that produced Sustainable Aviation is a collection of aviation industries in the UK, so it includes the major airlines, airports, manufacturers and the air traffic control provider (NATS). The strategy was produced in June 2005. It aims to outline steps that the industry can take, together with government, with a view to aviation contributing fully to sustainable development objectives. It outlines action that we believe the industry and government should take in the key areas of sustainability as it relates to aviation, so it includes the climate change impacts, noise and air quality, and it also speaks about the social and economic contributions of aviation.

  Q38  Mr Mudie: You mention Sustainable Aviation in paragraph 7, but in paragraph 6 you spell out the key objective of climate change policy. That seems to be straightforward. You mention climate change. Tell us in detail how that aspect of Sustainable Aviation meets paragraph 6?

  Mr Kershaw: First, it is important to point out that the industry takes climate change extremely seriously as a key issue that needs to be managed. The aviation industry accepts that it must be part of efforts to manage climate change in the long term and needs to find effective mechanisms to allow aviation to play its part. Specifically in relation to the paragraph to which you referred, the text comes from the United Nations Framework Convention on Climate Change (UNFCCC) and refers to the objective that globally we need to stabilise concentrations of greenhouse gases at safe levels. The safe levels are those determined by the scientific community, with stabilisation requiring global effort to limit CO2 emissions and other greenhouse gases. The Sustainable Aviation strategy is that aviation should be incorporated into a framework to achieve that objective. One of the ways that we need to move it forward is to include aviation and the air transport sector in post-Kyoto frameworks to deal with climate change. Currently, aviation is excluded from the Kyoto process and that is not helpful in terms of allowing aviation to play its full part in addressing climate change. One of the principles within Sustainable Aviation is that air transport should be included in a global framework to address climate change. It goes on to point out that emissions trading is by far the most environmentally effective and economically efficient mechanism to deal with air transport CO2 emissions.

  Q39  Mr Mudie: A lot of that was words and projecting the future. To be fair, what it comes down to is that you should join with the international body and do emissions trading not within the industry, so the growth of the industry will continue but you will offset it by trading with other industries. Is that a fair reflection? I am sorry to pick on you but your paper was before me. It is the view of the industry that at the moment generally it is doing very little but when it is pushed it will join internationally, not limit its behaviour but trade with other industries globally?

  Mr Kershaw: That is the objective of the industry. The UK is leading in bringing aviation into emissions trading and a good solid first step is the inclusion of aviation in the EU emissions trading scheme.

  Mr Wiltshire: Referring to our track record, the industry is not doing nothing. It has improved its fuel efficiency over the past 30 years by 50%. As mentioned earlier, it wants to continue that progress in future.

  Mr Humphreys: Sustainable Aviation has firm commitments to make substantial further improvements. The report produced in December indicated that the industry as a whole is well on the way to achieving those commitments. They will result in significant improvements.


 
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