Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 80 - 99)

TUESDAY 23 JANUARY 2007

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

  Q80  John Thurso: Even if we go back to the absolute figure projected, which is 17.4 against 67, that still leaves aviation producing an extremely large percentage of carbon emissions. The current projection in the Government's aviation White Paper is a 4.25% per annum increase in passenger numbers and the exponential curve for freight is generally regarded as being pretty similar. Is not the plain truth that the planet cannot afford your growth aspirations as long as you are using a carbon-based propellant?

  Mr Wiltshire: Our position is that the industry like many others is a carbon emitter. It currently represents a small proportion of carbon emissions. We want to play our part in dealing with carbon emission problems and helping to stabilise them. If by pricing carbon into people's activities they choose to burn it in a certain way then that is up to individual selection. I do not think we will crack the problem of climate change by taking a sectoral and, even worse, national approach and trying to control individual activities at national level. That is where one gets the 0.1% figure which has been quoted.

  Q81  John Thurso: At the end of the day, we will not be able to afford that much carbon for the activity of aviation. Therefore, we will have to ration it and the best way is to have a market mechanism to do that, with which you all agree, but the plain fact is that any increase in aviation that is more than 2% a year means that we are in the red zone.

  Mr Wiltshire: It means that aviation emissions may be growing overall, but we need to look at it at a global level and consider how we are to bring down carbon overall. We believe that the best way for aviation to play its part is by way of an international scheme that brings carbon down and caps it overall.

  Q82  John Thurso: What I am driving at is the fact that there is no viable likely alternative in a 50-year timeframe to the jet engine as the main propellant for commercial passengers. There is some gain to be had from efficiency, but it is not huge. Therefore, in order for you to operate you will remain a constant and increasing emitter as passenger numbers go up. There are many other industries where there are alternatives to carbon. For example, the whisky industry which is a major consumer of carbon through its distilling operations has opportunities to use non-carbon renewable energy sources and so forth. They can give up carbon and that will be used by you. The question is: how much of our carbon do we give you for aviation, and does the industry not have to accept that it cannot grow at the predicted rate?

  Mr Barker: We would like to see most of the forecasts build in the potential for technology. You painted a very bleak picture of efficiency gains in future. The Royal Aeronautical Society has shown that the industry has reduced its emissions per passenger by 70% over the past 50 years, so if we look at 2050 it is likely that the technological curve will continue to allow us substantial efficiency gains. The Stern Review highlights the ACARE targets for reducing CO2 emissions from new aircraft by 50% by 2020 and by 80% for NOx, so if there is a radiative forcing coefficient it is likely to narrow over the next 15 years. This industry exists on technology. It is a very capital-intensive industry and has an extremely good track record of investing in the latest technology to improve efficiency. The commercial imperatives are here today and ETS will raise that imperative still further. The problem with taxation of any kind is that it takes money out of the system. We should be forcing ourselves to invest as much as we can in pursuit of that goal.

  Q83  Chairman: Everything is a bit complicated. The Royal Commission on Environmental Pollution is adding up mathematically when it should not do so, or whatever else. Why does the industry not take the initiative and have an industry-wide scheme? For example, the submission by flybe says that shortly it will be announcing a new eco-labelling scheme for aircraft. The concept is to establish "a system using a labelling scheme where aircraft are graded based on fuel burn, carbon emission, noise footprint and total environmental cost. In doing so consumers would be informed about each flight they take." Why does industry not come up with such an initiative? Why does not British Airways, one of the big ones, do that?

  Mr Kershaw: There is no question but that it is important that airlines communicate more effectively with customers about the environmental impacts of flying. How does one do that?

  Q84  Chairman: There is one example from flybe. Why does not British Airways think of an initiative such as that? I do not hear anything from the industry. I think that in a sense you have been caught in the headlights.

  Mr Kershaw: One of the programmes that we introduced in 2005 was the carbon offset scheme which was essentially intended as a way to better inform the public.

  Q85  Chairman: What you are saying to me is that you do not really have anything.

  Mr Barker: One matter that may have inhibited the industry in the past is its competitive nature. This is the first time we have appeared like this together, and we take that responsibility very seriously.

  Q86  Chairman: You can thank the Committee for that!

  Mr Barker: We do thank you. EasyJet has a similar scheme to flybe. We are about to announce what we call our environmental code where we publish how efficient we are in the air and on the ground and what we are going to do about it.

  Q87  Chairman: Say in six months' time you write back to us and say, "Look, ahead of 2012 we are taking this initiative so the consumer is informed", because the previous witness, Professor Ekin, said that the political environmental was not as well advanced as it should be because the consumer is largely ignorant of what is happening in the area. You have a responsibility to educate the consumer, so why not do it ahead of 2012? Why does not Virgin do that? Richard Branson has taken lots of initiatives.

  Mr Humphreys: I have already explained that Virgin has taken some initiatives in this area and it is working on others. We would have no problem at all in what you suggest, and maybe the industry should look at that.

  Q88  Chairman: Let us take Virgin as an example. I do not see it advertising a new eco-labelling scheme or whatever.

  Mr Humphreys: We are in the process of coming up with proposals.

  Q89  Chairman: But it is something that all of you could be doing. If you can sit together here for the first time surely you can get together afterwards and come up with something in six months' time. Would you do that?

  Mr Kershaw: I think we need to improve the way we communicate.

  Q90  Chairman: Would you all sit together, however painful it might be, and come up with something and perhaps write to us in six months' time to tell us what you might be doing ahead of 2012? We are all shy here.

  Mr Humphreys: Yes.

  Mr Wiltshire: And through the Sustainable Aviation strategy we have ourselves committed to do that sort of thing.

  Q91  Chairman: Will you write to us in six months' time?

  Mr Wiltshire: Our timescales are a bit longer than that, but we will certainly be doing it and we will be reporting on it.

  Q92  Chairman: To refer back my earlier point about doing something in advance of 2012, you stated that there would be a 2004 to 2006 baseline for emissions. Why do you not set a tighter baseline for emissions, say 2002 up to 2012? That is an initiative that you could take ahead of 2012.

  Mr Kershaw: That baseline is related to the EU emissions trading scheme and is set by the European Commission.

  Q93  Chairman: You are not under any obligation from now until 2012, so perhaps you should take some initiative. Why do you not do that with tighter baselines?

  Mr Barker: As individual entities every year commercially we are making huge efforts to reduce emissions.

  Q94  Chairman: The answer is no?

  Mr Barker: We reduced our emissions per passenger last year by 3%.

  Q95  Chairman: But what about a tighter baseline?

  Mr Kershaw: The only purpose of a baseline is to operate within emissions trading.

  Q96  Chairman: It is to lower emissions.

  Mr Kershaw: If you are suggesting that we should create a voluntary emissions trading scheme I am not sure that that would be the best use of our resources.

  Q97  Chairman: What I am saying is that you have a free ride up until 2012 and you are doing nothing. You are not obliged to do anything until 2012, so why do you not come up with an initiative and have a tighter baseline?

  Mr Barker: Effectively, by 2012 the industry will have grown by then. We will have to pay for any extra emissions that we have produced post-2005. But all of us are trying to reduce emissions as individual airlines every year, and that is a commercial imperative; it is a matter of survival.

  Q98  Chairman: Surely, government should maintain some form of taxation up to 2012, and Stern has said it himself. It was repeated in one of your submissions to us. If APD is the wrong tax what is the right tax?

  Mr Kershaw: We believe it would be more appropriate to have something in line with emissions trading rather than to base it on taxation which we do not believe is environmentally effective. Equally, we would expect that once emissions trading was in place as a more effective mechanism there would be no purpose in having an APD or other environmental tax.

  Q99  Chairman: But up to 2012 it is legitimate?

  Mr Barker: The problem with any tax is that it takes money away from us to invest in the new technology that reduces emissions. That is a hard and fast fact.


 
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