Aviation Strategy

Written evidence from Greenpeace (AS 109)

 What should be the objectives of Government policy on aviation?

1. Greenpeace believes that if the Government is serious about tackling climate change, aviation policy must be shaped within the parameters set out by the legally binding climate targets established in the Climate Change Act.

2. To be clear, the government has a legally binding commitment to reduce greenhouse gas emissions (GHG) by 80% using 1990 as a base line. During the passage of the Climate Change Bill in 2008, the then Climate and Energy Secretary, Ed Miliband, made clear that he accepted all of the Committee on Climate Change’s (CCC) recommendations, including the inclusion of shipping and aviation emissions by the end of 2012, when a suitable methodology for accounting for these emissions had been agreed.

3. In addition to this, the former Government set a target that aviation emissions should be no higher in 2050 than they were in 2005. It should be noted that even reducing aviation emissions to 2005 levels affords the aviation sector special treatment compared to every other sector of the UK economy which is required to reduce emissions by at least 80% on 1990 levels. Allowing aviation to remain at 2005 levels means that these sectors have to do even more – cuts of at least 85% - and pick up the costs of doing so.

4. The current government has said that they will make their position clear on both the inclusion of aviation and shipping and the 2005 levels target by the end of this year.

5. The CCC has said in no uncertain terms that the government should plan on the assumption that aviation emissions will be no higher in 2050 than they were in 2005, and in fact aviation and shipping emissions have already been accounted for in the first four carbon budgets. Allowing aviation to grow beyond the tight constraints set out by the CCC means watering down the UK’s climate targets and reducing our chances of limiting global temperature rises to 2 degrees Celsius.

6. In light of this clear commitment in the Climate Change Act, which secured a cross-party consensus, aviation policy must operate within the carbon limits set out.

How important is international aviation connectivity to the UK aviation industry?

7. The aviation industry and indeed wider business community will undoubtedly argue that international connectivity is vital to the UK aviation industry, which in turn is necessary to secure economic growth in the medium to long term.

8. Greenpeace believe that the key point that is missing in this debate is that the UK and London are already exceptionally well-connected to the rest of the world, much more so than any other city in Europe. The default position of the aviation industry is that the UK is losing this status, and therefore expansion is necessary. This is simply not true.

9. As the former aviation minister, Theresa Villiers noted in a Commons debate earlier this year:

"It is very clear that London is one of the best-connected cities in the world, with its five busy and successful airports-six, if newly expanded Southend is included. Together, those five airports provide direct links to around 360 international destinations, including virtually all the world’s great commercial centres. That compares with just 309 such links from Paris, and 250 from Frankfurt. Heathrow provides more flights to New York than Paris and Frankfurt put together, and has more flights to the crucial BRIC-Brazil, Russia, India and China-economies than other European hubs, including more services to China………….it is simply not true to claim that London’s connectivity is falling off a cliff-edge." [1]

10. Specifically with regard to Heathrow, the airport has long been Europe’s biggest hub airport and remains so today. In 2011 it carried 69 million passengers. [2] This compares to a 2011 total for Paris Charles de Gualle of 61 million [3] , Frankfurt’s 56 million [4] and Schipol’s 49 million [5] . Heathrow and Gatwick combined carried more than 103 million passengers in 2011 [6] , 15 million more than the nearest metropolitan combination of Paris CDG and Orly. [7]

11. Heathrow delivers over 9,000 flights every year to New York and 2,500 to Singapore and New Delhi, more than any other airport in Europe. BAA and the Confederation of British Industry claim that the UK is "lagging behind" other airports because it only has 30 direct flights to China. [8] However, this ignores the 3,000 flights every year to Hong Kong (an important hub airport); taking these into account, there are in fact 81 direct flights a week to China from Heathrow airport. [9]

12. According to an analysis by Prime, a policy research think tank on macroeconomics, Frankfurt, London Heathrow and Paris CDG all have a broadly similar level of links to the BRIC countries - Brazil, Russia, India, China - (with the exception of Frankfurt, where Germany’s historically close relationship with Russia explain the high number of flights to Russia.) The table below taken from their report sets out those links in 2011. [10]

13. As the report notes – "Schipol in recent years is the only hub to have built up a broader range of BRIC destination and London remains far ahead in terms of connectivity to North America." [11]

14. Looking beyond Heathrow, there is not anything to stop individual airlines from offering direct flights to emerging markets from the other major London airports. Gatwick Airport has the capacity to handle up to 40 million passengers a year, but in 2010 just 31.3 million people travelled through it. [12] Stansted has permission for 25 million passengers; in 2010 it serviced just 18.6 million. [13] If there was sufficient demand for flights to China, India or other emerging markets, then there is already enough capacity at London’s airports for airlines to offer them. It is also worth noting that 75% of London’s aviation demand is for leisure travel and only 25% for business. [14]

15. It is clear then that the UK and its capital city, London, is exceptionally well-connected, and that despite bluster from the aviation industry, the country’s connectivity isn’t lagging behind that of its European counterparts.

What are the benefits of aviation to the UK economy?

16. Greenpeace believes that an assessment of the benefits of the aviation must be looked at alongside the economic, environmental and social costs of the sector.

Tax breaks:

17. The significant tax benefits that the industry enjoys must be balanced against the contribution the industry makes to the economy. The industry is exempt from paying fuel duty and VAT amounting to around a £9 billion a year subsidy. Whilst the fuel duty arrangement would need to be addressed internationally, the UK government should make moves to push for this.

18. Environmental costs must be included in any balanced and objective assessment. Aviation is without question responsible for a growing portion of UK emissions, which are driving climate change and this should be recognised in any calculation of costs and benefits. The Stern Report estimated that if we carry on with business as usual, climate change will cost between 5 and 20% of global GDP [15] .

Jobs:

19. As the aviation industry has grown, airlines and airports have become more efficient, with fewer members of staff per thousand passengers. Three reports, each sponsored by the aviation industry, show that the number of direct jobs in aviation fell from 180,000 in 1998 to 141,000 in 2007. [16] Over the same period, the number of passengers grew from 159 million to 218 million, meaning that the industry went from employing 1,132 people per million passengers to 646 people per million in nine years.

20. This increase in productivity is dramatic and is driven by the growth of the low-cost operators. Individual airlines have been employing fewer people in real terms: British Airways, for example, shed 42% of its workforce between 1998/99 and 2009/10. [17] The difference between low-cost and premium airlines is stark: British Airways had 1,157 employees for every million passengers in the year ended 31 March 2010 whilst Ryanair had just 106 employees per million passengers. [18]

Tourism deficit:

21. Greenpeace believes that there is evidence that the rapid growth in the aviation sector over the last decade or so has caused a loss of income in domestic tourism.

22. As the Department for Culture, Media and Sport noted in its Government Tourism Strategy, people in the UK are far more likely to holiday abroad than at home. Less than 40% of our total holiday spending goes on domestic tourism; just 20% of us holiday at home, compared to a European average of 28%. [19] Almost a third of people in the UK (29%) holiday abroad each year, compared to just 16% in the rest of Europe. This has a direct effect on UK tourism: budget hotel operator Travelodge says that budget airlines "are the single biggest cause of decline in traditional tourism resorts". [20]

23. Although the UK continues to attract international tourists, our predilection for foreign holidays has had a dramatic effect on our balance of trade. The UK’s balance of trade correlates closely with the number of passengers using the UK’s airports. In 2007, when our airports where the busiest they had ever been, our tourism deficit was also running at a record level. Research by Stop Stansted Expansion, using data produced by the Office of National Statistics, shows that when overseas leisure trips by UK residents fell from 60 million to 49 million between 2008 and 2011, the UK's tourism trade deficit also fell, from £20 billion to £13 billion. [21]

24. The level of inbound-outbound tourist deficit varies around the country. London and the South East are almost at parity, with a ratio of 1.3, where British tourists from that region spend £1.30 for every pound spent here by foreign tourists. [22] The largest tourist deficits are in the least affluent regions of the UK. The North of England has a ratio of 4.7: i.e. people from that region spend £4.70 for every pound spent in their region by foreign tourists. As a result, these are the areas whose local economies and jobs’ markets would have most to gain if a better balance could be achieved between outward, inward and domestic tourism.

How should we make the best use of existing aviation capacity?

25. Greenpeace believes that the capacity in the UK and Europe already exists to ensure that this country and our European partners are well connected with the rest of the world, including the emerging economies. The question must be whether this existing capacity is being used in the best way possible rather than automatically assuming that extra capacity is needed.

25. As Zac Goldsmith, MP for Richmond, noted in a debate on aviation earlier this year – "Does the hon. Gentleman agree that some of the problems that he has just described result not from lack of capacity but from poor prioritisation? Hundreds of flights every day to and from Heathrow involve places that do not in any way contribute to Heathrow’s hub status. We have short-haul flights, flights to Malaga and 15 flights a day to Cyprus. Such point-to-point flights could happen at any other airport. We have masses of spare capacity, but it is not all at Heathrow. If that is the problem, surely the priority is to make better use of existing capacity and to get rid of some of those pointless flights that could easily happen elsewhere." [23]

26. The point about prioritising existing capacity, for example in London, is an important one - both in terms of transferring short-haul flights onto rail, and by better using capacity currently within the system. For example both Gatwick and Stansted have spare capacity which could be used to improve connectivity to emerging economies, rather than building new runways. The former Transport Secretary, Philip Hammond, recently raised the question as to whether you could solve the issue with closer cooperation between Gatwick and Heathrow. [24]

27. The same point applies to Europe. It is nonsense to argue that European hub airports can continue to grow indefinitely given that we are increasingly living in a carbon constrained world and that the aviation industry has to make real reductions in its carbon emissions.

28. The vast majority of flights in Europe are intra-European. Before rushing to expand European hubs we need to look at whether existing capacity is being used effectively. Short haul flights should be transferred to rail and European hubs must work how to complement one another rather than compete.

What constraints are there on increasing UK aviation capacity?
Will the Government’s proposals help reduce carbon emissions and manage the impact of aviation on climate change? How can aviation be made more sustainable?

29. Above, Greenpeace has set out its belief that the main constraint on UK aviation capacity must be the government’s legal obligation to meet its climate targets as set out by the Climate Change Act.

30. An assessment must be made of aviation’s share of the UK’s total carbon budget between now and 2050, and aviation policy must be made on that basis.

31. A decision on the inclusion of aviation and shipping in the carbon budgets is due to be taken and announced by the end of the year. The government must agree to its inclusion and then from this calculate the proportion of the overall carbon budget that aviation is allowed to absorb. Aviation must work within these constraints.

What is the relationship between the Government’s strategy and EU aviation policies?

32. Much has been made of the inclusion of aviation in the EU ETS, leading some politicians to claim that its inclusion gives the aviation industry a free pass in terms of expansion. [25]

33. This is far from the truth. The Emissions Trading Scheme is a good start, but it won’t be enough on its own. It is dependent on the price of carbon and the number of credits. When the ETS first launched, the number of credits issued was greater than the amount of CO2 emitted, so the price of carbon crashed. Companies were given millions of free permits, which they traded with each other for less than the cost of actually reducing emissions. The ETS will cap emissions at 97% of their 2005 levels, falling to 95% of 2005 levels from 2013.

34. Although the EU subsequently reduced the amount of permits, the price of carbon remains extremely low. In 2011, the DECC valued one tonne of carbon at £13.50 (€15.70), but permits for one tonne were trading at just £5.40 (€6.45). As the aviation industry is allowed to buy credits from other sectors (which are polluting less because of the recession) there is no incentive for companies to clean up their act.

35. In addition, airlines will be given millions of credits for free. Just 15% of emissions have to be purchased on the open market. A study by US academics, funded by the American aviation industry, concluded that this was going to lead to a major windfall of around €2 billion a year, because the industry would pass on the cost of carbon to its passengers. [26]

36. The government knows that the ETS alone won’t be enough to keep emissions under control. That’s why it asked the CCC for the UK’s carbon budgets, include sectors which were covered by the ETS, and it is why the government must include aviation and shipping emissions in future carbon budgets.

37. The CCC argued that the key was to stop emissions before they started through a suite of measures relating to investment and planning decisions. In other words, we shouldn’t get locked into high carbon infrastructure like runways.

Efficiency:

38. Whilst planes have made efficiency gains of around 1.5% each year any positive impact on emissions has been wiped out by the massive explosion in flights.

39. The industry claims that new technology will come on stream that will outstrip the rise in demand. But the fact is that many of the new technologies they refer to like blended wing aircraft, will require significant changes to airports.

40. In the first CCC report, the then Chair, Lord Turner issued a cautionary note on efficiency gains and the role that it could play: "whilst estimates and targets suggest significant potential to drive efficiency improvement, it is likely that many of these improvements are already factored into projections of aviation emissions. More radical changes….. to aviation technologies e.g. blended wing bodied aircraft, are likely to be more expensive, require changes to infrastructure and may not lead to significant additional emissions reductions." He concluded that – "the limits to feasible fuel efficiency improvement… make it likely that aviation emissions will continue to grow significantly unless demand is constrained." [27]

The role of biofuels:

41. The Committee on Climate Change notes that - "concerns about land availability and sustainability mean that it is not prudent to assume that biofuels in 2050 could account for more than 10% of global aviation fuel." [28] [i]

42. Several airlines have run high-profile biofuels trials, including flights powered by biofuels obtained from algae. But these flights are about generating some positive headlines for a beleaguered industry. In practice, there are serious problems with powering planes with biofuels.

43. Concerns about biofuels have been raised by a wide variety of stakeholders including the Royal Society, the United Nations Food and Agriculture Organisation and the Environmental Audit Committee.

44. The greenhouse emissions generated by growing some crops for first generation biofuels are significant –particularly ethanol derived from maize grown in North America as well as those derived from palm oil in Indonesia . For example, biofuels continue to put huge pressure on land.  Rainforests and other ‘carbon stores’, such as grasslands and peatland, are being cleared to make way for biofuel crops. [29] Even when biofuels crops are being grown on land that is already cultivated, they often displace food crops, which forces farmers onto new land, again driving deforestation. [30] In Indonesia, for example, forests and peatlands are being drained, cleared and burnt to grow palm oil driven by biofuel demand, releasing colossal quantities of greenhouse gases in the process.

45. Although second generation biofuels, such as algae, are being developed, there is no evidence that they can be produced on a large enough scale to replace kerosene. For instance, British Airways is talking of a new plant in East London, which would convert domestic, agricultural, forestry and industrial waste into a biogas that will then be converted into synthetic kerosene. BA says that by 2014 the facility could be converting 500,000 tonnes of waste a year into 16 million gallons of biofuel. But this is less than 2% of the airline’s annual fuel needs. [31] We would need more than 50 refineries of this scale before BA would be kerosene free – and that’s just to cover the needs of one airline.

46. Given the rapacious demand of the aviation industry for fuel, it’s unlikely that there is a sustainable biofuel which can meaningfully contribute to emissions reductions. Whichever biofuel the industry were to decide upon, it would have a huge environmental impact if used at scale. Biofuels are not a silver bullet – and we can’t afford to let aviation expand on the off chance that one day someone might invent a sustainable fuel.

Do we need a step-change in UK aviation capacity? Why?

47. As set out above, we believe that there is no need to build extra capacity but there is a need to better prioritise existing capacity. London and the UK are exceptionally well connected. By transferring short-haul flights to rail and better coordinating the use of existing capacity we can ensure that it remains so.

48. The question then must be whether this existing capacity is being used in the best way possible rather than automatically assuming that extra capacity is needed.

Accurately projecting passenger demand:

49. Many of the assumptions underpinning calls for additional capacity are questionable, specifically the DfT’s passenger projections. Greenpeace believes that the DfT has a track record of producing misleading and incomplete assumptions about passenger demand, and that the latest projections published in 2011 are inadequate.

50. DfT suggests that by 2050, demand for aviation would, if not constrained by airport capacity or environmental limits, grow from 211 million passengers per annum (mppa) to between 400 and 700 mppa. [32]

51. However, the DfT has a history of massively over-stating the demand for aviation growth. In 2000, it predicted that by 2020 unconstrained demand would be 400 million passengers per annum (mppa). By 2009 it had dropped its 2020 forecast to 365 mppa but was confident that in 2030 demand would be 465 mppa. [33] Just two years later it had concluded that by 2020 demand would be just 245 mppa and revised its 2030 figure downwards to 345 mppa. [34]

52. In 2000 DfT thought that in 2010 276 million passengers would use airports in the UK. In 2009, it predicted that it would be 260 million people. [35] In reality, it was just 211 million. In just over a decade DfT had revised its 2020 forecasts downward by almost a third; in just two years, from 2009 to 2011 it had downgraded its calculations for 2015 by one quarter.

	2000 forecast	2009 forecast	2011 forecast
2010	276 million	260 million	211 million
2015	333 million	315 million	240 million
2020	400 million	365 million	275 million
2030		465 million	345 million

Unconstrained passenger demand for aviation forecasts, 2000 - 2011, based on Department for Transport figures

53. As DfT notes: "even when outturn data for all the key drivers of demand are input into the model" i.e. even when we know what GDP, exchange rates, oil prices, carbon prices and all the other things which affect the number of flights taken, "the forecasts of UK air passenger numbers for 2009 and 2010 exceed observed passenger numbers." [36] In other words, the model overestimates passenger numbers but DfT then seeks to make policy on the basis of its own flawed model.

54. One reason that the government’s assumptions are so inaccurate is that they are based on questionable assumptions. For example, the latest forecasts assume that the price of oil in 2030 will be $90 (2008 prices). However, the latest forecast by the Department for Energy and Climate Change suggests that a barrel of oil would actually cost $120. [37]

55. DfT has not provided unconstrained data on future demand for aviation in the South East in its 2011 forecasts. However, it says that in 2010, 125 million passengers used airports in the South East. As the table below shows, passenger numbers eventually peak in 2040, at 185 million passengers, due to capacity constraints.

56. In other words, there is hardly an impending capacity crunch. Even in the supposedly congested South East there is enough capacity in the system for the next 28 years – and that is assuming that DfT is able to accurately model future aviation demand.

Conclusion:

57. Greenpeace believes that: demand constraint must be a central plank of the government’s new aviation policy. It is untenable that the UK can meet its legally binding climate change targets whilst allowing aviation to absorb an even bigger share of a steadily shrinking carbon budget.

58. If we are serious about moving to a low carbon economy and improving the quality of life for local communities around the UK, then we must cap airport capacity, support low-carbon transport and improve connectivity through technological means.

59. In the immediate term this means:

- The inclusion of aviation and shipping emissions in the UK’s carbon reduction targets

- An objective assessment of what proportion of this overall carbon budget can be allocated to aviation which then frames aviation policy.

- Ruling out any aviation expansion until this assessment is made.

29 October 2012