Green Car Congress: Study: Proposed EU Aviation Carbon Pricing Schemes Wholly Inadequate

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Study: Proposed EU Aviation Carbon Pricing Schemes “Wholly Inadequate”

4 September 2007

450ppmv cumulative carbon dioxide emission profiles for the EU25 and three aviation emissions scenarios leading up to 2012—the current planned date for the including aviation in the ETS. Click to enlarge.

Current proposals to include aviation in the EU Emissions Trading Scheme (ETS) will have very little impact on reducing aviation’s contribution to climate change in a 450ppmv CO₂ pathway designed to keep warming at or below a 2°C threshold, according to a new report by the Tyndall Centre in the UK.

The new report—Aviation in a Low-Carbon EU—investigates to what extent EU proposals to include aviation in its Emissions Trading Scheme would help deliver a low-carbon EU future. The EU plans to include aviation in the EU ETS from 2011 for intra-EU flights, with all flights departing from or arriving in the EU included from 2012.

The air transport market within the EU25 nations continues to grow rapidly. EU25 passenger numbers in 2005 exceeded 700 billion, with an 8.5% increase on the previous year’s figures.

Combining the CO₂ emissions from domestic and international aviation provides an estimated CO₂ emission growth rate of 7% between 2003 and 2004 and 6% between 2004 and 2005. These rates of growth are similar to those produced by the industry since 1993, with the exception of the period affected by the events of September 11th 2001.

This rapid growth in emissions, coupled with limited opportunities for other than incremental improvements in fuel efficiency, at least in the short- to medium-term, gives rise to the concern that as EU nations strive to reduce its carbon dioxide emissions, aviation will be responsible for an increasing share of total emissions.

—Aviation in a Low-Carbon EU

The EU ETS was launched in 2005 and covers around 45% of EU carbon dioxide emissions. Under the scheme, power stations, refineries and heavy industry across Europe are given a limit to how much carbon dioxide they can emit. Participants in the scheme must hold sufficient carbon dioxide permits to match their levels of pollution. Companies that exceed their permits must buy extra allowances from those companies who have managed to reduce their emissions or pay stiff fines. The EU Emissions Trading Scheme is currently under review.

We delude ourselves if we believe the proposed framing of the EU ETS is in keeping with the EU’s own and repeated commitment to limit climate change to a two degrees Celsius rise. The current aviation ETS proposal must be significantly strengthened so as to both drive down emission growth rates and force the adoption of more efficient aircraft technologies and operation.

—Dr. Kevin Anderson, Director of the Tyndall Centre’s Energy Programme

This new Tyndall report, commissioned by the environmental organization Friends of the Earth, provides an update to a 2004 report by Tyndall that investigated the implications of a growing EU aviation industry within the context of a region striving to tackle greenhouse gas emissions.

The new report incorporates a number of important refinements, according to the authors. First, the research now includes the importance of cumulative emissions and carbon budgets as opposed to a smooth pathway to a certain percentage reduction in 2050.

Second, although the carbon budget chosen continues to be defined by the 2°C temperature threshold target, the carbon dioxide concentration considered is now 450ppmv rather than 550ppmv reflecting, at least in part, how the science has moved on. Consequently, the carbon budget available is more limited than under a 550ppmv regime considered previously.

Third, rather than assuming carbon emissions from the aviation industry will continue to rise, the new analysis explores the impact of scenarios that aim to be consistent with a 450ppmv future through reductions in passenger growth rates, the more rapid introduction of new management practices and technologies and, in the long-term, alternative fuel sources.

Fourth, the study considers the potential impact of including aviation within the EU’s emission trading scheme (EU ETS), and the carbon prices required to bring about significant reductions in aviation emission growth.

Whilst the EU ETS is an important mechanism for responding to the climate change challenge, this report demonstrates that the carbon prices currently being discussed are wholly inadequate for achieving other than insignificant marginal adjustments to the industry’s rate of growth.

Current discussions often refer to carbon prices well below €50/tonne, with the latest IATA report focussing on values per tonne of CO₂ of between €15 and €33. Within this Tyndall report, such low prices are considered inconsistent with a genuine drive towards an EU 450ppmv CO₂ pathway, and consequently the prices are revised upwards significantly.

However, even with the radically higher price of €300 per tonne considered here, the price signal may prove too weak to bring about the growth and efficiency changes embedded within the scenarios. Consequently, a clear conclusion of this report is that the EU ETS, even with carbon prices an order of magnitude higher than those currently being considered by the industry (i.e. €100 to €300 per tonne as opposed to IATA’s €15 to €33 figure), and with an early baseline year, may have insufficient impact on reducing current levels of emission growth.

—Aviation in a Low-Carbon EU

The authors conclude the report with a series of outlined recommendations for reconciling aviation with a 450ppmv CO₂ pathway:

A meaningful EU ETS. The EU ETS cap should be designed in keeping with a 450ppmv CO₂ pathway (based on cumulative emissions). A high proportion, if not all, carbon allowances should be allocated through a process of auction, rather than awarded. In the absence of meaningful emissions caps on other countries or regions, the EU ETS should be self-contained with no, or extremely limited opportunity, for purchasing carbon credits from elsewhere.
Aviation within a meaningful EU ETS. An early baseline year (not later than 1990) should be a prerequisite for aviation’s inclusion in the EU ETS. Aviation must be included in the EU ETS as soon as is possible and stringent constraints on the sector’s emission growth should be implemented in the interim. The overall EU ETS cap should be sufficiently tight that carbon prices well in excess of €300/tonne—an order of magnitude above current thinking—are achieved. Additional and substantial flanking instruments should be implemented to take account of aviation’s non-CO2 climate change impacts.
Alternatives to addressing aviation within the EU ETS. The aviation sector could operate within a sector-specific cap; this could be aviation only, or be for all transport modes. The cap should be based on the sector making its fair contribution to a 450ppmv CO2 pathway (based on cumulative emissions). A very high carbon-related price could be imposed on the industry. This could, for example, be in the form of a fuel tax, air passenger duty, or some other innovative charging instrument. A stringent carbon rationing regime could be introduced. The quantity of allowances should be accordance with a 450ppmv CO₂ pathway (based on cumulative emissions).

A core message to policy makers in the report is that: “constrained and responsible growth” of the aviation sector can be reconciled with a 450ppmv CO₂ future, but that immediate policies are necessary to substantially constrain passenger-km growth in the sector and that “urgent and radical” adjustments to the sector are necessary to bring about substantial efficiency improvements.

Resources:

Aviation in a low-carbon EU: A research report by the Tyndall Centre, University of Manchester
Friends of the Earth press release

September 4, 2007 in Aviation, Climate Change, Europe | Permalink | Comments (12) | TrackBack (0)

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Comments

Just tax aviation fuel at the same rate you tax on-road fuels and the forget about complicated carbon trading schemes. Conversely, liberate the industry from having to levy its own taxes to maintain infrastructure on the ground. Do allow airlines to operate integrated ground transportation services to increase revenue per passenger, since passenger numbers will likely drop as prices rise.

These changes will have to be implemented slowly, both because there are a lot of international treaties covering aviation and because airlines require long lead times to amortize their fleets. There are also established monopolies on the ground (e.g. rail) that have to be broken.

Also, require airlines to advertise exclusively the full end user price incl. all taxes in the reservation systems. Itemize taxes, agent fees and fuel surcharges all you want in the detailed bill - the ranking should be based on the full price. Anything else is just a bait-and-switch to hide the true cost of the service from the customer in your advertising. This change can be implemented immediately.

Posted by: Rafael Seidl | Sep 4, 2007 12:41:16 PM

The problem is that planes are so mobile. If fuel is more expensive in Ireland than Austria, guess where they will fill up the plane.
Cars generally stay within one country, but planes are a different matter.
You would need Europe level Carbon taxes for planes - perhaps we could bully other nearby countries into adopting the same taxes, but I doubt we could bully the USA, Russia and China.
Nontheless, it would be worth a shot - a europe wide carbon tax with the nations getting to keep their cut.
It might reduce the number of people going to Estonia for stag weekends - which might not be such a bad thing.

Posted by: mahonj | Sep 4, 2007 3:20:16 PM

A generalized cap-and-trade mechanism lets people choose how they're going to emit carbon, and lets the market price carbon for a given use. No need to monkey around with getting obsessed with aviation, which seems to be the Tyndall whipping-boy.

Posted by: jack | Sep 4, 2007 11:46:31 PM

The level of taxation would have to be decided by treaty and applied globally for it to work. The current situation stems from a treaty in the late 40s I think so it really isn't appropriate today.

One other important issue is the fact that emissions from international aviation and shipping are not included in emissions calculations for Kyoto. This needs to be rectified. Allegedly they couldn't come up with a way to apportion the emissions. But it's quite simple: the emissions from any flight are split equally by the departure and arrival country.

Posted by: Scatter | Sep 5, 2007 2:11:38 AM

@ mahonj -

I'm not sure if fuel tourism is really an option for commercial passenger service. Those flights are from A to B and they have to refuel at either end. A detour would not only inconvenience passengers, the extra fuel cost plus wear and tear on the aircraft would overcompensate any savings.

Posted by: Rafael Seidl | Sep 5, 2007 6:01:06 AM

One other important issue is the fact that emissions from international aviation and shipping are not included in emissions calculations for Kyoto.

Inventories submitted to the IPCC include bunker fuel.

Posted by: jack | Sep 5, 2007 6:02:06 AM

I know but they're excluded from the total GHG emissions reported under Kyoto and generally go unreported. So for example in the UK as far as Kyoto is concerned our emissions have gone down, but when you factor in aviation and shipping they have gone up.

You also have long haul aircraft refuelling in third countries but not taking on passengers and this fuel would not be counted in the departure or ultimate destiniation country bunker emissions.

Posted by: Scatter | Sep 5, 2007 6:58:17 AM

Kind of a moot point, since Kyoto is kneecapped. The reason they're excluded is precisely because of countries like GB, which can't be faulted for its geographical location and hence its role as a major aviation transfer hub.

There's lots of problems with allocation. For example, if a company of Country X offshores production to Country Y, the emissions get counted in the country of production, not where the primary economic benefits are.

It's always going to be an imperfect system.

Posted by: jack | Sep 5, 2007 8:00:05 AM

Oh for sure but things like aviation would be quite easy to include because they're direct emissions caused by burning a quantifiable amount of fuel and the movement of passengers around the network is tracked in detail. The indirect emissions associated with manufacturing products are *a lot* harder to measure.

If lots of people are flying into the UK then this should be counted. If it's simply pausing to refuel for onwards flight then it shouldn't be.

My main issue with this is that it gives the impression that we're making some sort of (very very slow) progress towards our targets when it couldn't be further from the truth and we are in fact diverging from our targets.

Posted by: Scatter | Sep 5, 2007 8:42:08 AM

If lots of people are flying into the UK then this should be counted. If it's simply pausing to refuel for onwards flight then it shouldn't be.

Think about trying to measure that. What about flights where some people get on and some get off? They've thought this through, believe me.

The UK's too small to matter in the scheme of things, so it's not even that important. It could go carbon-neutral and it would hardly make a dent in global emissions.

Posted by: jack | Sep 5, 2007 9:10:04 AM

It's just stupid to tax aviation in my opinion. I mean airlines are doing all they can to reduce the amount of fuel they use already, by doing things like buying 787s and A380s and other planes. The biggest problem with aviation is that a plane can last 40 years, and it's hard to replace old ones, because a brand new one costs hundreds of millions of dollars, if not billions, and a new one requires almost as much maintenance as an old one. Also the aviation industry employs millions of people worldwide, and if we cause it to crash, which we probably will by taxing their fuel further, many will loose their jobs. I think that we just need to find a way to sustainable make Jet-A grade biofuel.

Posted by: Brad | Sep 5, 2007 1:40:08 PM

It may not be obvious from the article, but the fundamental problem is the same one with other proposals for greenhouse gas taxes and carbon trading: there seems to be no price level that works for all energy uses. The report comments that values of 15 to 30 Euros per ton have been seen as appropriate for motivating industrial users to begin moving away from carbon emitting processes.

But when you translate that to gasoline, a gallon of gas only puts out about 20 pounds of CO2 or 1/100 of a ton, therefore we are talking about taxes of 20 or 30 cents per gallon. Tax levels are already substantially higher than this even in the U.S. and far higher in Europe, so adding such a GHG tax won't make a noticeable dent in transportation uses.

That is the crux of the problem that the report highlights, and why they call for 10 times higher(!) taxes of more like 300 Euros per ton which would be more like 3 dollars a gallon. That's the kind of stick which would obviously motivate significant migration away from CO2 intensive uses; however the problem is that if you apply this tax to industrial use, it's going to be far too disruptive and could cause economic chaos and collapse.

Now if you listen to what this cost analysis is telling you, it says that it is far easier and less costly to reduce CO2 production in industry than in transportation. Hence the focus should arguably be there rather than a priori deciding that we need to cut each sector by X% and trying to put together a jigsaw puzzle of policies to achieve such cuts across the board. The bottom line is that it will be much more efficient to achieve cuts by focusing on those sectors where it is easiest. And that probably means that transportation will be one of the last places to see improvement.

Posted by: Hal | Sep 5, 2007 6:45:23 PM