Taxing aviation to pay for adaptation to climate change
8th July, 2009
The Maldives Proposal for a Levy on International Flights breaks the taboo on taxing international aviation but it's not enough to tackle aviation's growing emissions, says Tim Johnson
Without a target for the aviation sector at Copenhagen, a levy appears, at best, to be a partial answer
As the Copenhagen climate negotiations in December draw ever closer, we are increasingly surrounded by proposals on how to structure a new international deal to succeed the Kyoto Protocol in 2013.
Among these, and thrown all too briefly into the UK media spotlight, was a proposal from the Maldives to impose a levy on all international flights.
Tabled on behalf of the 50 least-developed countries, the aviation levy is intended to create revenues to fund climate change adaptation measures in developing countries. The political messages behind this proposal are very clear: that guaranteeing finance is a critical issue for developing countries at the talks, and that international aviation, which has escaped any global measures to date by virtue of its exclusion from the provisions of the Kyoto Protocol, is a visible target for raising much-needed funds.
The need to finance adaptation measures is clear, and probably a critical component in obtaining the support of developing countries in Copenhagen. Fed up with the vague promise of financial support that, in practice, has delivered far less, developing countries are now looking for certainty, and find the idea of a dedicated fund appealing given the magnitude of the challenge.
Gordon Brown recently announced that approximately $100 billion per annum is required by 2020, while many in the environmental sector argue that it will be at least double this amount. While governments talk about the role of the carbon markets and development aid in contributing to this sum, a source of guaranteed funding is a high priority.
The argument for including international aviation in a new climate deal is equally compelling. With passenger traffic having increased by 38 per cent between 2000 and 2007, aviation accounts for 4.9 per cent of manmade global warming (if you include the latest best estimates for induced cirrus cloud formation) and, despite the current recession, predicts strong growth out to 2050. As one of the fastest-growing sources of greenhouse gas emissions, it is inconceivable that we can allow its continued absence from climate change commitments.
The industry, and the UN's International Civil Aviation Organization (ICAO), which has current responsibility for addressing the sector's greenhouse gas emissions, are not immune to these calls for change.
Last month, a high-level group within ICAO comprising 15 countries published its recommendations on a proposed framework. The highlight was a consensus to improve the average fuel efficiency of the in-service fleet at the rate of two per cent per annum through to 2050 (expressed as a 'goal' through to 2012, a 'recommendation' through to 2020, and an 'aspirational goal' from 2021 to 2050).
While the scope of this report was restricted from the start by unambitious terms of reference that talked only of aspirational fuel efficiency targets and frameworks, the recommendations represent a missed opportunity for ICAO to show leadership. It is symptomatic of many statements from the air transport sector that talk about voluntary agreements, goals and aspirations, and improved efficiency but ignore the essential elements in any climate strategy – a base year for measurement, a target for reduction (in absolute terms) and a global plan for mitigation. Given that the aviation sector is talking a different language, there is growing momentum ahead of Copenhagen, led by Australia, to take back the initiative and set targets for aviation.
So the stage and timing may be right for consideration of the Maldives' proposal, but, applied in isolation, it may not be the perfect solution. First, while it may break the taboo on taxing international aviation, it is a measure focused on raising finance rather than specifically reducing aviation emissions. With more than two billion passengers flying globally every year (around a billion on international flights), a flat-rate levy of $5-10 may raise substantial funds but will do little to influence airline behaviour or demand.
Furthermore, it will give rise, potentially, to the argument that aviation is paying its way and does not need to take further action, making it difficult to get a political consensus on the need for additional measures.
Second, previous attempts to impose a levy have been fiercely resisted by Treasury departments. Several years ago, French attempts by President Chirac to persuade the G8 to introduce a levy on international aviation as a means of funding development aid fell on deaf ears. Admittedly, the prospect of developing country support may create a more receptive atmosphere, but the fact remains that without a target for the aviation sector at Copenhagen, a levy appears, at best, to be a partial answer.
Other proposals are being floated. The Aviation Global Deal Group (a coalition of airlines and the Climate Group) has welcomed the opportunity to include international aviation in the Copenhagen deal, and has set out plans for a global trading scheme with revenues from auctioning carbon permits going to finance climate measures in developing countries.
The International Air Transport Association (IATA) has also committed to carbon-neutral growth in the medium term and to a reduction of 50 per cent by 2050 compared to 2005 levels.
Coincidentally, this translates as a long-term commitment to stabilise emissions at 1990 levels, the base year against which the world has to make its 80 per cent cuts over a similar time span. Furthermore, IATA has stated that the 50 per cent reduction will be on a net basis, anticipating a role for the carbon markets.
Both proposals are a reaction to the idea of a levy, advocating flexibility in approach and fearing that a levy may be ratcheted up in the future to control emissions by influencing demand (an approach that may appeal to many as being inevitable).
Whichever pathway you prefer, the message is the same: raising revenue for developing countries must be part of the solution, but it should not be at the expense of effective measures to tackle aviation's growing emissions. Viewed as part of an overall strategy it deserves further attention, but additional measures, and most importantly an emissions reduction target, are equally vital ingredients.
Tim Johnson is the Director of the Aviation Environment Federation
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