Global
Feb, 2007
With the dangers of global warming now embedded in the Western consciousness aviation is facing unprecedented scrutiny of its environmental performance. Although greenhouse gas emissions from aircraft contribute a relatively small proportion of the world total, sections of the media and public are increasingly voicing concerns over the air transport industry’s climate change impact. In the first of two investigations, Alex Derber ascertains exactly where the industry stands in relation to the environment and assesses how that position will change in the future.
In July 2005, the British treasury announced a review of the economics of climate change. In October 2006, Sir Nicholas Stern delivered his report to the chancellor and prime minister. The Stern Review has been lauded by, amongst others, four Nobel Prize economists and the president of the World Bank as a convincing, accurate and necessary assessment of the reality of climate change, the threat it poses and alacrity with which measures need to be taken to combat it.
Stern begins his executive summary as follows: “The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.”
That sentiment is echoed around the world and there is little point debating the existence of climate change or, indeed, the evidence that human activity is causing it. Doubting those conjoined facts is akin to insisting the earth is flat.
‘The greatest market failure the world has ever seen’
So runs the Stern Review’s preferred description of climate change. It estimates that the cost of not acting to curb global warming “will be equivalent to losing at least five per cent of global GDP each year, now and forever”. Incorporating a wider range of impacts into the calculations could mean a loss of up to 20 per cent. In contrast, the cost of acting now could be limited to around one per cent of world GDP per year.
Of course — and as Stern acknowledges — the cost cannot be measured in purely economic terms. It will be accounted for in the destruction of lives, cultures and ecosystems. As an example, the August 2003 heatwave in Europe killed 35,000 people. The World Meteorological Organisation predicts that due to rising global temperatures such heatwaves could become commonplace by the middle of this century.
Aviation context
Today, the commercial air transport industry accounts for almost 90 per cent of total aviation fuel burn. Global passenger air travel (revenue passenger km) is expected to grow by about five per cent per year to 2015 and total fuel burn by about three per cent, the disparity being due to efficiency gains. Unsurprisingly, future emission estimates become increasingly uncertain the further one projects ahead, but the Intergovernmental Panel on Climate Change (IPCC), on which many aviation/environment-related studies rely for their baseline numbers, has devised various scenarios based on differing assumptions of population and economic growth, land use, fuel mix, technological advances and energy availability to come up with acceptable median figures.
According to the IPCC’s mid-range scenario, by 2050 aviation’s contribution to global greenhouse gas emissions is expected to have risen from two to roughly three per cent. These figures are quoted constantly by the industry in its riposte to perceived demonisation by the media and environmental lobby. However, these numbers are somewhat misleading for several reasons. Firstly, the IPCC’s median prediction for aviation growth was calculated in the mid-1990s and now appears to be an under-estimate. Secondly, and most importantly, no account was taken of cuts in emissions that countries have committed themselves to, either unilaterally or under the Kyoto Protocol.
Stabilising CO2 concentrations in the atmosphere at 550 parts per million — the absolute maximum beyond which catastrophic climate change occurs — requires annual CO2 output to be brought down by 80 per cent, according to the Stern Review. There are few studies to be found estimating what aviation’s contribution would be in a future committed to such a reduction, but in cases where countries have already set themselves targets, air transport is on course to account for between 25 and 66 per cent of their projected allowances. This, however, is dealt with in the next article.
“..airlines would be expected to be able to pass on…the cost of participating in the [emissions trading] scheme to their customers. Whether airlines receive allowances free of charge would not be expected to make any difference to this cost pass-through decision.”
—EU Commission
The actual contribution that aircraft emissions make to global warming should also be examined more closely. Radiative forcing is a measure of the extent of change in the energy balance of the atmosphere. It is an important metric because the greenhouse effect of aviation emissions is greater than that of those same emissions at ground level because of the chemical changes that occur at altitude. An EC TRADEOFF study putting the radiative forcing index of aviation emissions at 1.9 is the best estimate we currently have. Huge uncertainties still remain, though, about the warming effect of cirrus clouds which can themselves develop from aircraft contrails. Such effects are excluded from most studies, which means that 1.9 is almost certainly an underestimate. The Royal Commission on Environmental Pollution (RCEP), an independent body established in 1970 to advise the UK’s government, parliament and public on environmental issues, concludes that aviation could contribute from six to 10 per cent of global total radiative forcing by 2050. It comments: “We question the desirability of allowing the environmental impacts of air transport to rise to such levels unchecked and unconsidered.”
Fuel efficiency
“Unchecked and unconsidered” is a label with which most in aviation would take umbrage with. IATA states: “Our industry takes its environmental responsibilities very seriously by constantly looking for — and finding
— ways to reduce our environmental impact...We improved fuel efficiency five per cent in the last two years and have improved it 70 per cent over the past 40 years. Last year we shortened 300 routes and saved over six million tonnes of CO2. We are reducing weight to reduce emissions. This goes from making lighter aircraft to little things such as washing aircraft surfaces to reduce friction, even reducing the number of ice cubes!”
Within the next 50 years there is no practical alternative to the jet engine in commercial aviation or to kerosene as the energy source for propulsion. In spite of this, as highlighted above, significant airframe and engine efficiency improvements have already been made in relation to the initial generation of jet aircraft (although a Dutch National Aerospace Laboratory study suggests that a 70 per cent gain is an exaggeration since the 1960s’ reference aircraft was the DH Comet 4, an aircraft that compared poorly in both ubiquity and fuel economy with its contemporary the Boeing 707).
Going forward, industry body the Advisory Council for Aeronautical Research in Europe (ACARE) targets a 50 per cent reduction in CO2 emissions (through improvements in engines, airframes and air traffic management) for the industry by 2020, a figure that the UK’s government quotes in its 2003 Aviation White Paper ‘The Future of Air Transport’. This is certainly optimistic. Not only does it require breakthrough technologies, but also the certification, mass production and fleet-wide adoption of those technologies within 13 years. The IPCC believes a 40-50 per cent reduction from engines and airframes alone (gains from better air traffic management are assumed to be around 6- 12 per cent by 2020) can only be made by 2050 at the earliest. Industry/government coalition ‘Greener by Design’ concurs.
Moreover, the RCEP notes: “Further improvements in engine design, using approaches such as lean-burn and staged combustion, require a trade-off to be made between fuel efficiency, oxides of nitrogen [a greenhouse gas] emissions and noise.” Most importantly, it should be noted that projections for future efficiency gains resulting from operational and technical improvements are already built into all major forecasts for global aviation fuel burn.
Single sky and emissions trading
Although the industry is quick to point to the technological strides it is making, it does acknowledge that they will be insufficient to reduce total fuel burn. Martin Broughton, chairman of British Airways, has said: “We are looking for fuel efficiency gains of between 17 and 30 per cent when we start replacing our long-haul fleet. But we are realists at British Airways. We recognise that these emissions gains for the industry are likely to be outweighed by future growth.”
In Europe, two measures have been tabled to address this problem. The first is SESAME, the European single sky initiative. The goal is to amalgamate all 34 separate European ATC providers into a single body, streamlining air traffic management over the continent. IATA claims 15 million minutes of delay could thus be driven out of the system, saving 12 million tonnes of CO2 emissions per year, and states: “It is unbelievable that governments are unable to organise themselves to get this implemented and we urge them to act without any further delay. If the USA can do it so can the governments of the EU. The question is: do they have the political will?”
While progress towards a single sky remains slow, the incorporation of aviation into the European Union Emissions Trading Scheme (EU ETS) looks closer to becoming a reality following the release of an EU Commission proposal on the matter in December 2006. This calls for all European airlines operating into or out of a European airport to account for the carbon they emit from 2011. Non- European airlines using continental airports will have to do the same from 2012.
The EU ETS began operating in January 2005, covering around 11,500 energy-producing and energy-intensive installations. Each installation was allocated a certain number of carbon allowances — each allowance equivalent to one tonne of carbon emissions — and was only allowed to emit that amount per year. Those exceeding their allowance would have to buy extra permits on the market from those who had managed to emit less than they were entitled to. Thus, reducing carbon emissions was incentivised.
Bringing aviation into the scheme is regarded as beneficial for several reasons. Firstly, it will encourage airlines to invest in modern, fuel- efficient fleets and working practices. Predominantly, though, since aviation is the only sector with no hope of cutting its carbon emissions in absolute terms, it makes sense to bring it within a scheme with an overall carbon cap.
Since aviation is expected to be a net buyer of carbon credits, the theory runs that it will bolster the market for carbon and subsidise deeper reductions in other industries. The Stern Review ventures that a deep and liquid market is essential to the sustained success of an ETS, which should therefore attempt to encompass as many industries as possible, including aviation. The goal, ultimately, is to spread emissions trading to the international arena.
Although many airlines have lent their support to the EU ETS, concerns have been voiced over the initial allocation of allowances. These appear to be unfounded: predictions are that 97 per cent of carbon credits will be issued gratis according to benchmarking criteria, with the remaining three per cent to be auctioned. The total aviation allowance to be issued will reflect 2005 emission levels for the industry.
The UK-based Institute of Public Policy Research and the World Wildlife Fund have contended that airlines will actually make windfall profits from this allocation, by passing on the carbon price of their free allowances to customers (this is what occurred with energy companies in the first phase of the EU ETS). easyJet has responded that such arguments demonstrated “an understanding of the economics of aviation that would shame a 10-year-old schoolchild”. Nevertheless, in the impact assessment for its proposal to include aviation in the EU ETS, the Commission notes: “Since every airline on each covered route would be treated equally, airlines would be expected to be able to pass on, to a large extent or even in full, the cost of participating in the scheme to their customers. Whether airlines receive allowances free of charge would not be expected to make any difference to this cost pass-through decision.
Through its proposal to incorporate aviation into the EU ETS, the Commission’s stated goal is to “address aviation’s growing climate impact and ensure that it contributes to the EU’s overall objective of limiting the increase in the global annual mean surface temperature to a maximum of 2 degrees centigrade above pre-industrial levels”. However, in its impact assessment, the Commission — assuming a carbon price of €30 per tonne — shows airline ticket prices will only rise by €4.6-€39.6 by 2020 as a result of the ETS. This will reduce demand growth from business- as-usual levels of 142 per cent to a minimum of 135 per cent. Thus, it is difficult to ascertain how membership of the EU ETS makes any significant difference to ‘aviation’s growing climate impact’.
Where it is hoped the air transport industry can make a difference is by subsidising deeper emission cuts in other sectors. This theory has its critics. There is the danger that other sectors wouldn’t invest their carbon profits in further efficiencies. More disconcertingly, George Monbiot, a leading environmental commentator, warns of “a serious danger that aviation could break the emissions trading scheme” by placing an unachievable burden on other sectors and by raising the price of carbon to unacceptable levels. “It wouldn’t work like that,” says a spokesman for British Airways, which has long supported inclusion in the EU ETS. “If any sector created a demand for carbon allowances that couldn’t be met the price would go through the roof and the potential buyers would think about doing something else rather than buying.
That’s how markets work. If individual airlines wanted to increase their carbon allowance beyond a certain point and they found that the price was exorbitant they might decide that they wouldn’t grow that much.”
Various studies have come up with different conclusions about aviation’s impact on the price of carbon. Some predict it will make little difference while others foresee an untenable increase. The EU Commission simply says: “With limited access to credits, aviation would have no significant impact on EU ETS prices. Instead the quantity of project credits purchased would increase.”
Other measures
UK start-up Silverjet has promised to become the world’s first carbon neutral airline through the use of carbon offsets. Offsets aim to nullify the carbon emissions of one party by reducing — or increasing the absorption capacity of — those of another. In practice this means the price of each ticket will be marginally higher to reflect the cost of, for example, reforestation projects or the distribution of energy-efficient light bulbs in Jamaica. Other airlines have committed themselves to offsets as well, which appears quite laudable.
Monbiot, however, is less than impressed, as he explains: “When you take your flight from New York and back you know for certain that you are producing 1.2 tonnes of carbon dioxide and that you are producing it today when you take that flight. When you buy an offset you might one day save
1.2 tonnes of carbon dioxide as a result of that offset — you cannot really be certain that you will — but it takes several years for that investment to mature and turn into a carbon cut commensurate with the carbon that you produced. In other words you are trading a certain emission now for a possible cut in the future and that is a bad trade. It’s a bad trade because carbon cuts made now are far more valuable in terms of restraining runaway climate change than carbon cuts made in the future...Secondly, when used by companies such as British Airways or BP, their purpose in selling carbon offsets is to make people feel better about using fossil fuels and the reason they want to make people feel better about it is so that they can keep expanding their business.
Mooted measures to sharply increase the cost of flying include environmental charges and the taxation of jet fuel.
“The availability of cheap air transport currently enjoyed by the public is a very recent phenomenon. It is not a traditional ‘right’ in any sense.”
—Royal Commission on Environmental Pollution
This latter option is at present rendered legally impossible by the Chicago Convention and numerous bilateral ASAs. And while the EU Commission has repeatedly called for the normalisation of the treatment of aviation fuel, unilateral action by one or even a union of states would have little effect due to tankering. Meanwhile, the notion of environmental charges, charmingly described by Ryanair CEO Michael O’Leary as “horse-shit”, was specifically rejected by the EU in favour of the ETS. Air passenger duty, another method, is dealt with in the following article. However, demand for air travel is relatively price inelastic which makes increasing ticket prices a contentious method of lowering emissions.
A rather novel idea under consideration by the UK’s environment minister, David Miliband, is the personal carbon allowance. Under this approach, every citizen is issued an annual amount of carbon credits which they can choose to use, buy or sell in a populised version of an emissions trading scheme. Naturally, this scheme, which it has been suggested could be established within a decade, would drastically reduce the number of flights taken due to the huge dent it would make in an individual’s yearly carbon budget.
IATA comments: “The major flaw of such a system is that it is likely to create a high threshold for people to get on a plane. It would put air travel back to where it was 30 to 40 years ago, with only the more affluent being able to fly. They can afford to buy up other people’s carbon rations.”
In fact, the social exclusion argument, routinely employed to stave off calls to increase the cost of flying, is rather disingenuous. Britain’s Civil Aviation Authority conducted a poll indicating that even in the age of cheap flights, people in classes D and E (the two poorest categories in the UK) take only six per cent of the nation’s flights. It should also be underlined that only a tiny, relatively rich percentage of the world’s population can afford to fly at all. Finally, the RCEP notes: “The availability of cheap air transport currently enjoyed by the public is a very recent phenomenon. It is not a traditional ‘right’ in any sense.” Interestingly, the public appears to agree: a recent Ipsos MORI survey in the UK found less than 22 per cent of respondents opposed to a policy to constrain aviation growth and 60 per cent support for environmental taxes on airlines — even if this meant higher air fares.
Conclusions
The chairman of British Airways has spoken of “a serious risk that airlines and aviation could become demonised in the same way that tobacco companies and smoking were during the last two decades”. Many in the industry express similar feelings. Aviation, they claim, has become environmental pariah number one in the eyes of environmentalists and certain sections of the media.
This article has attempted to examine some of the pertinent issues surrounding the debate. There is much it has not covered, including, most notably: regional environmental impacts (noise, air pollution); the air freight industry; the effects of possible oil price rises; and the projected mass proliferation of the very light jet.
In spite of this, certain conclusions can be drawn. The media certainly pours disproportionate scorn on the aviation industry. Airlines and manufacturers obviously devote considerable attention to reducing fuel burn, for commercial reasons if nothing else. Expecting operators to go further entails a self-imposed reduction in the number of flights which appears absurd. That should be the role of government or, indeed, the choice of the public. As has been shown above, though, there appears to be very little political will to impose measures to curb growth and the public, despite its protestations, keeps on flying.
On the other side of the coin, airlines and industry undoubtedly invite some criticism through rather hollow demonstrations of green credentials. Wildly exaggerated claims about future efficiencies breed only mistrust, while carbon offsets offer no real solution. Even support for the EU ETS can arouse suspicion, as cynics point out: “Turkeys don’t vote for Christmas.”
The final question is whether severe restrictions on growth are even necessary. Total aircraft emissions may now be relatively small, but if one agrees with CO2 stabilisation targets — as one should — there is little room in the shrinking carbon window for aviation to expand into. Nevertheless, growth in emissions will occur and there are no measures in place to prevent this. Although it is not happening now, at some point such growth will put the industry on a collision course with policy-makers.
When that happens, aviation will have to take a tougher look at its environmental policies, none of which as yet have involved a significant degree of sacrifice.