Can economic measures help reduce emissions?
Once the industry has maximised the reductions in emissions through technology, operational efficiencies and infrastructure improvements, we can then turn our attention to economic measures that can help to limit aviation’s climate change effects. Economic measures should first be used to boost the research, development and deployment of new technologies rather than as a tool to suppress demand. The use of tax credits and direct funding must be explored as incentives to drive new technology programmes and encourage companies to invest in new, more efficient equipment.
While emissions from domestic aviation are covered under the Kyoto Protocol, those from international aviation (and shipping) are not, due to the difficulty in allocating these emissions to specific countries. International aviation emissions are therefore not included in the carbon reduction goals of signatories to the Kyoto agreement. Instead, governments agreed to pursue the limitation or reduction of such emissions through the UN's aviation body, the International Civil Aviation Organisation (ICAO).
General Electric's GEnx-1B and Rolls Royce's Trent 1000 state-of-the-art jet engines. Incentivising R&D investment through tax credits and direct funding would provide a boost to environmental innovation.
Emissions trading
One method of limiting emissions is through emissions trading schemes (ETS). These involve setting an overall limit on emissions and then allowing companies to buy and sell emission allowances to meet their reduction targets. A global ETS is one possible option for ICAO to follow in pursuit of a reduction in emissions.
An emissions trading scheme can provide an added financial incentive for companies to combat global warming because emissions allowances are given a cash value; companies that are able to reduce their own emissions can sell excess credits to companies that exceed their targets.
Because schemes set an overall limit on emissions, the overall environmental benefit is guaranteed. ETS is one method that might be used to manage overall CO2 emissions from air travel as long as it is designed in the right way. Any scheme must be open (i.e. able to trade with other industries), global and agreed between those governments involved.
The goal for a well-designed scheme is to allow aviation to meet CO2 reduction targets while continuing to operate and grow in a sustainable way. The aviation industry regards well-designed trading schemes as being preferable to fuel levies and emissions charges because these have no direct environmental benefits and simply deprive airlines of the resources they need to invest in improved technology.
Currently, international aviation is not covered under any emissions trading schemes. But international aviation will be included in the European Union’s emissions trading scheme from 2012.
The aviation industry believes such schemes should be devised through ICAO rather than by individual nations and regions, to ensure they are developed in the most effective way. A global industry requires a global solution for global problems.
Emissions trading offers a workable, incentive-driven solution to capping emissions. A well-designed, internationally agreed scheme would deliver the greatest environmental benefits.
Green taxes
Green taxes add a cost to each flight, whether by adding a charge for each passenger carried, for each take-off or landing, or for each leg of a flight. Green taxes are aimed at changing demand for air transport, which simply means pricing some passengers out of the market.
But in many instances, travellers have no reasonable alternative to air transport.
The aviation industry believes that green taxes are not a viable solution to address aviation’s contribution to climate change because they drain the aviation sector of financial resources needed for investments into research and development. In nearly all cases, the money raised by governments from such taxes have not been reinvested in environmental improvement measures – the UK’s Air Passenger Duty is a case in point.
Fuel levies
Fuel levies are additional taxes on fuel. Fuel is already the largest expense for the aviation industry. Fuel levies tend not to be an effective emissions-reduction tool for aviation because of the international nature of its operations. Airlines should make refuelling decisions based on efficiency rather than stopping in one country instead of another because of the tax regime. This is why the Chicago Convention protects international services from fuel taxes to prevent unilateral fiscal measures.
Find out more about the Aviation Industry Commitment to Action on Climate Change »