There are growing calls for a green tax shift to the transport sector, which would help fill a gap in the EU’s budget after the UK leaves. A T&E analysis has found new measures such as a carbon tax on motor fuels, aviation kerosene duty, and ending the VAT exemption for flights within and from Europe would raise more than €50 billion annually. And last week, as EU leaders discussed the looming gap, 17 eminent economists rowed in behind the idea, calling it a ‘once in a decade opportunity’ to create a fossil-fuel contribution to the EU budget.
Transport is Europe’s biggest climate problem, representing 27% of the bloc’s greenhouse gas emissions. In order to meet its climate targets and avoid the severe impacts of climate change, stronger EU action on transport emissions is needed and fiscal policy has a key role to play – especially in the aviation sector which enjoys fuel tax and VAT exemptions and copious amounts of state aid.
Environmental organisations have long been concerned about the current rules relating to passenger transport VAT. The transport sector now accounts for the largest share of the EU’s greenhouse gas emissions, and the growth of aviation emissions now outstrips almost all other GHG sources. Yet member states oversee a VAT system which, through voluntary derogations, further inflates aviation’s rapid growth while also distorting competition with less carbon-intensive transport modes.
Transport is Europe’s biggest CO2 emitter and journeys by plane form a significant part. Many member states exempt tickets for domestic trips from value added tax (VAT) and all states exempt intra-EU airline tickets. The exemption for aviation costs governments some €17 billion annually. Even the European Commission calls these exemptions subsidies.
Transport is Europe’s biggest climate problem, representing 27% of the bloc’s greenhouse gas emissions. If Europe is to meet its climate targets and avoid the severe impacts of climate change, additional action is needed to tackle emissions from the transport sector. Meanwhile, the EU is drafting the post-2020 budget with a proposal expected in May 2018. The annual €10-14 billion gap that will be left as a result of the UK’s departure from the EU has triggered debate on alternative sources of revenue for the EU budget. This position paper outlines how a green tax shift has a key role to play in tackling transport emissions and addressing a gap in the EU's budget post-2020.
No one likes being misled by airlines, not on price, or where their luggage ends up. But fliers face a new risk: being misled on how sustainable their flights are. In a few years, fliers could be told that some of their ticket price is being used to prevent deforestation when in reality those forests had been cut down years ago. That’s because in 2016 countries meeting at the UN’s aviation agency (ICAO) agreed to establish a scheme to offset aviation emissions above 2020 levels, but left it uncertain as to whether they would deliver on this promise. The scheme, known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), means airlines won’t have to cut their CO2 emissions but instead pay other actors (the “offsetting” bit) to reduce theirs.
T&E convened a workshop to discuss emissions reduction pathways and measures for aviation in light of the Paris requirement for all sectors to cut emissions and to decarbonise by the second half of this century.
The UK cannot enjoy its current access to the EU air transport market after it leaves the EU unless it also commits to respecting EU aviation rules, a new report by T&E says. The report examines how to safeguard efforts to reduce the environmental impact of aviation after ‘Brexit’, and concludes that everyone stands to benefit if the British government adheres to EU rules on emissions trading and state aid.
The UN aviation agency ICAO has circulated draft rules for its carbon offsetting scheme (CORSIA). These rules were drafted after several years of technical work in ICAO. In November 2017 ICAO’s 36-state Council adopted the draft rules for CORSIA and circulated it to all 192 ICAO states for their feedback. States have until 5 March 2018 to respond, after which the Council will formally adopt the rules either unchanged or with amendments. The draft rules are available to read here.
The Dutch government’s refusal to publish documents about a controversial CO2 standard for aircraft, among other issues, is being challenged in court by T&E member Natuur & Milieu. It’s alleged that, by continuing to withhold decisions and research about the CO2 standard, emission trends, biofuels and offset rules – all of which were drafted or developed behind closed doors at UN aviation agency ICAO – the Netherlands is in breach of EU law.