EU finance ministers move to tax aviation fuel after UN agency dithers
EU finance ministers are moving to end the fuel tax exemptions enjoyed by the aviation and shipping sectors, it has been reported, as the UN regulators responsible for their climate emissions continue to sit on their hands. Politico said it obtained draft conclusions for the next meeting of ministers in which they ask the European Commission to consider ending the tax loophole.
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The ministers will call ‘on the Commission to update provisions in the future proposal … taking into consideration notably [the] treatment of the maritime and aviation sectors,’ according to the document seen by Politico.
Shipping and aviation do not pay taxes on the fuel they consume due to exemptions in the EU’s Energy Tax Directive. The incoming EU economy commissioner Paolo Gentiloni is set to review the directive to ‘align it with our ambitions and bring an end to fossil-fuel subsidies.’
Ending the aviation exemption is easiest, as the directive permits countries to tax jet fuel through a series of bilateral agreements or by agreement between individual countries. T&E said the enthusiasm of finance ministers is welcome, and those countries most interested should immediately pursue this path.
Shipping is more complicated, as ships can more easily avoid buying fuel in Europe by ‘tankering’ fuel elsewhere, an option less suitable for aviation. However, with the political will shown by these ministers, countries can ensure effective carbon pricing for shipping by instead bringing it within Europe’s emissions trading system (ETS), as Commission president-elect Ursula von der Leyen has committed to doing.
The move by finance ministers comes as the UN maritime and aviation agencies show no sign of reducing emissions from the sectors. Last year the IMO adopted an aspirational commitment to halve shipping emissions by 2050, and reduce the carbon intensity of the sector by at least 40% by 2030. However, the dysfunctional governance system, and even climate denialism by some major IMO member states, have since prevented the organisation from making meaningful progress in deciding the steps to achieve those goals.
Last month ICAO failed to take any significant steps at its triennial assembly to rein in airline emissions. Delegates at the meeting made no progress on advancing a long-term emissions reduction target for the sector, almost four years after the Paris agreement.
Instead ICAO passed a resolution attempting to shut down European measuress on airline emissions like the inclusion of European flights in the EU’s emissions trading system, as well as ticket and fuel taxes. T&E said that even as public concern reached record levels, ICAO was still trying to block those states that want to do more to tackle airline emissions, which have more than doubled in the last 20 years.
T&E’s aviation manager, Andrew Murphy, said: ‘The ambition shown by Europe’s finance ministers stands in stark contrast to the decades of inaction from the UN’s agencies. The desperate attempts by industry to block regional ambition should be seen for what they are: an effort to keep these sectors untaxed and their emissions unregulated.’
In September a poll in the UK found that two-thirds of people believe in the need to curb air travel to tackle climate change. Just 15% thought such action was not needed. Almost half of those surveyed felt they had become more worried about climate change than they were 12 months ago.
Yet the ICAO resolution called for a UN carbon offsetting scheme, known as Corsia, to be the only ‘market based measure’ covering aviation emissions. It calls for no regional ambition to be allowed. But if the EU bows to ICAO and industry pressure to drop EU flights from its ETS and rely on Corsia alone, airline emissions in Europe would soar by 683 million tonnes of CO2 over 10 years, according to independent research. That is equivalent to the overall annual carbon pollution of France and Poland combined.
A verbal objection was expressed by European transport officials at the assembly after the motion was passed. However, T&E said EU officials should have formally ‘filed a reservation’, a simple move which would provide absolute confirmation of the bloc’s right to regulate aviation pollution in Europe through its emissions trading system as well as ticket and fuel taxes.
Relying solely on the ICAO scheme will prevent the EU meeting its commitments under the Paris climate agreement. Corsia allows airlines to buy cheap carbon offsets that pay for emissions reductions elsewhere so they can continue growing theirs. T&E said that the use of carbon offsets, which already have a chequered history, will prevent the global economy from reaching net zero emissions by 2050 at the latest.
Flying is one of the fastest growing sources of greenhouse gas (GHG) emissions and the most climate-intensive form of transport. Aviation is responsible for an estimated 4.9% of man-made global warming. If international aviation was a country, it would rank as a top-10 emitter globally.
New research indicates that as many as half of flights may be considered to lack importance to the travellers taking them. A study focused on frequent flyers, published by the Journal of Air Transport Management, found that one in five flights (21%) could be considered redundant while leisure was the most popular motive for travel at 42%. Even in this category, the respondents said that 48% of these leisure flights were considered of limited value.