France gifting €1bn a year in aviation subsidies – study
The French government, which hosts this year’s critical COP21 climate change conference, is losing around €1 billion a year in revenue because it exempts domestic air transport from energy and carbon taxation. The figure comes from a study on foregone tax revenues from aviation commissioned by T&E member Climate Action Network France (RAC-France).
Entitled Tax exemptions and reduction for domestic commercial air passenger transport in France, the study by CE Delft quantifies the tax revenues lost to the French government in the period 2008-11 by its policy of exempting airlines from paying energy and carbon taxes on domestic flights. As well as being the most carbon-intensive mode of transport, aviation, along with shipping, is the only transport sector with a guaranteed tax-free status for its fuel.
The French reports finds that, depending on the tax rate that would have been used, the lost income in the three-year period ranged from €2.3 billion to €3.2 billion. It said a gradual abolition of the exemptions could generate €1.3-1.6 billion over the period 2015-18, which in turn would reduce CO2 emissions from domestic flights by 20-27%, and the new income could be used to create more jobs. The increase in ticket prices would be 18-24%.
RAC-France’s Lorelei Limousin said: ‘The government is continuing to subsidise air transport to the tune of more than a billion euros per year just for internal flights. This is precisely the area where less polluting alternatives exist, like trains, but they are suffering because of unfair competition with aviation.
‘Plans to build new airport infrastructure, like the proposed Great West airport near Nantes, totally conflict with policies to fight climate change, and if France wants to set an example as host of the COP21 conference, it should abandon such projects.’
CE Delft estimates that the French government has been allowed, under EU rules, to provide at least €10 billion in aid to the French aviation sector.
T&E’s aviation officer Andrew Murphy said: ‘France is hardly unique in granting such tax-free statuses to the aviation sector. Only a handful of states tax fuel for domestic flights, and fuel for international flights remains entirely tax free. Our estimate puts the cost of this exemption at $65 billion (€58.7 billion) every year, this for a sector whose emissions are expected to double by 2030.’
In April the European Commission approved three state-aid schemes for airports and airlines in France – the first time state-aid was approved on the basis of new guidelines adopted in February 2014. T&E said the guidelines would continue to give aviation a ‘leg-up’ over less carbon intensive modes of transport, while the EU and member states claim they are aiming to decarbonise their economies. The contradiction would also undermine Europe’s effort to be a climate leader.