Emissions trading is an easy option for airline chiefs

Dings wrote in response to an article by Rod Eddington, Chief Executive of British Airways and a follow-up letter by Sir Richard Branson of Virgin Atlantic, both published in the Financial Times in recent days.  See below for the full texts.

Emissions trading is an easy option for airline chiefs

By Jos Dings

Published: January 12 2005 02:00

Sir, The bosses of British Airways and Virgin Atlantic, Rod Eddington (“How
airlines can fight climate change”, January 4) and Sir Richard Branson
(Letters, January 11), are right to argue that more must be done to reduce
the impact of aviation o­n the environment. But they underestimate the
existing problem and are wrong to argue that emissions trading is the o­nly
answer.
Mr Eddington says his industry is o­nly a small source of greenhouse gas
emissions. Yet the climate impact of aviation is put at 4-12 per cent of
human-induced global warming, and the market is growing fast – at 5 per cent
per year. Yet this industry, which contributes just 1 per cent to global
gross domestic product and 0.2 per cent of global employment, still exists
in a parallel universe where value added tax (not paid o­n fuel or
international tickets) is described by airline bosses as a “swingeing tax”.
In fact, compared to other sectors, the industry as a whole has ferociously
resisted any attempts to make it take responsibility for its environmental
impact. The total inaction of the International Civil Aviation Organisation
(ICAO), given responsibility to tackle the issue after Kyoto, attests to
this.
Both men suggest that the European emissions trading system is now the o­nly
solution. They would. The industry stands to gain by joining – as the
history of similar systems suggests that carriers will receive the majority
of their tradable permits free, o­n entry to the system, and pay for o­nly a
tiny number. Furthermore, the price is likely to stay low because of the
political necessity of appeasing energy-intensive European exporters such as
the steel industry, who, as of January 1 already participate in the system.
Consequently there will be little or no incentive to reduce emissions.
There is a range of fairer options that would make airlines pay for every
ton of emissions they produce and therefore give a real incentive for
reductions – en-route emissions charges and tax o­n aviation fuel are two
examples. Far from being “blunt” instruments, such charges would merely
bring the sector into line with every other area of economic activity.
If airline bosses are really serious about climate change, they should get
their heads out of the clouds and start taking these other options
seriously.
Jos Dings, European Federation for Transport and Environment (T&E), 1000
Brussels, Belgium

How airlines can fight climate change
By Rod Eddington
Published: January 4 2005 02:00

During the 20th century, technological progress and market economics
combined to deliver an unprecedented standard of living for many of us
across the globe. The challenge facing us in the 21st century is to ensure
that these benefits can be shared more widely and sustained without serious
damage to the environment. This is reflected in the priorities that Tony
Blair has set for the UK’s presidencies of the Group of Eight industrialised
nations and the European Union this year – climate change and Africa.
In the aviation industry, we have a particular interest in the prime
minister’s agenda. Aviation is a small but growing source of greenhouse gas
emissions. The British government is supporting plans to constrain their
growth by including aviation within the EU emissions trading scheme.
The reaction of the main players in the UK aviation industry is to give a
cautious welcome to these plans. The caution arises from the potential risks
to the competitiveness of Europe’s aviation industry. But we welcome the
British initiative because emissions trading is likely to be the most
effective and efficient instrument for dealing with greenhouse gas emissions
from aviation.
This positive response may come as a surprise. However, British Airways has
long believed in responsible management of environmental issues. We have
improved our fuel efficiency by 25 per cent since 1990 and in the past five
years have cut our carbon dioxide emissions by 15 per cent. We have also
halved the noise impact of our aircraft fleet in the past five years. This
has been achieved primarily by investing in quieter aircraft with lower
emission levels and by improving flight procedures, particularly o­n take-off
and landing. We work continuously with aircraft and engine manufacturers and
other stakeholders, such as National Air Traffic Services, to improve our
environmental performance.
The high cost of aviation fuel gives us a continuing incentive to reduce
emissions by boosting fuel efficiency. But with the growing demand for air
travel, efficiency improvements are unlikely to be big enough to prevent the
growth of aviation emissions. At a time when the world needs to achieve
substantial cuts in greenhouse gases, this poses a serious environmental
challenge for our industry.
Some of aviation’s environmental critics have been pressing for swingeing
taxes o­n air travel. This is a blunt and ineffective approach. It works by
making it too costly for people to fly. Emissions trading is a much more
efficient mechanism, as it gives airlines and other participants choice and
creates financial incentives. We either cut our own emissions or we pay to
ensure that someone else does it for us.
BA has built up experience of emissions trading by participating in the
British government’s voluntary scheme. We are the o­nly airline in the scheme
and may be the o­nly airline in the world to be actively participating in
emissions trading.
This experience benefits our business in several ways. The concept of
emissions trading helps focus the minds of our management o­n the importance
of environmental improvements. We have gained valuable knowledge o­n how to
gather and report emissions data. And our practical understanding can help
us influence the framework for future emissions trading schemes.
The longer-term objective is to establish a global approach to emissions
trading in aviation, through the International Civil Aviation Organisation.
It will take time to get agreement o­n this, particularly with the US’s
rejection of the Kyoto protocol. However, there is an opportunity to
demonstrate that such an approach can work in Europe, by including aviation
in the EU emissions trading scheme from 2008, when the scheme moves into its
second phase.
To avoid competitive distortions, the EU scheme should apply o­nly to flights
that operate fully within the EU. Also, aviation should not be forced to
comply with standards that differ from those for other industries. The
suggestion that its targets should be higher because of other, less well
understood, effects in the upper atmosphere should be resisted. These
effects need more research and emissions trading is unlikely to be an
effective way to tackle them.
Technology and market mechanisms have driven massive economic progress
during the past two centuries. Now we need to harness them to tackle the
environmental challenges that the world faces. It is vital that the aviation
industry play its part. Europe’s emissions trading scheme offers an ideal
opportunity for it to do so.
The writer is chief executive of British Airways

Global emissions trading scheme is right way to limit aviation pollution
By Richard Branson
Published: January 11 2005 02:00

Sir, I am delighted that Rod Eddington, the British Airways chief executive,
has drawn attention to the problem of climate change and the need for
everyone in the air transport industry to play a part in finding a solution
(“How airlines can fight climate change”, January 4).
Air travel continues to bring enormous benefits to society. It oils the
wheels of commerce; it generates jobs; it opens minds as ever more people
experience new cultures. The recent tsunami in the Indian Ocean has been an
appalling disaster but just imagine how the world could have responded
without the aid of air transport. Virgin Atlantic alone has sent a number of
relief flights to the region and carried large amounts of aid free of
charge. Other airlines have also contributed substantially.
We have to recognise, however, that there are costs as well as benefits
associated with aviation. Everyone in the industry has to do everything
possible to minimise environmental costs. The record so far has been good
but more can and must be done.
Some environmentalists simply want to stop air travel. That is a foolish
approach. For example, imagine putting all those people o­n ships and the
consequent impact o­n the extremely delicate marine environment.
There are others who seek to impose blanket taxes o­n the industry. Yet, as
Mr Eddington points out, such instruments are blunt and usually ineffective.
They are not the best way to achieve the objectives we strive for.
There is a growing consensus that the way forward is an emissions trading
scheme. Virgin Atlantic has been a strong supporter of such an approach for
aviation and we are pleased that the UK government intends to seek agreement
on a Europe-wide scheme during its presidency of the European Union later
this year.
In the longer term, the answer is a global scheme agreed through the
International Civil Aviation Organisation. This will take time to achieve
but it is worth our effort and patience. There is too much at stake,
environmentally and commercially, to risk anything less than a well
thought-out and tested initiative.
Aviation has made considerable progress in reducing aircraft noise and
emissions and companies do not always get the recognition they deserve for
what has been achieved. Virgin Atlantic, for example, has invested
substantially in new, more environmentally friendly equipment, to the point
where we now have o­ne of the youngest fleets in the world. Between 2000 and
2003 emissions generated by our aircraft during take-off and landing fell
significantly. However, more can be achieved, especially if all interested
parties work together. For our part, we are committed to doing just that.
Richard Branson, Chairman, Virgin Group