1Aviation Environment Federation

All set for take off? Aviation emissions to soar underAirports Commission proposals

Aviation Environment Federation, 16 June 2015

Executive summary

Building a new runway in the South East of England will mean breaching the UK’stargets for aircraft carbon emissions unless growth plans in all other regions aremassively scaled back. The Airport Commission, which is due to pronounce soon onwhether Heathrow or Gatwick should gain the new runway, has so far failed to explainhow its recommendation squares with the UK Climate Change Act or to analyse theoverall economic impact of the proposal once climate constraints are taken intoaccount.

The legally binding Climate Change Act requires the UK to limit national carbonemissions to about 160 million tonnes (Mt) per year by 2050 – an 80% reduction on1990 levels. The government and the Committee on Climate Change (CCC), itsstatutory adviser, say that emissions from aviation should not take up more than aquarter of that figure – 37.5 Mt – by 2050. Yet the Airport Commission predicts thataviation emissions will exceed this figure even in the absence of new runway capacityand that a new runway would put the target even further out of reach.

Analysis by the Aviation Environment Foundation (AEF) shows that airports in all otherregions of the country would have to scale back their growth plans markedly if a newSouth East runway were built in order for aviation overall to remain within the 37.5 Mtfigure. A new runway could mean 36% fewer passengers per year flying in and out ofairports in the southwest; Scotland could lose 11% of passengers, the northwest ofEngland (where Chancellor George Osborne hopes to grow a ‘northern powerhouse’economy’) 14%, and the West Midlands a whopping 55%.

Without these cuts around the UK, the new runway simply cannot be built withoutaviation emissions soaring. If aviation emissions were to exceed 37.5 Mt by 2050(representing a 120% increase in emissions), energy, road transport, agriculture andhomes would have to tighten further the 85% cuts they collectively face already, actionthe Committee on Climate Change regards as beyond the limit of what is feasible.

No official body – not the Airport Commission, the Department for Transport or theCommittee on Climate Change – has calculated the overall impact of these tighterrestrictions on the wider economy, nor on regions facing the prospect of restrictionson passenger growth. This undermines the economic rationale for the new runwaycapacity, which is further dented by the finding that the number of business flights byUK residents has fallen over the last 15 years. While the sharpest fall was caused by the2007-8 financial crisis, business flight numbers have not recovered since, and show nosigns of doing so.

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Key messages

As the Government is finalising itsnegotiating position for the globalclimate talks in Paris at the end of thisyear, it must also decide whether or notto approve an infrastructureinvestment that could make our ownnational CO2 commitments impossibleto achieve.

Reconciling climate ambition withairport expansion has proved a majorobstacle to building a new runway inthe past, and the Airports Commission’sfinal report is set to hand back toGovernment the challenge of howexpansion at either Heathrow orGatwick can be made to fit within theemissions limits determined by theClimate Change Act.

For aviation to be compatible with the2050 CO2 target legislated in theClimate Change Act, total nationalaviation emissions can’t exceed 37.5Mt by this date.

- Opposition from big green NGOs tothe expansion of Heathrow, whenthis was last up for consideration,helped lead to the Government ofthe time to introduce nationalaviation emissions cap of 37.5 Mt by2050, to ensure that any airportexpansion could take place onlywithin climate limits.

- The cap reflected work by theaviation industry claiming it couldreduce emissions to 2005 levelseven while allowing for significantpassenger growth.

- Independent studies, however,including by the CCC, have sincefound that the industry’sassumptions about carbon efficiencyimprovements from aircraft andengine technology, more efficientair traffic management, and theintroduction of biofuels, were over-optimistic and that limiting

emissions to the level of the cap willrequire constraints on demand.

- CCC have indicated that a cap of37.5 Mt, which would require othersectors of the economy to helpcompensate for aviation, is themaximum possible allowance foraviation if the UK its to meet thereductions required by the ClimateChange Act.

There is no feasible way that aviationemissions can be limited to the level ofthe carbon cap if a new runway isbuilt, given the growth in demand itwould facilitate.

- Both Government and AirportsCommission forecasts indicate thatUK aviation emissions are on courseto exceed 37.5 Mt even withoutadding a new runway.

- Commission figures, while lowerthan Government’s, clearly illustratethat unless some new action wastaken to reduce demand at otherairports, adding a new runwaywould push aviation emissions evenfurther above the cap than ispredicted based on current capacity.

The economic case for expansion,already predicted by the AirportsCommission to be marginal undersome scenarios, could evaporatealtogether once the costs of limitingemissions in line with the Climate Actare factored in.

- The CCC has repeatedly told theAirports Commission that the costbenefit analysis for all short-listedexpansion options must factor in thecost of limiting passenger growthnationally to 60%, the maximumpossible under an emissions cap of37.5 Mt. The Commission has so farfailed to do this and has insteadquoted claims about economicbenefits from expansion that do notinclude these costs.

- In contrast to claims made onbillboard advertising, the

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Commission’s final consultationfound that including theenvironmental costs so farcalculated, the economic impact ofexpansion at Gatwick may be onlymarginally positive and that ofeither Heathrow option potentiallynegative. Recent recalculation bythe Commission of the air qualityimpact of expansion has alreadymore than doubled the estimatedair quality costs for all options.Since the Commission’s modellingindicates that building a new runwaywhile limiting emissions to a levelcompatible with the Climate Actwould require the cost of carbon toincrease from around £5 per tonnetoday to between £329 and £1316,proper inclusion of these costs looksset to wipe out any purportedeconomic benefit from expansion.

The aviation emissions challenge

2015 is an important year for climatepolicy. Momentum is building inadvance of the Paris climate talks atwhich more than 190 countries will tryto agree a new global approach forlimiting emissions beyond 2020 to safelevels. In the face of growing evidenceof immediate as well as future threatsbeing posed by rising temperatures,there has been ambitious talk about acomplete phase out of fossil fuels, andabout the poorest and the richestcountries all committing to nationallevel targets and obligations towardsdecarbonisation.

Aviation presents a growing challengein this context. While most othersectors are now on a path todecarbonisation, aircraft remain almostcompletely dependent on kerosene,with no options for radical change onthe horizon. In policy terms,meanwhile, aviation emissions oftenhave an ambiguous status, with a lackof clarity about how responsibility for

tackling them should be allocatedamong nations. International policymeasures that might fill the gap have,meanwhile, been elusive, despite overa decade of discussion at the UNaviation body ICAO.

Aviation & the UK Climate Change Act

In 2008 the UK introduced the world’s firstlegally binding climate change target. TheClimate Change Act had such strong cross-party support that only five MPs votedagainst it. The Act requires a cut of 80% ofthe emissions level in 1990, with a systemof 4-year carbon budgets keeping theeconomy on track. An independent body,the Committee on Climate Change, wascreated under the Act to give advice toGovernment on delivering these budgets.

Given historic international disagreementabout the appropriate way to allocateemissions from international aviation andshipping to individual states, theseemissions were not formally included incarbon budgets, but the Act requires theGovernment to review this situation on aregular basis with a view to their inclusionas soon as is practicable. The legislation inany case requires that emissions fromaviation and shipping be taken intoaccount in the setting of appropriatecarbon budgets for other sectors.

The approach of the Committee onClimate Change has been to allow‘headroom’ in the long term economy-wide emissions target of 160 Mt of 43 Mtfor emissions from aviation and shipping,of which aviation’s share would be 37.5Mt, equivalent to its level in 2005. Theproportion of emissions from aviationwould increase under this assumptionfrom around 5% today to around 25% in2050, with other sectors bearing anincreased responsibility for emissions cuts.Even this target for the aviation sector,however, will be challenging to deliver.

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The UK has a particularly important rolein helping to resolve this impasse, givenour unusually high level of aviationemissions; Heathrow alone isresponsible for more emissions from itsinternational flights than any otherairport in the world1. Currentlyresponsible for around 5% of UK CO2emissions, the Committee on ClimateChange assumes that aviation will beresponsible for 25% of emissions by2050, but says this is the maximum thatcan feasibly be allowed for. Yet demandfor aviation – at least for leisure travel –continues to grow and emissions areforecast to overshoot this level evenwithout adding any new airportcapacity. How should UK policymakersrespond? And how is a new runwayeven on the table in this context?

This paper sets out how climate changeissues have been considered to date bythe Airports Commission in the debateover a new runway in the South East,the limitations of this assessment, andthe significance of the decision facingthe new Government in what willundoubtedly be seen by the public asthe first major environmental test ofthis administration.

Climate change and the runwaysdebate

There has been political discussion fordecades about whether or not to builda new runway in the South East.Historically, proposals have all failed tomake it through the planning systemgiven concerns about eitherenvironmental or economic factors orboth.

But it is only in the past decade thatclimate change has become a seriousconsideration in the context of airportcapacity questions. It was under theLabour government that a new SouthEast runway was most recentlyconsidered, and the proposed

expansion at Heathrow attracted strongopposition on the basis of its likelyclimate change impacts. Greenpeaceargued that with a new runway theairport would become the biggestsingle emitter in the UK2 and the WorldDevelopment Movement calculatedthat its emissions would be equivalentto those of Kenya3.

Three things happened in 2008 that ledto the setting of an aviation emissions‘cap’ of 37.5 Mt. Firstly, the UK aviationindustry organisation SustainableAviation published a ‘CO2 roadmap’that set out a vision for reducingaviation emissions back to 2005 levelsby 2050 at UK level through acombination of operational andtechnological efficiencies and theintroduction of biofuels, while allowingfor significant passenger growth.

Secondly, the UK Climate Change Actwas passed, which requires UKemissions on average to be reduced by80% of 1990 levels by 2050, andemissions from aviation to beaccounted for (if not formally includedin carbon budgets). Modelling by theCommittee on Climate Change, set upto advise Government on delivery ofthe Act, about how different sectorswill contribute to the 2050 target hasassumed aviation emissions of 37.5 Mtin 2050, reflecting the target in theindustry’s roadmap. CCC has said thatthis is maximum level that can beallowed for.

Thirdly, in December 2008, theGovernment announced that while itcontinued in theory to support a newrunway at Heathrow this would infuture be subject to a condition thataviation emissions at a national levelmust be on course not to exceed 37.5Mt by 2050. The policy essentiallychallenged the industry to performagainst its own commitments. Whilethe cap itself is not legally binding its

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use by the Committee on ClimateChange in determining how much effortmust be made by other sectors remainscritical to the question of whether ornot airport expansion is compatiblewith climate ambition.

The need to manage demand

Rather than simply relying on industryaspirations, however, the Governmentasked the Committee on ClimateChange (CCC) to conduct its own reviewof the likely future emissions from theaviation sector. Its conclusions weresignificantly different from those of theindustry coalition Sustainable Aviation.

Under ‘likely’ assumptions in relation toaviation’s future carbon intensity, theCCC found, projected demand foraviation would lead to emissionssignificantly in excess of the 37.5 Mtcap. While some growth in passengernumbers would be possible, this wouldneed to be limited to around a 60%growth on 2005 levels, in contrast tothe forecast at the time of growth morelike 115%.

The Government’s own forecasts haveconsistently reached a similarconclusion; the latest CO2 forecastspublished by the Department forTransport anticipated emissions of 47Mt by 2050 even without the additionof new airport capacity.

The CCC refused to be drawn on thequestion of whether and if so how anew runway at Heathrow could becompatible with its recommendationsto limit demand growth, butenvironmental organisations continuedto highlight tensions between airportexpansion and CO2 targets. In 2009 acoalition of green NGOs, communitygroups and local authorities brought alegal challenge against theGovernment’s case for Heathrowexpansion, and in 2010 the High Courtruled that the introduction of theClimate Change Act required a reviewof aviation policy, concluding that itwould be “untenable in law and incommon sense” for the Government toretain the expansionist policy set out inthe Air Transport White Paper4.

While the Labour Government

CCC analysis in 2009 found that passenger demand growth would need to be constrained if the target oflimiting aviation emissions to the 2005 levels was to be achieved (from ‘Meeting the UK Aviation target –options for reducing emissions to 2050’ )

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continued to support Heathrowexpansion, both the Liberal Democratsand the Conservatives adopted clearparty policy opposing new runwaysanywhere in the South East on the basisof their likely environmental impactsand when the Coalition formed in 2010it adopted policy that no new runwaysat Heathrow, Gatwick or Stanstedwould be pursued during its term ofgovernment.

A new aviation policy was drawn up onthe basis that, as argued by theTransport Secretary, “The previousgovernment's 2003 White Paper, TheFuture of Air Transport, isfundamentally out of date, because itfails to give sufficient weight to thechallenge of climate change. Inmaintaining its support for newrunways – in particular at Heathrow –in the face of the local environmentalimpacts and mounting evidence ofaviation’s growing contribution towardsclimate change, the previous

government got the balance wrong. Itfailed to adapt its policies to the factthat climate change has become one ofthe gravest threats we face.”5

But the new policy avoided specificmention of runways, and pressurequickly re-emerged for a review of theGovernment’s position. TheGovernment’s solution was to set upthe Airports Commission, headed byeconomist Sir Howard Davies andstaffed largely by civil servants from theDepartment for Transport, to reviewthe question of whether new airportcapacity was required in order tomaintain the UK’s hub status. Atimetable of work that required theCommission to report soon after theelection left the Conservative party,now in Government, free to avoidmaking any commitment on airports inits manifesto except to say that itwould consider the Commission’sadvice.

Is the CCC’s approach to aviation tough enough?

Overall, the CCC has made recommendations that appear to be built around deliveringthe Climate Change Act at minimal cost and in way that is politically feasible. Aviation istricky in both respects since meaningful emissions reductions are hard to come by, andsince many politicians regard the sector with special affection.

Perhaps as a result, CCC has tended to tread somewhat carefully in relation to aviation.Its focus has been largely on the importance of allowing for aviation in the long-term80% emissions target by increasing the necessary cuts from other sectors. In terms of theexpected emissions reduction from aviation itself, CCC appears to have adopted the pathof least resistance in using a 37.5 Mt cap (or ‘planning assumption’ in the CCC’s terms) inits modelling. Evidence of the economic or social case for allowing aviation such agenerous target has never been presented.

A target of 37.5 Mt is equivalent to a 120% increase on emissions in 1990 as against the80% cut on 1990 emissions levels required from the economy overall, and takes noaccount of aviation’s non-CO2 impacts. Other sectors are expected to reduce emissionsby 85% on average in order to deliver an economy-wide 80% emissions cut, action theCCC has described as at the limit of what is feasible.

Beyond the headline conclusion of the CCC’s 2009 report that delivering this targetwould require demand constraint, CCC has remained fiercely silent on what policiesshould be adopted (including on airport capacity) to deliver this, arguing that these arefor the Government to address. In practice, however, public and political debate aboutrunways has been taking place without the climate change constraint on growth beingwell understood..

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The Airports Commission’sapproach on climate change

The Airports Commission has alwayssaid its recommendations will honourclimate change commitments. But infact it has been unable to show how anew runway could be compatible withan emissions target of 37.5 Mt.

The Commission has produced its own‘baseline’ forecasts of emissions fromaviation without expansion. These areunaccountably lower than the latestforecasts from the Department forTransport but still exceed the 37.5 Mttarget level even without expansion.The Commission has also modelled theemissions impact of each of its short-listed runway schemes and concludesthat they would all increase emissionsyet further above this level (even ifaviation was exposed to carbon pricingunder an emissions trading system).This is labelled the ‘carbon traded’emissions forecast.

Because of this overshoot, theCommission also conducted a modelrun whereby a new runway is built butemissions at a national level are cappedat 37.5 Mt through the application ofan increased cost of carbon, which hasthe effect of reducing travel demand.Even under this ‘carbon capped’forecast, the Commission says, demandfor aviation in the South East of Englandis strong enough to justify a newrunway. There the Commission rests itscase for expansion.

Speculation versus reality and theunintended consequences of a newrunway

The problem, however, is that the‘carbon cap’ remains nothing morethan a modelling assumption. With nopolicies to implement it, as theCommission’s own figures make clear,the cap won’t be achieved and building

a new runway will have the effect ofincreasing emissions. So how in practicecould the emissions cap be enforced if anew runway was built?

Climate limits, airport capacity, andmeeting demand where it arises: asummary of previous AEF research

Most airports in the UK have sparerunway capacity but would need toexpand their terminal capacity and/or toapply for new planning permissions inorder to make full use of it. Government(and subsequently Airports Commission)forecasts are based largely on thepremise that an airport’s capacity islimited only by its runway, withincremental growth as a result of thelifting of planning caps or expansion ofterminals assumed to be permitted.

Since under this assumption passengergrowth and emissions are forecast toovershoot the maximum level possibleunder the Climate Change Act, in 2011,AEF undertook research, commissionedby WWF-UK, on the maximum level ofpassenger demand that could beaccommodated by the UK’s airports if theGovernment were to implement amoratorium on all planning applicationsfor airport growth.

At a national level, our research found,sufficient runway and terminal capacityalready exists to allow for the maximumlevel of growth possible under the carboncap. Even at a regional level, in mostareas sufficient capacity exists to meetthe target-compatible level of growthwhere it arises. In areas of underprovision in terminal capacity (Scotland,the North of England and the South East)we identified feasible options foraddressing this without airportexpansion, including a more ambitiousstance towards rail, the promotion ofvideoconferencing, and an increase inaverage passengers per aircraft atHeathrow in line with the industry’s ownforecasts.

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We can see only two possible policy

We can see only two possible policyapproaches. First, the supply of airportcapacity elsewhere in the UK could bedirectly limited, for example throughthe imposition of planning restrictions.The Commission’s model effectivelyassumes that the UK’s entire airportnetwork is redesigned such that there ismore capacity in the South East andless elsewhere in the UK. But with theGovernment’s aviation policy explicitlysupporting growth at regional airportsit is hard to see this being an attractiveoption.

Secondly, demand could be regulatedthrough the imposition of new taxes orcharges on tickets. But with AirPassenger Duty having recently beencut and the significant obstaclesremaining to the introduction even ofthe kind of carbon trading assumed inthe Commission’s baseline forecasts,again it is very difficult to see how thiscould be realised. The cost of a one wayticket to Europe may need to beincreased by as much as £110 by 2050,

The Airports Commission’s Analysis –Outstanding Questions

When the Commission makes its finalrecommendation, will it have answered oneof the key political questions that got in theway of a runway last time round, namelyhow to square this with action on climatechange?

Question 1 The Commission has always saidit will honour the Climate Change Act. But ithas also admitted that all its short-listedexpansion options will breach therecommended aviation carbon cap even ifaviation is fully included in a carbon tradingscheme. What’s the solution to bringingemissions down and how much harder willthis be to achieve with a new runway thanwithout?

Question 2 The Committee on ClimateChange said that the Airports Commission’scost benefit analysis for each shortlistedscheme should include the cost of measuresto limit national air passenger growth to 60%over 2005 levels in order to limit emissions.Why did the Commission not do this work intime for its final consultation and why did itbegin claiming economic benefits fromexpansion before calculating these costs?

The Airports Commission’s own emissions forecasts indicate that all expansion options will exceed thelevel of the carbon cap. (graph produced by AEF using Airports Commission figures)

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AEF has estimated, based on AirportsCommission figures.

The other big gap in the Commission’swork on this issue to date has been itsfailure to calculate the overall cost ofintroducing the carbon cap itself andhow this affects the supposedeconomic benefit from expansion. InJuly 2013, the CCC published an openletter to the Airports Commission6

recommending that the economicimpact of any proposal for new airportcapacity should take account of thecost of limiting growth in air passengernumbers at a national level to no morethan 60% of the level in 2005.

The Airports Commission admitted inits final consultation however that ithad not undertaken this analysis,making its published claims about theeconomic impact of expansion (in factalready marginal or even negativeunder some assumptions) too high.Figures published so far by theCommission suggest that fully includingthese carbon abatement costs could infact demolish the economic case forexpansion.

Impacts of expansion on regionalairports under a carbon cap

Maintaining the carbon cap whilebuilding a new runway would be, itappears, both costly and politicallyextremely challenging. Given politicalambition to rebalance economicactivity away from South East England,the Government will need to considerwhether or not it is even desirable.

Under carbon capped forecasts, theCommission’s model illustrates,passenger numbers would not increase(or would increase only very marginally)at a national level as a result of addinga new runway. Instead much of the60% allowable growth in passenger

numbers that would have taken placeat regional airports is simplyredistributed to the South East.

Under the Commission’s ‘Assessmentof Need’ forecast (see table below) allregions of the UK are predicted to seepassenger growth in a ‘no newrunways’ scenario, even if the carboncap is achieved. But building a newrunway at any of the short-listed siteswould reduce the level of passengergrowth that could take place at otherairports. Only London and the SouthEast would see any benefit in terms ofincreased passenger growth.

The necessary reduction in growthelsewhere in the UK is forecast by theCommission to be greater in the case ofa runway at Heathrow than at Gatwick.This finding rests, however, on theassumption that the growth facilitatedby Gatwick expansion would bepredominantly in short-haul leisuretravel rather than long-haul flights(which generate higher emissions perflight).

If in fact Gatwick expansion were to beaccompanied by an increase in long-haul business flights, as the airporthopes, differences in terms of thecarbon impacts of the three expansionproposals (and therefore in terms ofimpacts on airports outside the SouthEast) would reduce.

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UK region

Forecast totalpassenger

numbers in 2050under 'no new

runway' carboncapped scenario

Expansion option

Difference in passengernumbers (millions) with

expansion comparedwith the 'no new

runway' scenario (undera carbon cap)

Percentagedifference

compared with'no new runway'

scenario

Scotland 36.70

Heathrow North West runway -4.06 -11.05Gatwick runway -0.35 -0.95Heathrow extended runway -3.79 -10.32

NorthernIreland 13.66

Heathrow North West runway -1.59 -11.64Gatwick runway -0.18 -1.34Heathrow extended runway -1.36 -9.93

Wales 2.72

Heathrow North West runway -0.70 -25.75Gatwick runway -0.14 -5.08Heathrow extended runway -0.70 -25.75

NorthWest 54.71

Heathrow North West runway -7.69 -14.07Gatwick runway -0.81 -1.49Heathrow extended runway -6.35 -11.61

North East 7.54

Heathrow North West runway -1.13 -15.02Gatwick runway -0.05 -0.65Heathrow extended runway -1.13 -15.02

Yorkshireand

Humber9.80

Heathrow North West runway -1.25 -12.79Gatwick runway -0.97 -9.88Heathrow extended runway -1.25 -12.79

WestMidlands 21.56

Heathrow North West runway -11.93 -55.34Gatwick runway -5.40 -25.05Heathrow extended runway -10.72 -49.75

EastMidlands 10.84

Heathrow North West runway -2.72 -25.12Gatwick runway -2.28 -21.03Heathrow extended runway -2.72 -25.12

East

56.57

Heathrow North West runway -10.06 -17.79Gatwick runway -0.29 -0.51Heathrow extended runway -6.92 -12.23

SouthWest 17.44

Heathrow North West runway -6.33 -36.30Gatwick runway -3.27 -18.77Heathrow extended runway -6.16 -35.32

South East 53.19

Heathrow North West runway -10.10 -19.00Gatwick runway 19.43 36.54Heathrow extended runway -7.45 -14.00

London 100.95

Heathrow North West runway 41.24 40.85Gatwick runway -0.48 -0.48Heathrow extended runway 34.87 34.54

Airports Commission forecasts of passenger numbers in 2050 both with and without a new runway (tableconstructed by AEF based on Assessment of Need carbon capped forecast, published November 2014)

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Are new runways essential to meetpassenger growth?

Demand for air travel keeps growing,particularly internationally. Despitetaking a hit from the recession, as muchas 6% annual growth in passenger km isanticipated for the Asia-Pacific regionbetween now and 2030, around 5% inthe Middle East, and 4% in Europe. Theterms of reference given to the AirportsCommission include a requirement toidentify ‘the steps needed to maintainthe UK’s global hub status’, partlyperhaps with a view to the UK cateringfor some of this growth. But the keypolitical argument – that new runwaysare necessary for British business – isnot in fact well evidenced.

In the UK, where the aviation market isrelatively mature, future demandgrowth looks much more modest thanin many other countries. UK aviationexperienced particularly rapid growthbetween 1990 and 2005, with ticketprices consistently falling and many UKairports expanding. The 2003 AirTransport White Paper set out policyfor aviation expansion throughout theUK including three new runways before2030 (one to serve the South East, onein the Midlands and one in Scotland)and airports subsequently publishedvery optimistic figures about theirpotential for growth.

In fact, however, demand growth hasbeen much slower than anticipated andGovernment forecasts have fallen eachtime they’ve been revised. Even post-recession the Government nowforesees passenger growth of only 1-3%annually between now and 2030.

Passenger demand growth is fuelled tosome extent by air fares beingartificially low as a result of taxexemptions: aviation is zero-rated forVAT and no tax is levied on jet fuel. Thecase for revision of the ban on fuel tax

remains strong, as argued byeconomists from the World Bank andIMF7. Since a lot of air travel isdiscretionary, demand, particularly forleisure travel, is quite sensitive to priceincreases and would be expected toreduce further in response to anyfuture increase in taxation.

Even on current trends, however, it isworth considering who the main usersof a new runway would be. The‘assessment of need’ that theCommission undertook, and on which itbases its case for a new runway, wasessentially an assessment of demand.But this conflates leisure and businessdemand. If the justification for payingthe price both environmentally andeconomically for a new runway rests onassumed business needs, it is worthlooking specifically at trends in businesstravel.

Falling UK demand for businesstravel

The rhetoric used by those arguing fornew airport capacity has changedsomewhat from the last time SouthEast expansion was on the table, whenthe headline argument was a supposed£5 billion benefit for the UK as a whole.This time round, the talk has been allabout ‘connectivity’: the idea that UKbusiness requires more (preferablydirect) connections by air to businessdestinations, particularly in emergingeconomies.

There are plenty of questions arisingfrom this assumption, for exampleabout the direction of causalitybetween direct air connections andtrade relations, or about whether itharms British business to have to hub inFrankfurt or Dubai rather than in SouthEast England. More fundamentally,though, is there in fact a strongdemand for business travel that can’tbe met with current infrastructure?

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The evidence is perhaps surprising.Business flights accounted for less thana sixth of all international travel to andfrom UK airports last year, and UKdemand for business travel has fallenover the past 15 years, both in absoluteand percentage terms. The trend maybe partly attributable to the embeddingof carbon accounting as part ofstandard business practice as well asgreater scrutiny of business’environmental performance byshareholders.

Research published in 2011 on travelpractices among FTSE 350 companiesby WWF-UK8 suggested that reductionsin business flying during the recessionwere likely to outlive it. Of thosecompanies that had cut their flying

during the recession, 85% did notintend to return to ‘business as usual’levels of flying. Overall, 91% ofrespondents agreed with the statement‘Reduced flying and greater use ofalternatives are now important parts ofour corporate responsibility agenda.’The assumed business case for airportexpansion may then need furtherscrutiny.

Could technology improvementsoffer a better way to tackleemissions than restricting demand?

There are a number of ways in whichaviation is expected to become morecarbon efficient in future, but each ofthese has significant limitations. The

Business travel by UK residents has been falling both in absolute and percentage terms (graphs by AEF basedon data from ‘ONS Travel Trends 2014’, published May 2015)

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

Business trips by UK residents (thousands)

0

2

4

6

8

10

12

14

16

18

Business trips as a percentage of total trips by UK residents

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headline conclusion of the work of theCommittee on Climate Change onaviation in 2009 was that technologyimprovements won’t take place fastenough to allow for unlimitedpassenger growth without increasingemissions. Both academic andGovernment studies have reachedsimilar conclusions. The key options areconsidered below.

Aircraft and engine technology

Historically, there have been impressivetechnological improvements in jetaircraft. Between 1960 and 2000, forexample, aircraft efficiency improvedby an average of 70%9. But morerecently these trends have beenflattening out, with the gains becomingever harder to come by. There is someevidence in fact that even where moreefficient aircraft models are available,they are not necessarily the preferredoption for airlines renewing their fleet.Research in 2009 from the InternationalCouncil on Clean Transportation10

found, for example, that over theprevious two decades there had been

no improvement in the emissionsperformance of newly purchasedaircraft on a per passenger basis.

Operational improvements

Improving the efficiency of air trafficmanagement appears to offer a win-win solution, since measures such asmore direct routing of aircraft andreductions in the time aircraft spendholding and stacking while they wait forlanding slots should be beneficial to theaviation industry while also yieldingCO2 reductions. But in practice thereare real challenges to implementingoperational efficiencies. Some aresimply political; states have beenreluctant to want to cede control tomore centralised systems of air trafficmanagement and there remainssomething of a patchwork of air trafficmanagement blocks.

Alongside this, tensions are increasinglyevident between noise managementand fuel efficiency particularly inrelation to lower airspace. Recent trialsof new flight paths (at Gatwick,

Historic improvements in the efficiency of new aircraft are flattening out (ICCT 2009 ‘Efficiency trends for newcommercial jet aircraft’)

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Heathrow and Birmingham, forexample) that were designed to helpdeliver a more efficient UK airspacehave been halted followingunexpectedly strong communityopposition from communities that werenewly overflown. With one in threepeople in the UK now saying they aredisturbed by aircraft noise11, thischallenge is unlikely to diminish.

Finally, some operational efficiencyappears to be compromised by the verynature of both airports and airlinesoperating competitively in their owninterests. In the case of Heathrow, forexample, operating at full capacityreduces the airport’s resilience to badweather, congestion or other delays.Meanwhile the requirement for aircraftto wait in holding stacks arises in partbecause pilots choose to attempt earlyarrivals rather than arriving at adesignated time, thereby creatingcongestion.

Alternative fuels

Some sectors may in future be able torun entirely on renewable electricity,and the UK’s climate change strategyfor transport assumes a very significantdecarbonisation of the road and railsectors. But for aviation, the onlyalternative energy source currently onthe table is biofuel. Once the industry’sbig hope, it now seems likely thatbiofuel will have only a very smallimpact on the sector’s emissions. Withmany sources of biofuel now widelyacknowledged as having unacceptableenvironmental and social impacts theaviation industry has focussed on theidea of making fuel from sources ofenergy that would otherwise go towaste.

Yet sourcing environmentallysustainable biofuel in sufficientquantity to have a meaningful impacton total emissions and at a cost that is

not prohibitive now appears hugelychallenging. The Government estimatesthat only 2.5% of aviation fuel is likelyto come from alternative sources by205012.

How much, in total, can thesemeasures do to limit emissions?

The combined benefit of technologicaland operational improvements,together with alternative fuels, is alikely reduction in the carbon intensityof aviation if around 0.8% annually until2050, the Committee on ClimateChange estimated in 200913. Otherresearch, including the Government’sown forecasting, reaches similarconclusions.

Each of these components could intheory have a bigger impact if theregulatory and economic environmentwas right. Aviation could have morebiofuel if less is used by other sectorsfor example, while a technologyefficiency standard for aircraft couldspeed up the adoption of newtechnology. But each would have costimplications, which in turn could impacton demand.

Can inclusion of aviation ininternational carbon markets makeup for any shortfall in emissionsreduction?

In environmental terms, as well as inrelation to economic competitiveness,it would clearly be preferable foraviation emissions to be tackledeffectively at an international levelrather than the UK taking action alone.In recent years both the EU and the UNaviation body ICAO have made movestowards regulating aviation emissions,but even under the best possibleoutcome, the current picture suggeststhat complementary national level

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action by states, including the UK, willbe necessary alongside anyinternational measures.

Europe and its heavily compromisedemissions trading regulations

The 1990s saw a rapid growth inEuropean aviation, and therefore inaviation emissions, that becameincreasingly at odds with EU climateand energy policy. Europe’s preferredsolution was to introduce aviation intoits pre-existing Emissions TradingSystem, which imposes a cap onemissions (reducing gradually overtime) and after an initial allocation topolluters, allows them to buy and sellpermits equivalent to their emissions.In theory, this allows emissionsreductions across economies to bemade in the most cost effective waypossible. Legislation was passed in 2008requiring that from 2012 airlines eitherentering or departing from the EU mustsurrender emissions permits based onthe fuel consumed during their flight.

States outside Europe, however, mostnotably the USA and China, arguedstrongly that the EU had no right to tryto regulate emissions outside EUairspace or on other countries carriers.In 2013 the EU conceded, agreeing to‘stop the clock’ on the legislationexcept insofar as it covered short-haulflights both departing from and arrivingin European states. As a result, onlyaround 25% of the emissions thatwould have been covered by theoriginal legislation are currentlyaccounted for.

The hope is that this suspension willallow time for ICAO to agree analternative scheme that hasinternational support. Irrespective ofthe outcome at ICAO, however, anyattempt to expand the EU ETS in thefuture is likely to be met with fierce

international opposition, limiting theEU’s ability to tackle this issueeffectively at a regional level.

Slow UN progress on aviationemissions

Aviation emissions at an internationallevel are expected to increasesignificantly, potentially generating asmuch as a five-fold increase betweennow and 2050.

The industry’s proposed response tothis challenge has been to agree a goalof carbon-neutral growth from 2020.Emissions would be allowed to growuncapped until then, but from 2020 anyincrease would be subject to a carbonoffsetting or trading scheme. TheInternational Civil Aviation Organisationof the UN – ICAO – has taken this targetas the basis for its work in developing aglobal market-based measure for thesector, and hopes to reach agreementon this at its Assembly in autumn 2016.But there are significant hurdles to beovercome before this becomespossible, including finding a deal that isacceptable to both developed anddeveloping countries.

If it could in fact be delivered, would aclimate measure based on this targetbe in line with the requirement tostabilise global temperature growth at2 degrees, or with the commitmentmade by all EU and all G7 members tomake emissions cuts of at least 80% by2050? It’s a question ICAO has yet toeven consider. At present, while theindustry has set a target of a 50%reduction in emissions below 2005levels by 2050, ICAO has no goalbeyond its net 2020 target.

In terms of UK climate policy theanswer is clearer. Emissions forecastsfor aviation already assume that thesector will in future be covered by a

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fully functioning global emissionstrading system and even so exceedmaximum limits required under theClimate Change Act.

Recommendations: How to squareaviation policy with climate policy

The Government should rule out newrunways in the UK.

- AEF work has shown that we haveenough capacity already to cater fora 60% growth in passenger demandconsistent with the CCC’s advice onhow to keep emissions at or below2005 levels by 2050. Furthermore,the capacity exists to meet demandin the regions where it originates,without displacing passengers toremote airports in the UK.

- Modelling by the AirportsCommission clearly shows thatadditional runways will make itmuch harder to reduce aviationemissions to an appropriate level.

- Trying to impose a carbon cap whilebuilding a new runway would, ourwork shows, mean either higherticket prices or constraints on otherairports; neither seems a priceworth paying.

Aviation should be taxed more fairly

- Demand for aviation has beensustained by air fares that havebecome progressively cheaper inreal terms. Arguably, air fares havebecome artificially low as there is notax on fuel for international flightsand no VAT on tickets.

- While air fares have been falling,buses and trains have beenbecoming more expensive14.

- While Air Passenger Duty (APD)compensates in part for thisanomaly, Treasury estimatessuggests that if aviation paid dutyand VAT equivalent to that paid bythe motorist, the tax revenue would

be as much as four times that fromAPD. This would have a significantimpact on air fares and demand.

Both Government and business shouldsupport and invest in alternativemeans of connectivity

- Connectivity and mobility do nothave to involve air transport. Thereis a case, on environmental grounds,for not licensing air routes wherefast and frequent rail links are inplace given that rail is significantlyless carbon intensive than air travel.

- Many companies, including leadingmultinational businesses, are nowactively managing their carbonfootprint, and for many that meanscutting back on corporate travel. BT,BSkyB and LloydsTSB, for example,have all been participants in recentyears in a programme to cut 20% oftheir business flights (the 1 in 5challenge15). These businessesbelieve that their success does notdepend on increasing use of airtravel, and have begun to adoptdifferent business practices and toinvest in video-conferencing.

Aviation should be formally includedin carbon budgets.

- While carbon budgets for othersectors have been set so as to allow‘headroom’ for internationalaviation and shipping emissions,formally including these sectors incarbon budgets would providecertainty about their futuretreatment, and reinforce theimportance of continuing to accountfor them in the long term 80%carbon target.

Government should continue tosupport the development ofinternational measures to reduceaviation emissions

- The wider the scope of action totackle climate change the more

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effective it will be. This is true for allsectors; there is nothing uniqueabout aviation in this respect. But tothe extent that international policycan be developed to tackle aviationemissions, this will of course help toaddress any concerns about thecompetitiveness impacts of action totackle aviation emissions. AEF isactively supporting the current UNwork on developing a global MarketBased Measure for aviation throughour participation in ICSA, a globalcoalition of environmental NGOscampaigning on aviation emissions.

- Even if these difficult negotiationsare successful, however, a measurewill not be introduced before 2020.Complementary, national levelaction will still be necessary totackle the industry’s risingemissions.

Endnotes:

1 Southgate D, August 2013, ‘Carbon footprint ofglobal scheduled international passenger flights2012’http://electricvehicleaustralia.com/2013/04/20/76/2 http://www.greenpeace.org.uk/media/press-releases/greenpeace-response-heathrow-expansion-calls-201208283

http://www.globaljustice.org.uk/news/2009/jan/15/flights-heathrows-third-runway-will-emit-same-greenhouse-gas-emissions-kenya4

http://www.wwf.org.uk/about_wwf/press_centre/?unewsid=38055 Foreword by the Secretary of State forTransport, Philip Hammond MP, to theDepartment for Transport’s “Developing asustainable framework for UK aviation: scopingdocument,” March 2016 http://www.theccc.org.uk/wp-content/uploads/2013/07/CCC_letter_aviation_commission.pdf7 Keen et al, September 2014, ‘The (non-)taxation of international aviation and maritimefuels: Anomalies and possibilities’

http://www.voxeu.org/article/non-taxation-international-aviation-and-maritime-fuels-anomalies-and-possibilities8 WWF-UK, 2011, ‘Moving on: why flying lessmeans more for business’http://assets.wwf.org.uk/downloads/moving_on_report.pdf9

http://www.transportenvironment.org/sites/te/files/media/2005-12_nlr_aviation_fuel_efficiency.pdf10 ICCT, 2009, ‘Efficiency trends for newcommercial jet aircraft’http://www.theicct.org/sites/default/files/publications/ICCT_Aircraft_Efficiency_final.pdf11 Defra, December 2014, ‘National NoiseAttitude Survey 2012’http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=18288&FromSearch=Y&Publisher=1&SearchText=no0237&SortString=ProjectCode&SortOrder=Asc&Paging=1012 DfT, ‘UK aviation forecasts 2013’,https://www.gov.uk/government/publications/uk-aviation-forecasts-201313 CCC, December 2009, ‘Meeting the UKaviation target’http://www.theccc.org.uk/publication/meeting-the-uk-aviation-target-options-for-reducing-emissions-to-2050/14 Parliamentary question 223954 answered byRobert Goodwillhttp://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2015-02-10/223954/15 http://www.globalactionplan.org.uk/one-in-five-challenge