To put the environmental impact of airline travel into perspective, the next time you fly to Europe you will be emitting as much greenhouse gas as the average Briton releases during an entire year. According to some carbon calculators, your journey will emit approximately four tonnes of carbon dioxide equivalent. Compounding this environmental damage is the fact that aviation emissions released in the upper atmosphere are thought to be up to five times more harmful than surface emissions, due to so-called ‘radiative forcing.’
Qantas’s recent announcement that it will offer passengers the option of flying ‘carbon neutral’ is an important step for an industry coming to terms with climate change. The Qantas scheme gives passengers the option to purchase a commercial product, accredited by the Federal Government, that will offset their flight emissions through carbon storage or emissions reduction measures.
With emissions from aviation growing faster than any other industry sector, the Qantas scheme is a significant development. However, it also raises questions about how industry and government will respond to climate change and who will bear the cost of cleaner skies.
Voluntary schemes such as that introduced by Qantas may soon be overshadowed by an anticipated Australian emissions trading scheme that caps total emissions or even by the expansion of the European Union’s emissions trading scheme to cover aviation emissions.
There is also a question of efficacy can offset schemes really absorb growing emissions and deliver projected abatement outcomes? Some low-cost, low-tech projects like reforestation, for example, are open to a degree of interpretation about their abatement potential and their environmental consequences for developing economies. Ultimately, the Australian Government will have to decide whether aviation is captured in a national emissions trading scheme or allowed to continue voluntarily offsetting growing emissions.
While carbon trading schemes to try to cut emissions are being developed in several countries, the most advanced program currently exists in the European Union. From 2012 all international flights departing or landing in the EU will be captured by the EU Emissions Trading Scheme. While this aims to limit future growth of aviation emissions, it will also increase the cost of flying.
However, what proportion of the additional costs aviators will be able to pass on to customers and how much they will absorb as reduced profits remains unclear. The fear is that airline passengers may be left paying for a scheme that doesn’t deliver the necessary environmental outcomes.
The growth of low cost airlines has increased passenger numbers, and greenhouse gas emissions from aviation have risen rapidly. Although aviation only contributes around 3 per cent to total global emissions, domestic aviation emissions grew by 65 per cent in Australia between 1990 and 2004. During the same period, international aviation in the European Union rose by 87 per cent. Under a business-as-usual scenario, this is projected to increase to 150 per cent by 2012. No other industry projects such rapid emission increases. It is therefore hardly surprising that the EU feels compelled to curb emissions from the aviation sector.
The EU trading scheme places a price on carbon emissions and is designed to provide industry with flexibility on how emissions abatement can be achieved. Each year businesses are required to surrender what are known as European Union Allowances for each tonne of verified carbon they emit. Upper limits are set by government, and companies that emit more than this limit must buy allowances on the open market or face a fine. Conversely, companies that emit less than their quota may sell allowances. This should concentrate emissions reductions where they can be achieved most cost effectively and maintain the liquidity of the emissions trading market.
In the first phase of the EU scheme (2005-2007), national governments were permitted to allocate up to 95 per cent of allowances free-of-charge to existing businesses based on their historic or projected emissions. This changed only marginally for phase two (2008-2012) to 90 per cent. The justification for doing this rather than making businesses purchase allowances is that companies need time to adjust to a new carbon-constrained economy.
Provided with tradable emissions allowances at no cost, some industries have raised prices, passing on the costs of buying additional allowances to consumers. For example, in Germany and the Netherlands wholesale electricity producers passed between 60 per cent and 100 per cent of these costs to domestic and industrial consumers.
Competition between different carriers and modes of transport in Europe means that the aviation sector may be constrained in how much of its additional costs it can pass on to consumers. But Australians have fewer travel options for getting out of the country and competition in the domestic air travel market is still relatively limited.
The allocation of allowances based on ‘business as usual’ during the current phase of the EU emissions trading scheme was one of several flaws in the design of the scheme. Verified emissions data released in 2006 showed that more allowances had been allocated than actual emissions. The price of allowances subsequently fell from a high of more than ‚¬29 per tonne of carbon dioxide equivalent to around ‚¬0.10.
To its credit, the European Commission has reduced the total pool of allowances available to industry in the next phase of the EU emissions trading scheme. This may well mean that allowance prices rise again, although how stable increases will be and how much they will be passed on to consumers is likely to remain uncertain for some time. The cautious message is to expect higher flight prices from at least 2012 when international aviation emissions are captured by the EU trading scheme.
The balance of evidence to date also suggests that rather than driving new innovation and clean environmental solutions, many industries captured by the EU emissions trading scheme have continued with business as usual. This may change as emissions caps become stricter, but here in Australia, the sector’s capacity to reduce absolute emissions (as opposed to relative emissions per kilometre travelled) through better fuel efficiency, new technology and improved airspace management, is limited by the relentless growth in passenger numbers. It is hardly surprising therefore that Qantas’s announcement of a voluntary carbon offset scheme offers passengers the option of further reducing their carbon emissions.
While we await further developments from Europe and details of an emissions trading scheme from the Australian Government, a range of voluntary schemes are already available to offset emissions from your next flight. However, consumers who genuinely wish to reduce the environmental impact of their travel are advised to be careful.
While the Qantas scheme is Government-accredited, many others rely on voluntary codes of conduct and there are substantial differences in the way individual schemes calculate emissions and account for abatement. For example, a number of private companies will commit to planting trees to offset emissions. While this might help biodiversity and climate protection, it is difficult to predict future tree growth over many decades and attribute this growth to carbon abatement carbon is re-released into the atmosphere from leaf litter and as trees die and decompose. Serious concerns have also been expressed about whether some schemes may be funding the removal of natural forests to make way for new plantations of exotic species.
Even discounting these problems, to offset only the global aviation greenhouse gas emission for a single year would require 28,800 square kilometres of afforestation an area almost a third of the size of Tasmania.
The World Bank, not usually a critic of markets, has also raised concerns about voluntary offset schemes. In a recent report, it notes that voluntary schemes lack acceptable standards and pose a significant risk to the regulated emissions trading market.
Only time will tell whether the Qantas scheme ends up being a stepping stone towards the sector’s inclusion in a national emissions trading scheme or a reason to remain exempt from it. Either way, the days of sitting back and relaxing on your next international flight, free from ethical and financial dilemmas, are quickly fading.
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