Written memorandum by Dr Paul Upham
Evidence submitted by Dr Paul Upham, Research
Fellow, Tyndall Centre for Climate Change, the Manchester University
Business School.
This is an individual submission, drawing on
and making inferences from work undertaken with colleagues. The
Tyndall Centre does not adopt corporate policy positions and the
submission is the responsibility of the author only.
EXPANSION OF
EU ETS
1. Providing double-counting of emissions
is avoided, there appears to be no reason why the EU ETS should
not be expanded to encompass other commercial and public sector
activity, including transport, though some minimum emission threshold
would presumably be desirable from an administrative perspective,
given the need for verification. The fuel-poor will need to be
protected from energy price rises through measures such as subsidised
insulation of houses.
1.1 Private (domestic) fuel-related emissions
could be better dealt with via an allied but at least initially
separate scheme. This domestic tradable quotas option,
under study at the Tyndall Centre, envisages an electronic, automated
debit of an individual's carbon allowance account upon payment
for direct purchases of fossil fuel and electricity for private
transport, heating, light etc. Excess allowances would be sold
as under EU ETS. The political plausibility of this scheme would
likely increase as the adverse consequences of climate change
become more apparent.
1.2 The EU ETS and DTQs systems could, with
some revision, run in tandem, with the sum of their permitted
emissions contracting to meet long-term climate change targets.
A DTQs scheme could, if so designed, capture the emissions of
small (sub-threshold) enterprises.
INCLUDING AVIATION:
RATIONALE AND
COSTS/BENEFITS
TO THE
INDUSTRY AND
CONSUMERS
2. The climate-warming effects of aviation
need to be controlled because at present rates of growth they
threaten the ability of the EU to meet its long-term climate target
of limiting average global warming to +2ºC (please see below).
This conclusion assumes that half of the emissions of international
flights to and from the EU are the responsibility of EU nations,
and assumes that total EU carbon emissions will need to contract
by at least 80 per cent between now and 2050. This contraction
is further assumed necessary to meet the dual conditions of international
per capita equity in carbon emissions by 2050 and an atmospheric
carbon dioxide concentration of 450ppmv, a level more likely to
be necessary to meet the +2°C threshold.[10]
While the 1958-2004 average annual increase in carbon dioxide
concentration is 1.4ppmv, 1997-98 saw a 2.87ppmv increase.[11]
The level of 450ppmv could be reached well before 2050 and may
also be too high to limit warming to +2°C.
2.1 Aircraft carbon emissions are projected
by detailed AERO2K modelling[12]
to grow globally at about 3.3 per cent per annum for the period
2002-25. Tyndall's passenger-based calculations[13]
suggest that if European passenger growth trends continue as they
have done over the last decade, EU25 aircraft carbon emissions
will grow at an annual average of about 4.8 per cent pa over the
2002-25 period, despite an assumed increase in annualised average
fuel efficiency of 1.2 per cent pa.
2.2 Aviation industry representatives and
the UK Government believe that inclusion within EU ETS will allow
aviation to offset its emissions growth through the purchase of
emissions allowances surrendered by firms in other sectors, and
that this will be an economically optimal solution.
2.3 However, if we make the assumptions
listed in point (2) above, some of which reflect the contraction
and convergence climate policy regime implicit in the UK Government's
60 per cent CO2 reduction target for 2050, we find that the consequences
of aviation growth for other sectors would be severe. If EU aircraft
emissions are uplifted by IPCC's average of 2.7[14]
to reflect their additional warming effect relative to surface
emissions (uplift is highly problematic scientifically, but is
still instructive if its limitations are understood), we estimate
that by the year 2017, uplifted EU aircraft emissions would exceed
the EU's 2050 carbon emissions target. From 2017 therefore, if
aviation emissions were to continue to grow, no growth in carbon
emissions by other sectors would be possible. Growth in aviation
emissions would only be possible at a rate equal to the rate of
emissions contraction by other sectors.
2.3.1 In practice, if international aircraft
emissions were included in EU ETS and the EU applied annual caps
commensurate with 450ppmv by 2050, the rise in the price of carbon
would likely prevent the projected 2017 level of aviation activity
and emissions, assuming that consumers consider aviation less
essential than other goods and services. An equal, annual distribution
of the required 80 per cent reduction in EU emissions over the
period 2010-50 is 2 per cent pa (ie a reduction from 1,100 million
tonnes of carbon [MtC] to 217MtC, or just over 22MtC pa). This
is equivalent to a compound annual reduction of about 4 per cent
pa. If we assume that the EU cannot purchase substantial quantities
of emissions allowances from outside of the EU ETS (see below),
and that the EU commits to an annual reduction in carbon emissions
over 2010-50, then from 2017 aviation carbon emissions could grow
only in so far as other sectors of the economy reduced their emissions
in excess of 22 MtC pa, and in so far as the excess allowances
involved were not purchased by firms in other sectors. This is
despite anticipated annual fuel efficiencies for the EU fleet
of 1-2 per cent (maximum) up to 2050, which we have already accounted
for.
2.3.2 While aviation might in principle
purchase sufficient allowances for traffic growth, it would seem
unwise to assume the availability of sufficient allowances. To
date the industry and UK Government have assumed availability
because they have not envisaged a tightly contracting EU emissions
cap, and in some quarters have disputed any responsibility for
international flight emissions.
2.3.3 In terms of costs to consumers, aviation
would likely become more expensive due to the need for airlines
to purchase emissions allowances at a price that would rise in
accordance with the annual increase in their scarcity, as availability
contracted. The detailed consequences for the aviation industry
and its competitiveness are difficult to anticipate, as there
are many factors involved and likely airline, lender and consumer
responses are unknown. In general one might expect routes, airlines
and airports that are only marginally successful to fail, while
others would experience very low growth or stasis. If all airlines,
regardless of nationality, are obliged to purchase allowances
for the emissions of half of their EU originating or departing
flights, then international competitiveness should not be a problem.
It is important to note that it is not the inclusion of aviation
within the EU ETS per se that would raise prices and curtail growth
in a closed EU ETS, but the contracting emissions cap that is
necessary for the ETS to achieve its ultimate purpose.
2.4 There is some scope for mitigating the
above conclusions. If enacted, these would make it more likely
that the aviation sector would avoid contraction in the short
term, if incorporated in an EU ETS with a target of 450ppmv (or
no more than +2°C average warming).
2.4.1 In principle, there could be substantial
trade-out of aviation emissions from the EU ETS to less developed
countries via the Clean Development Mechanism (CDM) and Joint
Implementation (JI), involving investment in energy efficient
plant and bio-sequestration with bioenergy. However, while bio-sequestration
coupled with bioenergy and biofuel production apparently has significant
potential to reduce atmospheric carbon dioxide,[15]
it does require substantial land (and water), involves fire risk
and should not be relied upon alone. Moreover, if projects do
not entail genuine "additionality" in emissions terms,
use of the CDM and JI to compensate for aviation emissions growth
will have a perverse outcome. Nevertheless, if properly implemented,
this could be an important instrument for an aviation industry
seeking growth under conditions of a tightly capped EU ETS.
2.4.2 An option for mitigating the warming
effects of aviation emissions themselves (in addition to the expected
1-2 per cent fuel efficiency arsing from other operational, engine
and airframe improvements) is contrail avoidance. This may be
simpler to achieve than previously thought.[16]
However, while this would reduce the short-term and regional warming
effects of contrails, cirrus and NOx, it would raise the long-term
warming (100 year duration) effects of carbon dioxide, as a result
of flight through lower, denser air. In the long term, the net
effect of lowering altitude will be beneficial only if it is assumed
that the future level of air traffic will be the same as under
a scenario of "conventional" flight levels. If, after
lowering flight altitude, society later opts for the stronger
step of reducing the number of flights (eg as global warming becomes
strongly evident), then the additional carbon dioxide consequent
on lowering flight altitude would still contribute to warming.
Lowering flight altitude should not therefore simply be accounted
for by a lower uplift factor. This notwithstanding, if no uplift
factor is assumed, then by 2020 we estimate that EU aviation emissions
will be 54 per cent of the EU's 2050 target; 67 per cent by 2030
and 101 per cent by 2050. (We assume that the aviation sectors
of all EU nations mature at an annual passenger growth rate of
3.3 per cent and that new airport infrastructure is made available
as required.)
Timing
2.5 While the aviation sector should be
incorporated within EU ETS as soon as possible, this must not
be seen as sufficient in terms of managing aviation's contribution
to climate change. There will be no wholly satisfactory solution
to the problem of making aviation emissions with regional and
short-term warming effects commensurate with the effect of long-lived,
globally distributed carbon dioxide emissions. As implied above,
while different flight profiles[17]
might be allocated different multipliers relative to carbon dioxide,
this could have a perverse outcome. However, incorporating aviation
on the basis of carbon emissions alone, without additional measures,
will be equally unsatisfactory. There needs to be one or more
additional measures that take account of contrails, cirrus and
NOx but do not entail increased carbon dioxide emissions. A multiplier
applied to carbon dioxide emissions would likely lead to increased
NOx as engine manufacturers raise engine temperatures in response,
for higher fuel efficiency and hence lower carbon dioxide.
2.6 Moreover, without the political will
to institute a declining cap in the EU ETS from an early date,
as described above, including the aviation sector would not be
desirable because it would not effect control or offset aviation
emissions. In that case, the less desirable option of a severe
emissions or fuel charge would be necessary to reduce demand.
Alternative measures
2.7 To reiterate, emissions trading can
only be as effective as a low carbon instrument as the emissions
cap within which it operates. Whether or not alternative or additional
measures are necessary will depend on:
— The adequacy of the ETS cap;
— The degree to which the system captures
relevant emissions (a system designed to capture most commercial
emissions will need to be complemented by a domestic quota system;
this might also be used as a model for a system aimed at smaller
enterprises, for which verification costs would be disproportionate);
— The reliability of emissions offsets
made by trading out of EU ETS via CDM and JI; and
— The degree to which complementary
measures account for non-carbon dioxide effects.
2.8 Given the potential for uplifted aviation
emissions to consume the entire EU 2050 budget by 2017, and to
continue growing for further decades, there is a strong case for
a supplementary, mandatory requirement for an annual reduction
or offsetting of EU aviation emissions of at least 4 per cent
pa from 2010-50. This reduction would include international
emissions as defined above. The economic and social benefits of
achieving the reduction through a tightly capped, but internationally
open EU ETS should be greater than achieving the reduction through
a charge on fuel or emissions: an open ETS should deliver the
emissions reduction either at lower cost or in a way that facilitates
new, relatively benign development in less developed countries.
September 2005
10 DEFRA (2004) Scientific and technical aspects
of climate change, including impacts and adaptation and associated
costs, Department for Food and Rural Affairs, London, www.defra.gov.uk/environment/climatechange/pdf/cc-science-0904.pdf Back
11
Keeling, CD and TP Whorf (2005) "Atmospheric CO2 records
from sites in the SIO air sampling network". In Trends:
A Compendium of Data on Global Change. Carbon Dioxide Information
Analysis Center, Oak Ridge National Laboratory, US Department
of Energy, Oak Ridge, Tenn, USA. Back
12
Eyers, CJ et al (2004) AERO2K Global Aviation Emissions
Inventories for 2002 and 2025, QinetiQ Ltd, Farnborough, England.
See http://www.cate.mmu.ac.uk/aero2k.asp Back
13
Bows, A, Upham, P and Anderson, K (2005) Growth Scenarios
for EU and UK Aviation: contradictions with climate policy,
Tyndall Centre for Climate Change Research report for Friends
of the Earth Trust Ltd, The University of Manchester, Manchester.
Available via www.foe.co.uk Back
14
IPCC (1999) Aviation and the Global Atmosphere. Summary for
Policymakers. A Special Report of IPCC Working Groups I and
III in collaboration with the Scientific Assessment panel to the
Montreal Protocol on Substances that Deplete the Ozone Layer,
Penner, JE, Lister, DH, Griggs, DJ, Dokken, DJ and McFarland,
M (eds). Intergovernmental Panel on Climate Change, Geneva, www.grida.no/climate/ipcc/aviation/index.htm Back
15
Read, P and Lermitt, J (2005) "Bio-energy with carbon storage
(BECS): A sequential decision approach to the threat of abrupt
climate change", Energy, vol 30, issue 14, pp. 2654-2671. Back
16
Mannstein, H, Spichtinger, P and Gierens, K (2005) "A note
on how to avoid contrail cirrus", Transport Research Part
D, 10, pp421-426. Back
17
CfIT (2005) Transport and Climate Change. CfIT response to
DEFRA consultation, pp9-10, Commission for Integrated Transport,
London, http://www.cfit.gov.uk/reports/ccdefra/pdf/ccdefra.pdf Back
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