Flying out or driving in?

Sometimes it is argued that flying is something special, for one reason or another, and therefore it should kept out of the EU ETS.  I looked at some of these special characteristics of flying to see if there are grounds for not including aviation emissions in the EU ETS.  And by doing this I realised that the problem is not that flying should be out of the scheme but that driving should be in the scheme.

There are remarkable differences between aviation and most of the other industries in the scheme.

First, flying, the product of aviation, has a higher level appeal than the product of the other basic industries of the EU ETS: flying is part of self-fulfilment and discovery, right at the top of the Maslow pyramid.  Electricity, cement, iron, bricks, sugar, fertiliser and so forth are right at the bottom – food, shelter and warmth.

Second, with the advent of cheap flying, aviation has taken on some symbolism of democracy and egalitarianism.  Now to tax flying is a slap in the face of the man in the street.  Yet it is not so mundane as electricity as to have lost its glamour.

Third, flying is the only industry in the EU ETS where the general public regularly go to the installation.  Few people have actually been to power stations and even fewer to nitric acid plants, but almost everyone has sat in an aeroplane a few metres from the engine.

Fourth, unlike other products covered by the EU ETS, flying draws you in to consuming more of it.  As travel becomes cheaper, we spread our networks: we buy a home in the south of France or our daughter moves to Australia or we start dealing with customers and suppliers on other continents.  With our network thus extended, we have much to lose if flying becomes expensive again.

These characteristics mean that flying is politically sensitive in a way that other products from EU ETS installations are not.  It has become a necessity – not a dull one like electricity, but one which is powerfully symbolic of freedom and wealth.  There is public dismay, a sense of deprivation, if we are threatened with flying becoming more expensive.  The general public does not notice the price of cement.

Does this give political grounds for treating flying separately in emissions policy?  On the face of it, no: it would be an arbitrary decision to favour aviation compared to other industries just because it is politically popular, just because the general public has no idea about the other industries; it would constitute a very regressive subsidy, unjust to those people who do not or cannot fly.

However, if you look at those characteristics of aviation, you realise that another activity shares them: driving your car.  In the same way, the car is a symbol of freedom and a tool for extending our networks.  And emissions from road transport are three or four times those of flying.

So while it is defensible to include aviation in the EU ETS on the grounds that it causes lots of emissions, it is arbitrary to regulate flying but not to regulate driving.

Political pragmatism, not principle, rules here: politicians are too scared of interfering with driving.

To regulate emissions from road transport – whether by tax or by inclusion in the EU ETS – would create a level playing field with flying.  It would also be a sensible move if we want to push the region to a low carbon economy.  Our fear to talk about constraining emissions from road transport amounts to a huge [3] fossil fuel subsidy at a time when we are forcing other industries to constrain their emissions.

 

Postscript

I have heard two weak arguments why aviation should not be in the EU ETS.

First, that the impact of the EU ETS is so insignificant that it is a waste of time to include aviation in the scheme.  This argument is inconsistent with the one that says it is an intolerable burden.  Let’s see: a 1 euro change in the EUA price has the same impact on costs as a 60 US cent [1] change in the oil price per barrel – that is, what we are used to thinking of as a meaningful change in the EUA price is pretty immaterial for an aviation company.  A return flight from London to New York might emit 1.2 tons per passenger.  That implies that a 1 euro increase in the EUA price would impose an extra cost of 1.2 euro on the ticket.  That seems insignificant.

Compare this with electricity.  A 1 euro change in the EUA price would impact the cost of a typical monthly domestic electricity bill by 12p in the UK [2].  Nor is that likely to break the bank.

So retail insignificance would be no more valid reason for excluding aviation than for excluding electricity generation.

The second argument I have heard is that there is no technical possibility for significant further abatement.  This is not unique for aviation.  The manufacture of ammonia, for example, has very limited further possibility for abatement.  And indeed ammonia has fewer substitutes than flying.

In fact, there is an important abatement measure – the one which economists fear most of all: abstention, restraint; that is, not to fly.

Notes

  1. 6.8 barrels of oil in a metric ton.  3.15 tons CO2 per ton of fuel burnt.  1.3 usd per euro.  1 euro change in the EUA price = 1.3 x 3.15 / 6.8 = 60 cent change in oil price.  Approximately.
  2. 3.3 MWh typical household electricity consumption in a year (Ofgen).  0.275 per month.  Assume emissions from electricity production average 0.5 t CO2/Mwh.  Typical emissions therefore 0.138 tons per month per household.  Impact of 1 euro change in EUA price is 14 cents or 12p.
  3. “huge” is not a useful word in discussion environmental policy.  Road transport emissions in the EU are about 900 million tons.  Assuming a carbon price of 4 euro, not putting a carbon price on road transport implies a subsidy, compared to other industry, of 3.6 billion euro.
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