Richmond Heathrow Campaign                                                                                    ZAS0049

Written evidence from the Richmond Heathrow Campaign

INTRODUCTION

1.              This Report from the Richmond Heathrow Campaign (RHC) responds to a Call for Evidence by the Environmental Audit Committee ‘Inquiry: Net Zero Aviation and Shipping. 20 July 2021'.

2. The Terms of Reference list eight topics which we address here in relation to aviation, which is RHC’s subject of concern, experience and knowledge.

3. RHC represents three amenity groups in the London Borough of Richmond upon Thames: The Richmond Society, The Friends of Richmond Green, and the Kew Society, which together have over 2000 members. The members of our amenity groups are adversely affected by noise from Heathrow Airport's flight paths. We acknowledge Heathrow's contribution to the UK economy and seek constructive engagement in pursuit of a better Heathrow. We are an active participant in the Heathrow Community Noise Forum.

4. RHC has undertaken extensive research on Heathrow and submitted a large number of papers to the Airports Commission, the DfT, CAA and others, which can be found at www.richmondheathrowcampaign.org. 

MAJOR FAULT LINES IN ACHIEVING AVIATION NET ZERO

5. 6th carbon Budget. RHC places reliance on the Climate Change Committee’s (CCC) 6th Carbon Budget, December 2020, as a source of information and legally based pathway to aviation net zero that converts ambition into policy, targets and action. The 6th Carbon Budget demonstrates aviation net zero is achievable and financeable by 2050, and as such satisfies the Paris Agreement on Climate Change.

6. Running out of time. Time is being lost across the economy, as made clear by the CCC’s progress report to Parliament in June 2021. Explicitly, UK aviation (and question the DfT) oppose demand management, which is a major plank of the 6th Carbon Budget. Instead, industry is relying on efficiency gains and yet-to-be developed sustainable aviation fuels (SAFs) that are over-optimistic compared to the 6th Carbon Budget and on speculative removal of greenhouse gases from the atmosphere.

7. Government is slow to respond to the challenge and reluctant to administer the medicine needed, especially in the face of the industry’s current pandemic problems.

8. Polluter reluctance to pay. The aviation industry is calling for the government and hence tax payer to financially support carbon abatement by funding efficiencies from aircraft and airspace modernisation and SAF refineries, etc. The industry is in denial of the polluter-should-pay principle (the polluter being the passenger and freight owner) by not managing demand and seeking support from the public purse. 

9. Fair allocation of abatement costs. The majority of people around the world do not fly (50% in the UK). In the UK, 15% of people take 70% of all flights.

Purpose of travel.  In pre-covid terms, 60% of UK passengers were UK resident leisure passengers (including friends and family), 20% foreign resident leisure passengers (tourists to the UK) and 20% business.  International-to-international (I-I) passengers comprised 10% of passengers.

Distance travelled. Emissions per passenger depend on distance travelled, class of travel and other factors. Broadly, individual flights vary substantially from the average of 0.13 tonnes of CO2 per passenger based on the UK's 39.6 MT and 292 mppa in 2018. Approximately 0.05kg of CO2 is emitted per 1000km in economy class. But a one way premium class journey from London to Auckland (20,000 km) emits a substantial 1.8 tonnes of CO2 per passenger, compared to an average UK carbon footprint of 6 tonnes of CO2 per person per year. Long-haul, short-haul and domestic comprise around 21%, 67% and 12% of UK air travel, respectively. 

RHC proposes an increase in air passenger duty (APD) (see para 13) for fiscal and not pollution control reasons but it would have the effect of constraining demand and the long-established format of APD, based on distance and class of travel, seems a reasonable approach to allocating the cost of carbon mitigation. Furthermore, the substantial increase in HM Treasury income could support the less well off, social care, etc.

10. Cheap UK air fares. Airlines continue to race to the bottom on air fares (e.g. recent BA Gatwick plans and a new JetBlue Atlantic service) and demand is inflated with increased carbon emissions.

11. Carbon implications from the high propensity of the British to fly. More Britons travel abroad than any other nationality, according to official data from the international trade body for aviation. In 2018, 8.6% of all international travellers were British followed by the US with 7.6% and China 6.6 per cent. The global aviation industry emitted 915 Mt of carbon in 2019 or 2% of total global carbon emissions of 42 Gt. UK aviation emitted 39.6 Mt or 8% of total UK emissions of 522 Mt; as such the UK aviation carbon footprint is relatively high. 70% of passengers on UK international flights are UK resident but carbon accounting allocates 50% to the UK, based on departures alone, and therefore the UK bears less than its fair share of global aviation carbon costs. Surely, the UK is under moral obligation not to be the highest aviation polluter.

12. UK airports continue to seek unsustainable expansion.
1. The DfT’s Airports National Policy Statement (APNS), approved by the Secretary of State in 2018, estimated the impact of Heathrow’s 3rd runway on the UK economy in a range of minus £2.2 bn to plus £3.3 bn (present value 60 years 2014 prices). Included was a cost of £1 bn for carbon, which given the evidence, RHC regards as ludicrously low and does not even cover the carbon cost of additional surface access.
2. Crucially, the DfT estimated that the 3rd runway would benefit passengers by £64.3 billion (60 yr present value) as a result of the increased capacity reducing scarcity rent and hence ticket prices. This works wholly against the UK passenger demand ceiling in the 6th Carbon Budget of 365 mppa, if aviation is to achieve net zero by 2050. RHC estimates current UK ticket prices will need to rise on average by 70% or £28 bn a year to constrain demand growth that includes airport expansion. Without expansion an additional 7 Mt of carbon emissions would be avoided and £12 bn of mitigation costs would be saved and ticket prices could be held to a 40% increase.  The DfT’s scarcity rent value included is wholly misplaced in RHC’s opinion and without it the economic value of expansion is substantially negative and the expansion unjustified. 
3. There are other carbon consequences of a 3rd runway. The APNS predicts that adding 43 mppa to Heathrow will take growth of 17 mppa from other UK airports, which surely contradicts the government’s levelling-up policy and is a result of the regions having to bear part of the carbon cost of Heathrow’s expansion. Of the net 26 mppa, 16 mppa would be international-to-international transfers resulting in only 10 mppa additional UK terminating passengers. The Airports Commission and RHC believe I-I transfers add no economic value to the UK. Instead, they add a substantial carbon cost to the UK.
4. The 6th Carbon Budget says ‘There should be no net expansion of UK airport capacity unless the sector is on track to sufficiently outperform its net emissions trajectory and can accommodate the additional demand.’ In effect we suggest this means no expansion until zero carbon flight is the norm, perhaps in 30 years’ time.

13. UK demand and carbon emissions inflated by under-taxation. Aviation is substantially under-taxed compared to other sectors of the economy, meaning other sectors have to pick up the tab to satisfy the government’s fiscal needs.  RHC estimates passenger demand is inflated as a result of under-taxation by around 10% and therefore by 4 Mt out aviation’s total carbon emissions of 40 Mt in 2019.  Our estimates show full and fair tax on aviation, based on the exemption from fuel duty and VAT, would have been around £15.8bn in 2019 instead of actual £3.6bn. The shortfall, net of actual APD, was a substantial £12.2bn (£9.4bn from terminating passengers and £2.8bn from I-I transfers’ exemption from tax)[1].

14. Extended to 2050 with demand growth of compound 25% mppa, full and fair APD would be £19.4 bn a year instead of a counterfactual £4.4 bn, i.e. an increase of £15.0 bn. However, arguably the growth between 2018 and 2050 should take account of fuel efficiencies of compound 35%, resulting in a net increase of £9.7 bn.

15. International aviation is predicted to grow at environmentally unsustainable rates. The ICAO forecast substantial global aviation growth of over 4% pa through to 2045 compared to the CCC’s unconstrained forecast of 1.6% pa or carbon constrained 0.7%pa for the UK.  These differences create pressure on UK aviation to downplay the climate issues in the face of competition.

16. International aviation is not taking carbon emissions seriously.  60% of global passenger demand (but 96% of UK demand) is for international flights, which is the responsibility of the UN-ICAO and disjointedly outside the scope of COP 26 that covers domestic aviation. The ICAO offsetting scheme for international aviation (CORSIA) will be largely ineffective in our view, on account of the un-reliability of offsetting schemes, low carbon price of a few dollars per tonne of CO2e that lacks commercial incentive and the temporary life of the scheme.  CORSIA is a convenient excuse for the UK aviation industry and government not to take specific action.

17. International fault lines on who should pay. Developing nations seek financial assistance from reluctant developed nations in mitigating a relatively high growth rate for carbon emissions. Bridging the major financial divide will be essential at COP 26 if there is to be co-operation in achieving aviation net zero.

18. While claiming leadership, the UK is beholden to passenger and fuel markets. There are practical issues of carbon leakage and competition between nations and tankering of fuels and international laws governing aviation such as the Chicago Convention. These are real problems but risk the UK not taking bold unilateral action on carbon mitigation.

6TH CARBON BUDGET, DECEMBER 2020

19. UK aviation demand in 2018 was 292 million passengers a year (mppa) resulting in the 12.6 Million tonnes (Mt) of kerosene jet fossil fuel and 39.6 Mt of carbon[2]. 

20. The 6th Carbon Budget predicts unconstrained Baseline passenger growth averaging 1.6% a year or compound 64% (2018-2050) resulting in 64 Mt a year of carbon by 2050 or 51 Mt a year after Baseline efficiencies.

21. The now legally adopted 6th Carbon Budget targets the following reductions in the 51 Mt of aviation carbon in 2050, along with interim targets:
1. 12 Mt a year through demand management,
2. 8 Mt a year through efficiencies,
3. 8 Mt a year through replacement of kerosene jet fossil fuel with sustainable aviation fuels (SAFs) reaching 25% blend by 2050,
4. 23 Mt a year removal from the atmosphere.

22. The full aviation carbon abatement scenario in year 2050 is summarised in Figure 1 as interpreted by RHC from the 6th Carbon Budget and in Figure 2 on a temporal basis.

Figure 1

Figure 2

23. The Baseline scenario includes airport expansion (2029-2033) and Figure 2 shows the substantial reduction in carbon when expansion is excluded.

24. Figure 3 illustrates the abatement divergence of the DfT and aviation industry from the 6th Carbon Budget.  The DfT and Sustainable Aviation assume higher demand growth and hence carbon. In all three cases, expansion is included as unconstrained growth but as discussed in para 12, the 6th Carbon Budget then removes the associated carbon by assuming no expansion. RHC estimates that around 7 Mt out of the 12 Mt of carbon a year reduced by demand management relates to the avoidance of airport expansion.

Figure 3

DEMAND MANAGEMENT

25. Demand management is ill defined but can involve an increase or decrease. Figure 4 shows indicative demand sensitivity to carbon price, prepared by RHC from recent CCC, DfT and Sustainable Aviation information. In 2017 the DfT predicted carbon prices rising from around £40 in 2020 to £221/tonne of carbon by 2050.  It can be seen that a carbon price of £221/tonne of CO2 for example gets nowhere near reducing demand to the ceiling of 365 mppa.  In fact a carbon price nearer £700/tonne of carbon is needed.

Figure 4

26. Figure 5, based on Figure 4, shows that a cost of £28 bn a year needs to be added to passenger ticket prices to achieve the ceiling of 365 mppa and 39 Mt a year of carbon in 2050, which is required by the CCC’s demand management. This is reduced to £16 bn if there is no airport expansion.

Figure 5

27.              Figure 6 shows the components of the £16 bn a year of abatement costs needed to ensure demand does not exceed 365 mppa by 2050, assuming expansion has been ruled out.

Figure 6

EFFICIENCIES and HYBRIDS

28. The claim by the aviation industry that new generations of aircraft result in 20% efficiencies is hollow. 20% means an average 0.9% pa over the 25 year life of an aircraft and the introduction of more efficient aircraft is deferred by fleet turnover averaging only around 5% a year. The CCC assumes efficiencies averaging 1.4% pa 2018-2050, which seems not unreasonable but the aviation industry assumes average rates above 2%pa, which seems over optimistic.

29. The 6th Carbon Budget assumes the value of efficiencies and operational improvements as £2.8 bn a year in 2050 but £2.2 bn a year net of investment, operating and financial costs.

30. In Figure 6 we assume the £2.2 bn a year is passed by the airlines to passengers as a cost reduction and hence a reduction in ticket prices but there may be a case for the industry retaining the financial benefits of efficiency improvements on condition the savings are invested in further fuel savings and carbon mitigation.

CARBON MARKET BASED SCHEMES AND SUSTAINABLE AVIATION FUELS (SAFS)

31. Over-reliance is placed on SAFs. The CCC assumes 25% blend by 2050 but the DfT and Sustainable Aviation assume 50% blend. Seemingly, the 6th carbon Budget assumes only sufficient supply of feedstock for 25% blend.   Moreover, the CCC and industry assume no life cycle carbon emitted by the SAFs, which seems over-optimistic. Also, we question whether municipal waste and other feedstocks should be concentrated on providing aviation fuels. There are considerable uncertainties in scaling up SAF supply. Current UK plans concentrate on bio refineries in the north of the UK, resulting in high freight costs of municipal waste feedstock across the UK and transport of fuel to the south to Heathrow and Gatwick, which use around 70% of UK aviation fuel.

32. Figure 8 shows the fuel mix and on a temporal basis 2018-2050 in Figure 9.

Figure 8 – Prepared by RHC from 6th Carbon Budget data

Figure 9

33. A major question is whether SAFs can be supplied at competitive prices to kerosene. Figure 10 shows the RHC model for airline decisions on whether to purchase kerosene or SAFs with a cap and trade scheme, based on one Mt of fuel. The SAF option is the left column and the kerosene option the right. This is one example, but the SAF price would have to be below £750/tonne compared to a kerosene price of £500/tonne. Current predictions of SAF costs are several times this kerosene price.

Figure 10

34. If CO2 traded prices were £221/t in 2050, the fuel cost (kerosene, SAF and carbon) would be £1.2 bn per Mt of fuel and based on 10 Mt of fuel needed for 365 mppa in 2050, the total fuel cost would be £12 bn a year which is an increase of £7 bn compared to the counterfactual £5 bn without SAFs and CO2e costs.

REMOVAL OF RESIDUAL CARBON FROM THE ATMOSPHERE

35. Engineered greenhouse gas removals include bioenergy with carbon capture and storage (BECCS) and Direct Air capture of CO2 with storage (DACCS). The 6th Carbon Budget assumes out-of-sector removal of 23 Mt a year by 2050 - paid for by aviation. The Budget assumes engineered emission removals of 58 Mt CO2/year and 39 MT CO2/year of nature based sinks are needed by 2050 for aviation and other hard-to-abate sectors. In RHC’s view carbon removal remains highly speculative. This report’s author was involved in the North Sea potential for storage and 30 years later there is little progress.

36. RHC’s interpretation of the 6th Carbon Budget is that the cost might be around £50/t of CO2 adding little over £1 bn to ticket prices.

AIRPORT CARBON QUOTA SCHEME

37. RHC has proposed an airport carbon quota scheme for airports to incorporate in Action Plans.  Heathrow, Gatwick and Manchester together emit around 80% of the UK aviation carbon.  There is not the space here to describe the scheme further but RHC would be pleased to engage on these matters on other occasions.

Peter Willan, BSc Eng(Hons), MBA, ARSM, FCMA, FEI, HonRCM

Chair, Richmond Heathrow Campaign

September 2021