EN Official Journal of the European Union C 185/97

Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — Reducing the Climate Change Impact of Aviation

COM(2005) 459 final

(2006/C 185/17)

On 27 September 2005 the European Commission decided to consult the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 21 March 2006. The rapporteur was Mr Simons.

At its 426th plenary session, held on 20 and 21 April 2006 (meeting of 21 April), the European Economic and Social Committee adopted the following opinion nem. con. with 55 votes in favour and one abstention.

A. Conclusions

A.1 Like the Commission, the EESC is of the opinion that additional (policy) measures are needed to control the impact of aviation on climate change. The increase in aviation's contribution to greenhouse gas emissions will be approximately 50 % of the annual percentage increase in aviation, even if all the ambitious R&D goals are achieved over the coming decades. The budgets reserved for this in the 7th Framework Programme will have to be spent in a targeted and effective way.

A.2 To limit the impact on the climate, the European Commission has set a policy goal for the reduction of CO2 and NOx emissions in the EU, beginning with the period 2008-2012. Taking account of international treaties, agreements and ongoing studies, the EESC is of the opinion that potential measures for aviation should initially apply only to CO2 emissions from intra-EU air traffic in order to minimise potentially long implementation delays.

A.3 It will be necessary to work through the International Civil Aviation Organization (ICAO) in order to ensure the worldwide application of an Emissions Trading Scheme (ETS); as a practical first step, an intra-EU ETS could be a very feasible option, if this proves appropriate in the course of the negotiations.

A.4 From the earliest date possible, all intra-EU air traffic should be included in an open (EU) Emissions Trading Scheme, with a realistic baseline scenario, in order to reflect its (annually increasing) CO2 contribution to climate impact. There should be allocations at EU level and additional contribution/reduction targets should apply directly to the airlines as the trading parties; it must remain possible for new operators to enter the market, without competitive disadvantage. For other impacts, use should be made of more appropriate local instruments, such as an NOx levy or operational measures.

A.5 Investment in research into the climate change effects of aviation's non-CO2 emissions and technological developments to secure cleaner air transport should be a key priority for the Community and industry, with particular emphasis on preventing adverse trade-offs between local noise, local emissions and global emissions of aircraft.

A.6 Given its emission reduction potential, improved air traffic management should also be a priority, using the Single Sky Initiative and the SESAR programme.

A.7 Non-discriminatory measures to improve the competitive position of surface travel modes should be further explored in order to offer more attractive alternatives for passenger and cargo transportation within the Community.

B. Reasons

B.1 While the contribution of aviation emissions to climate change is relatively small (around 3 %), it is forecast to grow due to increasing demand, the absence of alternative fuel sources and the relative maturity of current aircraft technology. Even when all ambitious EU R&D goals are realised and implemented in the next decades, the increase in CO2 output of aviation will be 2 to 2.5 % per year, or roughly half of its annual growth (forecasted to be 4 to 5 % per year).

B.2 An ETS offers the most cost effective solution to limiting the climate change effect while facilitating the sustainable development of aviation.

B.3 The problem is global in nature and thus demands a global solution. In the interim, if appropriate, the establishment of an intra-EU scheme represents a first step which can be used as a blueprint for global application through ICAO.

B.4 For this reason, an EU scheme should be as uncontentious as possible, being initially limited to CO2 without the application of multipliers. The effects of non-CO2 emissions (which have no Kyoto Protocol equivalent values) are scientifically less well understood although there are indications that certain non-CO2 emissions could have effects in some cases. Pending further research, such effects should be the subject of standardised EU-wide local instruments where necessary, such as a NOx levy.

B.5 Where they exist, high speed trains have been shown to represent a valuable alternative to passenger air travel on certain European routes, which see enormous volumes of traffic having flight times of one hour or less. Studies should be carried out to evaluate the potential for their expansion and the possibility of providing such services for freight transportation, taking care to prevent distortion of competition by national or EU subsidising. However, trains should not be expected to ever become a full equivalent alternative to more than a part of intra-EU air traffic.

1. Introduction

1.1 Air transport has become an integral part of society in the 21st century, enabling both passengers and freight to travel large distances at an unprecedented speed and providing significant economic benefits to regional and national economies. However, aviation also contributes to climate change. Although aircraft fuel efficiency has increased by more than 70 % over the last 40 years, the total amount of fuel burned has increased by over 400 % in that time due to even higher growth in air traffic which in turn is the result of travel requirements/demand.

1.2 As a result, the impact of aviation on the climate is on the rise and is the fastest growing single source of greenhouse gases in the area of transport: whilst the EU's total emissions controlled under the Kyoto Protocol fell by 5.5 % (-287 MtCO2e) from 1990 to 2003, its greenhouse gas emissions from international aviation increased by 73 % (+47 MtCO2e), corresponding to an annual growth of 4.3 % per year. The growth in air traffic in the EU since 1990 has, however, been much faster. This shows that the aviation industry is attempting to tackle the environmental impact at source using efficient technology.

1.3 In this connection, tackling the problem at source is an effective (initial) measure. In the short, medium and long term, the remaining contribution cannot be compensated for by the aviation industry itself, except by an enforced but unrealistic slowdown in growth of air traffic.

1.4 Although aviation's share of overall greenhouse gas emissions is still modest (about 3 % (1)), the rapid growth undermines progress made in other sectors. If the growth continues as up to now, by 2012 emissions from international flights from EU airports will have increased by 150 % since 1990. This growth in the EU's international aviation emissions would offset more than a quarter of the reductions required by the Community's target under the Kyoto Protocol.

1.5 In the longer run, aviation emissions will become a more significant contributor if current trends continue, with the proportion of total EU CO2 emissions arising from aviation increasing from 3 % in 2005 to approximately 5 % in 2030 due to a doubling of air traffic. An ETS would reduce demand to some extent but, to compensate for the expected growth in air traffic, the sector would have to acquire credits from other credit holders to ensure that growth did not undermine the Community's Kyoto targets as mentioned above.

2. Summary of the Commission communication

2.1 On 27 September 2005, the Commission published its Communication on existing and possible additional policies which would attempt to stop this trend either indirectly or directly.

2.2 Existing policies, for example the EU's Sixth Framework Programme for Research, focus, inter alia, on public awareness, encouraging the use of alternative modes of transport and carrying out research into cleaner air transport. The forthcoming Seventh Framework Programme will focus even more closely on the climate change impact.

2.3 Planned policies such as improved air traffic control management (under the Single European Sky programme) will attempt to achieve a medium-term reduction of approximately 10 % by improvements in efficiency in the use of European air space.

2.4 Policies previously discussed such as the possible introduction of an energy tax for air transport (fuel), or a tax on tickets (in the EU), could possibly bring the impact of air transport on climate change only partially under control.

2.5 The Commission therefore also recommends that the impact of air transport on climate change be included in the European Emissions Trading Scheme (EU ETS), to complement existing policies. In the Commission's view, this fits in well with the policy of the International Civil Aviation Organisation (ICAO), which does not explicitly endorse energy taxes, but rather the concept of international open trading in emission rights to be implemented through voluntary emissions trading or the incorporation of international aviation into the countries' existing schemes.

2.6 The Commission identifies the following key design parameters in its Communication and gives them its provisional approval: — trading party: aircraft operators; — type of emissions: CO2 and non-CO2 effects where possible; — scope: all departing flights (within and from the EU); — allocation method: harmonised at EU level.

2.7 A working group of experts from Member States and the key stakeholders: industry, consumer and environmental organisations, has the task of advising EU officials by May 2006 on the way to incorporate aviation into the ETS system, cf. the terms of reference in the annex to the Communication. Legislative proposals are expected in late 2006.

3. General comments

3.1 The worldwide impact on climate as a consequence of (man-made) emissions of greenhouse gases is by now recognised by nearly every country in the world. However, there is still a considerable difference of opinion about the best way of tackling the problem. Countries such as the United States and China, which are responsible for a substantial proportion of worldwide greenhouse gas emissions, have opted for innovative at-source measures as the spearhead of their approach and have recently concluded international agreements on the subject.

3.2 The Kyoto Protocol, signed in 1997 and ratified by Russia, Canada and other countries, as well as the EU, aims for an EU-average reduction of 8 % in greenhouse gases over the period 2008-2012 compared with 1990 levels, with different percentage reductions per Member State. Part of these reduction commitments can be achieved by (more cost-efficient) measures abroad.

3.3 The European Climate Change Programme (ECCP) was set up in the EU in 2000, under which the new EU Emissions Trading Scheme (ETS) for CO2 was developed, which entered into force for all fixed sources of emissions on 1 January 2005. Transport is not (yet) included in the EU ETS for the first trading period up to the end of 2007, but may be for the second period from 2008 to 2012. Moreover, international air transport is one of the areas not included in the current Kyoto Treaty and objectives.

3.4 In order to secure the global application of the aviation rules, the way forward is through initiatives and negotiations under ICAO auspices.

3.5 Commercial aircraft operate at cruise altitudes of 8 to 13 km, where they release gases and particulates which alter the atmospheric composition and contribute to climate change. Carbon dioxide (CO 2 ) is the most important greenhouse gas because of the large quantities released and its long residence time in the atmosphere. Increasing concentrations have a well- known and direct effect which warm the earth's surface. Nitrogen oxides (NO x ) have two indirect effects on the climate. Nitrogen oxides produce ozone under the influence of sunlight, but they also reduce the ambient atmospheric concentration of methane. Both ozone and methane are strong greenhouse gases. Overall, however, the ozone effect predominates, thus warming the earth. Water vapour (H 2 O) released by aircraft has a direct greenhouse gas effect, but as it is quickly removed by precipitation the effect is small. However, water vapour emitted at high altitude often triggers the formation of condensation trails, which tend to warm the earth's surface. Moreover, such ‘contrails’ may develop into cirrus clouds (clouds of ice crystals). These are also suspected of having a significant warming effect, although this is far from certain. Sulphate and soot particles have a much smaller direct effect compared with other aircraft emissions. Soot absorbs heat and thus has a warming effect; sulphate particles reflect radiation and have a slight cooling effect. In addition, they can influence the formation and properties of clouds.

3.6 In 1999 the Intergovernmental Panel on Climate Change (IPCC) estimated that the total climate impact of aviation was potentially some 2 to 4 times greater than the effect of its CO2 emissions alone; latest insights indicate that this effect is most likely to be in the factor 2 region, and updated IPCC conclusions are expected in the near term.

3.7 As fuel used in international aviation is exempt by treaty from taxation, this places aviation in a privileged position in comparison with other transport modes. It is true that, for example, aircraft operators pay their own infrastructure costs in terms of en-route and airport charges (the latter increasingly including environmental elements); environmental charges in the form of passenger duties; and enjoy subsidies only in the case of routes to which Public Service Obligations apply; but in this respect other forms of transportation also bear equivalent charges.

4. Specific comments

4.1 An intra-EU ETS — that may, if appropriate, be brought into the ICAO negotiations as a first practical step — would be an addition to existing policy instruments, such as increasing public awareness with regard to sustainable mobility, promoting alternative means of transport and encouraging research into cleaner air transport.

4.2 Possible additional instruments to limit the impact of aviation: — taxation: kerosene duty (fixed percentage) or VAT on tickets; — levies: flat-rate or progressive (per kilometres flown) amount per passenger or aircraft; — emissions trading: inclusion of EU aviation in the open EU ETS.

4.3 The alternative, taxation (an EU duty on kerosene or VAT on tickets), would, according to research conducted for the Commission, have the greatest impact on the demand for air transport (at least –7.5 % in 2010) and the least effect on CO2 emissions (-0.9 to –1.5 %). There would be no incentive for cleaner air transport.

4.4 Another alternative, a levy per passenger , would be relatively easy to introduce, but there would be no incentive whatsoever to reduce the greenhouse gas emissions per aircraft movement, the policy goal. On the other hand, depending on its level, this form of taxation could possibly have a major impact on air transport demand and consequently on the competitive position of the European (aviation) industry.

4.5 A more realistic option, certainly in the short term, would be the introduction of a levy per aircraft, possibly as a flanking policy for non-CO2 effects. These levies can act as a stimulus for cleaner flying and they have a lesser impact on air transport demand. A levy per aircraft could also be imposed on carriers from outside the EU, provided that the revenues were used to protect the environment.

4.6 However, the incorporation of air transport into an EU ETS would have the following advantages: — most cost-effective solution; — environmental benefit, in terms of CO2 reduction, known in advance; — not a new policy instrument; first phase already operational.

4.7 For the EESC, the most probable shape of an initial EU ETS for air transport is: — CO2 only if early inclusion of aviation is of key importance: — The only substance with good scientific evidence regarding its effects — Other options are either not (yet) practicable, lead to delay, or still lack sufficient scientific evidence (covering all non-CO2 impacts) — Other environmentally harmful substances, such as NOx, by means of more appropriate flanking instruments — Emission rights to be allocated at EU level: — Bad experience with national allocation plans for fixed sources when allocation is made at Member State level — Aviation is pre-eminently a market with international competition, preventing market disruption — Emission rights to be granted to airlines — ensuring the most effective and efficient incentives within the scheme — Allocation method: non-discriminatory — Grandfathering clause, benchmarking of performance or auction — Equal treatment with respect to other sectors in the open EU ETS — Care should be taken not to ‘punish’ already efficient airlines and new entrants — Exclusively for flights within the EU, not (yet) for all departing/arriving flights: — There is no ideal solution, the most pragmatic solution is negotiations through the ICAO forum — All airlines will be involved in this process, irrespective of their country of origin.

4.8 A limited impact assessment was carried out by the Commission at the time of the Communication and it was noted that a more detailed impact assessment will accompany any final proposal. The actual economic impact will depend, inter alia, upon the likely trading price and allocation methodology.

4.9 A scheme covering intra-EU flights will affect EU operators in different ways. Firstly, differences in price elasticity will result in significant variations in the effect on demand. In addition, the effect could depend on the percentage of an operator's overall output represented by intra-EU services. Concerns have been expressed that operators with small percentage coverage could engage in cross subsidising between fare types or with their longer haul services to the detriment of those carriers with a large (or total) percentage of operations covered by the scheme. These aspects require further consideration as part of the impact assessment.

4.10 There are still many aspects of air transport in an EU ETS which the EESC feels require study, for example in the proposed and already active Working Group of Experts, before a definitive position can be taken on methods and timing: — lessons learned from the evaluation of emissions trading for fixed sources, before aviation measures can be implemented; — problems arising from the introduction of aviation into the EU ETS after the commencement of the second trading period; — future trading prices and their impact on the growth of aviation; — the overhead costs of emissions trading for aviation in relation to the planned targets; — feasibility and manageability of emissions trading for aviation; — possibilities of aviation emissions trading into a worldwide system via the ICAO and, if not feasible, the benefits and losses of potentially purely regional implementation; — further research into interference between slot allocation and emissions trading in aviation; — further research into the effects of possible trade-offs between CO2 and NOx emissions (a greenhouse gas, but also a ‘local issue’ in the vicinity of airports in urban areas in the EU).

Brussels, 21 April 2006. The President of the European Economic and Social Committee Anne-Marie SIGMUND

(1) Aviation is one of the cleanest and most economical forms of transport. The transport sector as a whole accounts for about 22 % of all global CO2 emissions from fossil fuel use. Results from the Intergovernmental Panel on Climate Change (IPCC) demonstrate that, within the transport sector, the largest contributor to greenhouse gas emissions is road transport (75 % of total transport CO2 emissions). The share of aviation is only 12 %. Consequently, aviation is responsible for only about 2 %-3 % of total global CO2 emissions (12 % of 22 %).