Tuesday, 29 January 2013

Carbon Offsets - The Air Passenger Duty Excuse

Aircraft are one of the fastest growing sources of greenhouse gas emissions worldwide. While the per-kilometer carbon emissions from flying economy class are about the same as those from  driving alone in a car, an airplane can cover any given distance much, much faster.  You might generate the same CO2 emissions from a single 12-hour flight as you would from a year of driving. The climate change impact becomes even greater when you consider the indirect warming impacts of high altitude flights, which can double the overall warming compared to burning those same fossil fuels on the ground.

What is more, aircraft flights are often discretionary - at least compared to other greenhouse gas sources like producing food, heating our homes and generating electricity.  As a result, flight emissions tend to come under special scrutiny by sustainability teams, environmental campaigners, and - importantly - politicians.

Which brings us to Air Passenger Duty (APD).

In December 2006, the then-Chancellor, Gordon Brown, announced that the Government would double Air Passenger Duty rates for UK flights. The rates were raised again in 2009, and then in 2010, and again in 2012.  They are scheduled to rise again in April 2013. APD was originally introduced in 1993 solely as a means of raising revenue from the relatively lightly taxed airline industry. However, Brown justified doubling the APD on environmental grounds, and hinted that it would be earmarked to "secure extra resources...for our priorities, such as public transport and the environment." According to the BBC, the Government continues to make environmental claims for APD rises, and campaigning organisations like Greenpeace argue that increases help ensure that airlines pay their proper environmental cost.

Air Passenger Duty costs £13 for a short-haul flight, rising in tiers up to a maximum charge of £92 for flights over 6,000 miles, and brings in over £2 billion in revenue.  The duty is several times the cost to purchase carbon credits that would balance out those flight emissions. It might seem reasonable, therefore, for the average passenger or company travel coordinator to avoid purchasing carbon offsets, on the assumption that they have more than paid for the environmental cost of their flights already.

It might seem reasonable, but it would be wrong.

Anyone familiar with the story of the Carbon Reduction Commitment Energy Efficiency Scheme will be unsurprised to learn how the Government uses the revenues from thAPD. A quick recap:iIn December 2011, the Chancellor announced that CRC revenues at £12/tonne CO2 would no longer be "recycled" back to participating companies as an incentive to save energy.  Nor would they be "hypothecated" and earmarked solely to environmental and energy efficiency initiatives.  Instead, the funds now go into the general revenue pool for use as the Government sees fit.

The same applies to Air Passenger Duty.  While the purchase of a quality carbon offset credit directs funds towards a real emission reduction that has been verified by an auditor, Air Passenger Duty payments go into the general tax revenue pool, where they are added to funds from every other source.  There is no requirement to hypothecate those revenues towards emission reduction activities, and no direct link between APD revenues and Government spending to tackle climate change.

APD is not even structured to provide strong incentives to reduce emissions.  Because it is levied on a per-passenger basis and not per plane or per litre of fuel, APD provides little direct incentive for airlines to fly fewer, fuller planes, or to fly newer, more fuel efficient aircraft.

With an increasing number of experts concerned that we are on track to disastrous climate change, it is more important than ever that we use all the tools at our disposal to reduce global emissions.  However, APD has only a marginal impact on aircraft emissions.  The revenue is not reinvested directly into emission reduction activities and its pricing structure does not drive down passenger numbers effectively.  In its current form, then, APD is not a credible alternative to offsetting your flight  emissions with carbon credits.

If you can avoid flying, then by all means do so  But if you must fly, there is no real alternative to carbon credits to offset those emissions.