Aviation bearing the brunt of carbon taxes

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The aviation sector is facing difficult times ahead as certain countries, including South Africa, push to implement carbon taxes on aircraft.

From January 2012, airlines flying to or from Europe will have to buy permits from the EU’s Emissions Trading Scheme (ETS) for 15% of the carbon emissions they produce during the entire flight. They join 11,000 factories and power plants already in the scheme.

The South African government is planning on introducing a carbon tax from 2012, amounting to R75 per tonne on carbon dioxide emissions. The proposed tax was first announced in December last year and in March the treasury said it was working on plans to take the tax forward.

The carbon tax has met with some opposition. According to Giovanni Bisignani, former CEO and Director General of the International Air Traffic Association (IATA), “South Africa is a particularly carbon-intensive destination and relies extensively on long-haul flights from key international tourism markets. Putting a tax on aviation would put in jeopardy the very substantial benefits delivered to SA’s society and economy which far outweigh any additional tax revenues.”
“Aviation has been the sacrificial lamb…. It has become a target because it is seen as nonessential,” said international tourism and economic development consultant Anita Mendriatta at the 2011 Gauteng Tourism summit in Johannesburg on Friday.
“But it’s not just the passengers, it’s cargo too and aviation taxes are one of the biggest challenges to the tourism industry. They may cut tourist visits to (a long-haul destination like) SA,” Mendriatta said.
“The airline industry is currently struggling with the impact of cost increases brought about by tariff increases…increased ATNS [air traffic and navigation services] charges as well as escalating fuel costs. The volatile state of the industry means that further cost increases are likely to be absorbed by many of the airlines themselves,” said Chris Zweigenthal, Chief Executive of the Airlines Association of Southern Africa. He added that proposed cost increases “need to be reviewed urgently to ensure the sustainability of the airline industry in South Africa.”

Treasury spokeswoman Kershia Singh told Business Day on Friday the department was evaluating comments received on its discussion paper on SA’s proposed carbon tax, and would publish a draft policy paper in November.

There are concerns that the proposed carbon tax will hurt the tourism industry, from which South Africa generates billions of rands. South Africa aims to increase tourism’s contribution to the economy from R189 billion in 2009 to R499 billion by 2020, creating 225 000 new jobs in the process, Business Day reports.

Doing this would entail increasing the number of foreign tourist arrivals from 7 million in 2009 to 15 million by 2020. However, the proposed carbon tax could dent these numbers as flights become more expensive. There is also concern that the carbon tax will not go

In a May visit to South Africa, Bisignani spoke out against the proposed airline carbon tax. “We’re against those types of taxes,” he said. He added they were “allowed but not the best way to attract tourists”. He stepped down as IATA chief earlier this monh.

The IATA chief noted that global aviation was to blame for 2% of global carbon emissions, versus 18% for motor vehicles and 38% for electricity generation. Bisignani averred that although airlines were just a small contributor to global warming, it has for some time been working to reduce its footprint through the promotion of biofuel and improving efficiencies, including working with governments to shorten air routes. IATA has also long proposed the integration of European airspace, with the EU setting 1995 as implementation date. But the idea, which would have a direct impact on the environment, has remained just talk.

The EU aims to lead the world in fighting climate change, and says it needs to put a price on carbon dioxide emissions to guard against future climate impacts such as crop failures, droughts or flooding.

However, Europe’s scheme, and those from other nations, have generated an enormous amount of criticism. China in particular was heavily critical of the scheme while the Air Transport Association of America (ATA) said the EU’s climate regulations breached US sovereignty, and that they comprised an illegal charge under the main international treaty on air travel, the Chicago Convention.
“The EU does not have competence to regulate third country airlines in third country airspace,” Derrick Wyatt, a lawyer for ATA, told the European Court of Justice in Luxembourg. “It is astonishing that a US airline must acquire an EU license to cover emissions at a US airport.”

On a typical San Francisco to London flight, just under 9% of emissions occur in the EU, compared to 25% over the Atlantic, 37% over Canada and 29% over the United States, he added.



Airlines say their emissions should only be tackled in U.N. bodies, such as the International Civil Aviation Organization (ICAO), which have clear rules to prevent countries imposing illegal charges on each others’ airlines.
“Instead of flying planeloads of lawyers to Europe, the aviation industry should face up to its future and get on with the job of cutting emissions,” said Bill Hemmings of green transport campaigners T&E.