IATA calls for rethink on emissions tax

GENEVA, 19 July 2021: Relying on taxation to spur a cut in aviation emissions based on Europe’s ‘Fit for 55’ proposal is counter-productive, warns the International Air Transport Association (IATA).

IATA calls for a shift in EU policy to support practical emission reduction measures such as incentives for Sustainable Aviation Fuels (SAF) and the modernisation of air traffic management.

“Aviation is committed to decarbonisation as a global industry. We don’t need persuading or punitive measures like taxes to motivate change. In fact, taxes siphon money from the industry that could support emissions’ reducing investments in fleet renewal and clean technologies. To reduce emissions, we need governments to implement a constructive policy framework that, most immediately, focuses on production incentives for SAF and delivering the Single European Sky,” said IATA’s director general Willie Walsh.

Comprehensive Approach

• Sustainable Aviation Fuels reduce emissions by up to 80% compared to traditional jet fuel. Insufficient supply and high prices have limited airline uptake to 120 million litres in 2021 — a small fraction of the 350 billion litres that airlines would consume in a ‘normal’ year.
• Market-based measures to manage emissions until technology solutions are fully developed. The industry supports the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a global measure for all international aviation. It avoids creating a patchwork of uncoordinated national or regional measures such as the EU Emissions Trading Scheme that can undermine international cooperation. Overlapping schemes can lead to the same emissions being paid for more than once. IATA is extremely concerned by the Commission’s proposal that European States would no longer implement CORSIA on all international flights.
• Single European Sky (SES) to reduce unnecessary emissions from fragmented air traffic management (ATM) and resulting inefficiencies. Modernising European ATM through the SES initiative would cut  Europe’s aviation emissions between 6-10%, but national governments continue to delay implementation.
• Radical new clean technologies. While it is unlikely that electric or hydrogen propulsion could have a significant impact on aviation emissions within the EU ‘Fit for 55’ timeframe of 2030, the development of these technologies is ongoing and needs to be supported. 

“Aviation’s near-term vision is to provide sustainable, affordable air transport for all European citizens with SAF-powered fleets, operating with efficient air traffic management. We should all be worried that the EU’s big idea to decarbonise aviation is making jet fuel more expensive through tax. That will not get us to where we need to be. Taxation will destroy jobs. Incentivising SAF will improve energy independence and create sustainable jobs. The focus must be on encouraging the production of SAF, and delivering the Single European Sky,” said Walsh. 

Promoting green fuels

The most practical near-term solution to reducing emissions is Sustainable Aviation Fuels. Energy transitions are successful when production incentives drive down the price of alternative fuels while driving supplies up. The EU ‘Fit for 55’ proposal does not include direct measures that will achieve this. Without specific measures to reduce SAF costs, it does, however, propose a mandate to increase SAF use to 2% of jet fuel use by 2025 and at least 5% by 2030.

“Making SAF cheaper will accelerate aviation’s energy transition and improve Europe’s competitiveness as a green economy. But making jet fuel more expensive through taxation scores an ‘own goal’ on competitiveness that does little to accelerate the commercialisation of SAF,” said Walsh.

Mandating a gradual transition to SAF is a less efficient policy compared to comprehensive production incentives, but it may contribute to making SAF more affordable and widely available in Europe, but only under the following key conditions:

• It is limited to EU-only flights. This will limit the negative impacts on the competitiveness of European air transport and potential political challenges from other countries.
• It is accompanied by policy measures to ensure a competitive market and appropriate production incentives. The mandated use of SAF must not allow energy companies to engage in uncompetitive practices with the resulting high costs being borne by airlines and passengers.
• It is targeted at locations that have substantial airline operations and close proximity to SAF refineries.

Need more concrete actions

The SES has been on the drawing board for 20 years but has made little progress despite the promise of a 6-10% improvement in environmental performance, safer operations and reduced delays.

“Europe’s national politicians are quick to lecture airlines on the efforts industry should be making on the environment. But they are silent when it comes to areas of their own responsibility. Just recently, the European Council failed to show any leadership to cut emissions by harmonising European air traffic management. Moreover, the constant absence of political support from states on the SES proposals undermines the credibility of the ‘Fit for 55’ proposal and the credibility of Europe’s determination to drive real solutions for sustainability,” said Walsh.