The European Commission (EC) may have given up on the idea of a kerosene tax, but a new study commissioned by Brussels may well propose a more workable alternative - emissions-related charging

After spending the last two years in the shadows as engine noise hogged the limelight, the emissions issue is back on the agenda. As with noise, which flared up after the USA took offence at an attempt by Brussels to ban hushkitted engines, the pressure for a tightening of standards is coming from Europe.

A study into the question of emissions charging, carried out by Dutch consultancy CE Delft on behalf of the EC, is due to be published this month. Brussels studied the possibility of a tax on aviation fuel (kerosene) back in 1999. However, it concluded then that, in the absence of any international agreement, the ambit of an aviation fuel tax would need to be limited to European carriers on intra-Community flights. As it could put these carriers at a competitive disadvantage and there would be little net environmental benefit it was effectively a non-starter.

Taking charge

The new study looks into the possibility of an emissions related charge, rather than a tax, and would be applicable to all airlines regardless of nationality. "It is looking at the legal, technical, environmental and practical implications. It is not just a theoretical economic study but looks at how something like this could be made to work", says Michael Rossell, a senior policy advisor to Transport Commissioner Loyola de Palacio.

Effectively there are two approaches to an emissions related charge - either a charge that raised revenue to cover the environmental costs of emissions or as a revenue neutral charge. Brussels believes the former would be consistent with the "polluter pays" principle agreed as part of the United Nations Framework Convention on Climate Change at the Rio de Janeiro Earth Summit in 1993 and reiterated by ICAO at its 33rd Assembly last year.

But, as always, the devil is in the detail. One problem would be how the not inconsiderable revenues from the charges would be used to offset the environmental impact. One idea would be to pay for early retirement of older aircraft, another to finance expensive research and development - but Brussels warns these sorts of ideas could also raise question about unfair competition and state aids. Airlines are worried that the revenue will end up going into government coffers.

An alternative approach could be to develop a revenue neutral charge which would have worst performing aircraft paying a higher charge, whilst better performers could get a rebate. An airline with a fleet that included both types might not pay any more on fuel and related charges than it does now. However, there are those in Brussels who believe that although this methodology would be simpler to introduce it would not be consistent with the principle that the polluter pays.

Any charge would need to be applied to emissions at all stages of flight as putting a charge on emissions at airports could only relate to local air quality. It is likely that Eurocontrol, the European air traffic management provider, would be given responsibility for collecting the charge.

Rossell says the focus of the study is not on reducing growth or demand for air travel: "We want to send a market signal that the cost of pollution needs to part of the cost of travel - to internalise the external costs." The principle here is that airlines looking to purchase new aircraft should be encouraged to go for the most fuel efficient models, he says, and that they should do so sooner than they might have done otherwise.

Rossell emphasised that the Commission's work on emissions was being fed into ICAO's CAEP (Committee on Aviation Environmental Protection) process, a sign of how keen the EC is to avoid a repeat of the painful hushkit episode.


Once the study has been completed, the EC will look at it from a policy perspective. Once this is completed, it hopes to start a wide-ranging consultation process in mid-to-late summer. It would then be the end of the year before the consultation period ended, and any proposals could be put before the European Parliament and the Council of Ministers.

This part of the process is likely to take until the end of 2003, and it would then take another 18 months to go through the various member state parliaments, presuming the proposal became a directive. This latter process would be unnecessary if the EC ended up issuing a regulation instead.

Either way, there is no doubt that emission-based charging is a real possibility. It has already been implemented unilaterally by European airports such as Zurich and some in Sweden as part of their landing fees. That said, presuming the report does recommend a charging system, there is still plenty of time for the airline industry to make its objections known, and there is also the clear chance that, like engine noise, emissions will be subject to global political pressures.

What is clear, is that emissions is likely to join noise at the top of the industry agenda.

Source: Airline Business