Any initiative to reduce or pay for the environmental damage caused by air travel should be agreed by all countries rather than for the European Union to act alone, he said. "ICAO must bring the rest of the world into emissions trading."
Speaking at an Aviation Club UK luncheon in London, Broughton also criticised UK finance minister Gordon Brown for yesterday announcing a doubling in air passenger duty, raising the impot to £10 ($19) for European flights and £40 for long-haul legs. Broughton says air passenger duty is a "blunt instrument to raise revenue pure and simple, and treating aviation like a cash cow will do nothing to help the environment". A full transcript follows below this article.
He acknowledged that BA would almost certainly pass on the increased tax to passengers, adding: "that's what the Chancellor [finance minister] would be advocating".
He said the issue of the environment was "not going to go away" for airlines and that the industry had to start taking its own green initiatives such as persuading passengers to use "carbon offsets", where voluntary payments are made to compensate for the environmental damage of air journeys, to, for example, fund hydro-electric initiatives in China or India.
Such a scheme, introduced on a trial basis by BA, however, had been largely unsuccessful as it "wasn't marketed properly". He said there was "a potential for our industry to engage more with our customers" in combating environmental damage.
He mutedly acknowledged Virgin Atlantic rival Sir Richard Branson's contribution to the environmental debate saying he had "finally" taken a stand, but in a broadside at Ryanair's Michael O'Leary's colourful dismissal of the green agenda, he said: "It's no use polluting the environment with Ryanair verbals."
CHAIRMAN, BRITISH AIRWAYS
SPEECH TO THE AVIATION CLUB
Wednesday December 6, 2006
[CHECK AGAINST DELIVERY]
Ladies and Gentlemen,
Thank-you for your introduction. It’s a great pleasure to be here today.
It is earthly matters I want to talk about – and in particular the future of Planet Earth, and aviation’s part in it.
For the last two or three years, and especially in the last 12 months, this industry has been almost under siege from the environmental critics.
Helped by an insufficiently questioning media, the green lobby has had a field day in portraying the industry as the greatest threat to humanity since Noah’s Flood.
At a time when commercial air transport has an utterly outstanding safety record, we are told that flying kills.
According to George Monbiot, the archpriest of anti-aviation commentators, millions of lives in the developing world will be put at risk by droughts and storms, so we should reduce runway slots in the UK by 90 per cent – yes 90 – over the next 25 years.
Monbiot is an extreme critic. But there are many in the media and political worlds with a similar view. The overall effect is creating a climate of opinion in which we are seen as environmental pariahs: blinkered, polluting dinosaurs more interested in next-generation mid-air mobiles than in the next generation.
There is a serious risk that airlines and aviation could become demonised in the same way that tobacco companies and smoking were during the last two decades.
I remember it well.
Everyone here knows this media stereotype is a grotesque distortion. But many people outside, especially younger people, do not. The issue for the whole industry is how we respond; and how we are seen to make environmental responsibility integral to our businesses.
It’s not because Willie Walsh used to run Aer Lingus that I say to you: we are all green now.
So what should be done? We can’t pollute the atmosphere further with a volley of Ryanair verbals - and pretend to ourselves that the problem doesn’t exist. That’s just dumb.
And while we welcome Sir Richard Branson’s recent entry into this debate, we need a more encompassing response than more white lines on the tarmac at Gatwick.
Of course there are many valuable operational practices that can be implemented to save fuel burn and hence emissions. We accept this at British Airways. That’s why we’ve been implementing them for years – and continue to explore further fuel efficiency improvements wherever we can.
Everyone knows that new aircraft use less fuel than their predecessors. That’s why we are looking for fuel efficiency gains of between 17 and 30 per cent when we start replacing our long-haul fleet.
But we are realists at British Airways. We recognise that these emissions gains for the industry are likely to be outweighed by future growth. What we need is a broader strategy.
The first requirement is to generate a more informed and rational debate, and provide some context. Aviation may be one of the fastest-growing sources of CO2 emissions, but it is still a small one.
According to the recent Stern report on the economics of climate change, worldwide aviation currently produces 1.6 per cent of greenhouse gas emissions - less than one sixth of road transport, for example. Stern estimates aviation’s figure will reach five per cent by 2050 if the industry does nothing to clean up its act.
If we focus on UK aviation’s share of global CO2 emissions, we see that it’s barely one tenth of one per cent. So if you closed down UK aviation tomorrow, you would not have saved the planet, as some observers seem to think.
Instead, you would have caused wanton damage to the economic interests of the public - for no perceptible environmental gain whatever.
It follows that there is no justification for singling out aviation as the climate change whipping-boy. Seeking to tax UK aviation out of existence would not only be economically counter-productive, it would make no meaningful difference to global warming.
There’s a crying need to balance the policy debate. The truth is we are being castigated for providing a public service. We do not fly around emitting carbon dioxide for some kind of perverse pleasure. We fly because people want us to.
People want to travel. They want to do business – to meet customers, suppliers and investors – because they want to create wealth for their companies, their families, their staff and their communities.
In an increasingly globalised world, people want to experience and explore different cultures and lifestyles.
There is nothing ignoble in this. Nothing selfish, nor anti-social. It reflects the reality of how people want to live their lives and earn their livelihoods in the 21st century.
This demand for travel stems from powerful economic and social changes around the world.
Look how internationalised our higher education system is becoming.
According to the OECD, the number of students attending university outside their home country has doubled in the last ten years to more than three million. The UK is only fractionally behind the US as the world’s biggest recruiter of overseas students – and the traffic of British students going abroad is also rising sharply.
The demand for travel reflects mass, popular forces. It is not imposed top-down by a handful of airline executives worried about their revenue targets.
Globally, while aviation accounts for less than 2% of carbon emissions, it supports 8% of GDP.
Earlier this week, a study by the Oxford Economic Forecasting group emphasised yet again the importance of aviation to the whole UK economy.
Currently, the industry brings the national economy net benefits of around £11.4 billion a year. That figure would be more than doubled, the study says, if the Government went ahead with all the runway capacity proposals in the White Paper of three years ago.
It would be remiss of me if I did not add that two thirds of the extra national economic benefit would come from the introduction of mixed mode operations and a short, third runway at an airport not too far from here, which I happen to know very well.
But perhaps most important of all, the study described the UK economy as ‘set to become increasingly dependent on aviation’ with the continuing growth of high-tech manufacturing and knowledge-based sectors, such as financial and business services, at the expense of traditional manufacturing.
In other words, UKplc cannot hope to prosper in the increasingly internationalised economy of tomorrow without the first-class air transport infrastructure and services which global businesses need.
We fly, therefore, because society wants and needs us to. But society is also rightly worried about climate change. The recent YouGov poll carried out for BATA illustrated the slight schizophrenia in the public’s mood on these issues. Nearly 60 per cent of people said they were concerned about aviation’s impact on climate change, but only three per cent thought the correct response was to give up flying.
It is not just individuals who are concerned about climate change. Understandably, our major blue-chip corporates share those concerns. The same growth sectors benefiting from aviation are the ones in the vanguard of the business response to climate change.
HSBC has recently gone carbon-neutral. Standard Chartered is just one of the corporate leaders urging the Prime Minister to set the toughest target for UK carbon allocations under the EU emissions trading scheme. (And incidentally it was good to see the European Commission taking a tough stand on permit allocation last week.)
BSkyB has publicised its use of carbon-neutral taxis and incentives for staff to buy low-carbon cars.
So how long before these and other major corporates put their significant air travel under the carbon spotlight?
We can be sure they will be looking to operators who deliver best against their own need to be as carbon efficient as possible.
I have no doubt whatever that the right policy response is to go with the grain of what society wants: an aviation sector that is environmentally responsible and focused on making real reductions in global carbon emissions. Carbon-safe flying, you might say.
Last week, Tony Blair spoke of the UK’s role on climate change as one of offering leadership without getting too far ahead of the pack. That describes British Airways’ own policy.
Emissions trading is absolutely central to carbon reduction.
Many people here know that British Airways has led the way for the last seven years in pressing the case for aviation to be included in a system of emissions trading.
Our critics claim that carbon trading is some sort of soft option for airlines – a cunning ruse for avoiding green taxes or for passing the buck to other sectors of the economy.
These assertions are nonsense - and it is high time we said so. We already have a green tax. It is called Air Passenger Duty, and in the current year it will raise nearly £1 billion for the Exchequer.
By the way, if anyone knows how you can avoid APD, feel free to offer me a bit of consultancy afterwards.
And talk of passing the buck in relation to climate change is irrelevant and absurd.
Climate change is a global problem requiring a global solution. It doesn’t matter whether you reduce emissions in Heathrow, Harare or Hindustan – provided the overall effect is to reduce global emissions.
Carbon trading gives companies in all industries a simple choice: if you don’t cut your emissions, you must pay for someone else to. If that extra cost makes you uncompetitive, you will face a very serious problem.
It was very encouraging that the Stern report endorsed the effectiveness of emissions trading, and also made perfectly clear that there need be no contradiction between measures to combat climate change and the pursuit of increased wealth.
We don’t need to choose between two options. We can be green and we can grow at the same time.
But if the Stern report has been the good news on emissions trading, the news from the EU has been less good.
EU Environment Commissioner Stavros Dimas has just finalised his proposal to include aviation in the EU scheme.
The proposal is now being considered by the other commissioners, who will decide in two weeks’ time whether to endorse it formally.
I have to say that it’s a disappointing document.
Though British Airways supports the principle of including aviation in the EU scheme as a first step toward the global solution we need, I am afraid that Commissioner Dimas has allowed his idealism to get in the way of pragmatism.
There are two issues of particular concern: the geographical scope of the proposal – and the methodology for capping aviation’s carbon allowances.
The plan to include all flights in and out of the EU as well as all those within the EU is overly ambitious and self-defeating. It will undoubtedly lead to international disputes, as non-EU states and airlines challenge the right of the EU to apply the scheme to them.
At the best of times, it never takes long for an American to reach for his attorney – and for US aviation, as we all know, this is not the best of times.
Law suits would follow before you could say extra-territorial jurisdiction. And a lot of Asian and Middle Eastern carriers would line up behind the Americans.
If legal action was not enough, non-EU countries would also have the option of regulatory retaliation against European airlines.
The net result would be a critical delay before any scheme could be implemented – and the delay would be seized on by our critics as proof of our unwillingness to tackle our climate change impact in any serious way.
We all agree that what is needed is a global response – in this case a global emissions trading scheme. But let’s deliver it in two stages.
The EU Commission has jurisdiction over Europe – let it focus on that and deliver an intra-Europe scheme as stage 1.
So who should have jurisdiction globally?
The airline sector must show leadership and not wait for a generic global ETS – and that role falls to the International Civil Aviation Organization, ICAO.
When I suggested that last week to the Secretary of State for DEFRA, David Miliband, he scoffed at the idea that ICAO could actively promote such a scheme.
So let’s put that challenge to the 2007 ICAO Assembly.
Show some leadership, ICAO – or others will usurp your position, and screw it up in the process.
The other objection we have to Commissioner Dimas’s proposal is that it treats aviation differently from other sectors already in the EU scheme.
For example, up to 40 per cent of aviation’s emissions cap is to be auctioned to the highest bidder, whereas the existing scheme provides for initial allocations for other sectors to be free.
There is no case for this kind of punitive discrimination against aviation, or for arbitrarily increasing European airlines’ costs and weakening their competitive position against operators in the rest of the world.
The Commission is talking about implementation in 2011, which although depressingly slow is probably realistic, so there’s time to revise these proposals to create a simpler, workable scheme confined to flights within the EU.
That is what we at British Airways will continue to advocate. And we believe such a scheme would be a critical breakthrough, establishing a model for the rest of the aviation world to follow.
Make no mistake. We are in favour of the EU securing substantial emissions reductions over the next decade. Indeed, we wish the EU would direct more energy into the achievement of a Single European Sky.
We’ve had a Single Open Aviation Area in Europe since 1993 and the Commission has the jurisdiction to enforce a Single European Sky.
As we try to press the Americans to adopt Europe’s version of Open Skies, Europe should adopt America’s version of Single Sky instead of allowing 35 ATC providers when one could do the job much more efficiently.
IATA shows that 15 million minutes of European delay – worth $3.4bn p.a. –arise from this absurd policy with very substantial climate change impact.
So, come on Commission, set yourself a Single Sky objective for January 2011 to coincide with the carbon trading scheme objective . If all that happens, it will be very good news. But it is still four years away.
Can we do more in the short-term? I believe we can. I’ve spoken about going with the grain of what society wants and I believe there is potential for the industry to engage more with our customers on this issue.
I’m convinced there is potential for much wider use of carbon offsets, enabling customers to cancel out the effect of their flight emissions by paying for an equivalent reduction in emissions elsewhere – typically by helping invest in a renewable energy project in the developing world.
There’s a good case for regarding offsets as a preliminary to a full trading scheme.
Both offsetting and trading reflect the actual carbon that aircraft emit, and both involve air users paying for emissions reductions in other industries.
Both use international mechanisms and both are focused on direct environmental benefit.
I believe that wider use of offsetting would pay great dividends in terms of public understanding of emissions reductions, and boost confidence in carbon trading as the best way forward for the industry.
One of the messages of the Stern report was that richer countries should not lecture developing nations on their emissions performance; they should help put in the investment needed to secure improvements.
Offsetting emissions on flights in the Western world to pay for, say, hydro-electric projects in India or China is an excellent way of achieving this objective.
Polling and market research suggest there’s a willingness among a growing numbers of customers to make a personal contribution to the wider efforts to tackle climate change.
At British Airways, we’ve experimented with a voluntary offsetting scheme for about a year. In terms of awareness-raising, it has had some success. But frankly, I don’t think we’ve marketed it sufficiently, and actual take-up has been low. We are working hard on ways of addressing this.
I’m convinced that offsets give us a real opportunity to engage with our customers and demonstrate that the aviation industry is serious about addressing climate change – and prepared to take meaningful action now on its own account without having measures imposed on it by the regulators.
Ladies and Gentlemen, I make no apology for having devoted my whole speech to the environment. It’s a huge issue, and one that will not go away for this industry for decades ahead.
Aviation meets a public demand. It underpins the livelihoods of millions of people.
It is an economic and social good that is integral to the 21st century way of life.
Our customers understand this, as they equally understand that action to combat climate change is essential – and expect us to play our full part.
We each have a part to play:-
The European Commission must deliver an intra-Europe Emissions Trading Scheme on a similar basis to other industries and must deliver a Single European Sky by the same date, 2011.
ICAO must bring the rest of the world into the same or similar Emissions Trading Schemes.
And airlines need to support both those actions and take innovative and imaginative actions on offsets.
We all have to address our environmental responsibilities seriously to earn our licence to operate.
If we find the right way to harness the support of the travelling public, we can make real progress on climate change – and isolate the George Monbiots of this world who will never be satisfied until every runway is grassed over.
At British Airways we need no reminding that sudden, unpredicted events can burst out of left field and compel radical short-term shifts in management focus.
The environmental challenge is neither sudden nor unpredicted. It’s there for the long-term. It’s there for this industry to face up to. We must not be diverted from meeting it.
Thank you all very much.