Campaign for Better Transport analysis finds Heathrow expansion relies on higher carbon prices that could reduce demand in other parts of the country
Theresa May last week talked up plans to bolster the government’s push to reduce the divide between the economies of London and other British cities, even if she is loath to deploy George Osborne’s “northern powerhouse” rhetoric.
But a new report released today has highlighted one little spoken of, but potentially huge hiccup in the drive to balance the British economy more evenly – namely that a large-scale expansion in London’s air capacity, as would occur with the expansion of Heathrow of Gatwick airport, would necessitate a future reduction in the capacity of airports elsewhere in the country if the UK is to keep within its carbon budgets.
The analysis, published by the Campaign for Better Transport (CBT), scrutinises the assumptions and conclusions made in the final report of the Airports Commission, an independent body set up by the government in 2012 to look at how the UK should maintain its global aviation hub status. Published last July, the report recommended a third runway be built at Heathrow. When challenged on whether this would be compatible with the UK’s already generous allocation for the aviation sector in its 2050 climate target, the commission reassured those concerned that it was.
But by looking deeper into the Airports Commission’s figures, the new CBT analysis has highlighted a potential flaw behind that reassurance: the commission’s projections for keeping within the aviation climate budget rely on soaring carbon prices that would reduce the number of UK flights taken elsewhere.
A return flight from London to New York, for example, would have a £68 carbon price added to the cost of the ticket, the new report highlights. The assumption goes that this price hike would keep overall demand within the level needed to hit the sector’s carbon target – a return to 2005-level emissions by 2050, which is already an extremely generous allowance compared to other sectors that allows for a 60 per cent increase in flight demand assuming fuel efficiency improvements and the wider use of biofuels materialise as planned.
But the Airport Commission also found that expansion at Heathrow (or Gatwick for that matter) would still be justified, because even with the hike in carbon prices it expects all new London capacity to be used – an assumption which inherently means it will be those airports outside London where people are less able to pay the increased cost of flying where the number of flights will be curbed.
In addition, the report argues that under the Commission’s carbon pricing vision if a new runway is built and assumptions about demand and technology-delivered emissions-reductions prove too optimistic, prices will have to rise even further to ensure aviation remains within its carbon cap. Examples given in the report include an increase in prices of £108 by 2050 for a return ticket from Edinburgh to Malaga, a £116 increase on the cost of a flight from London to Athens, and a price hike of £140 for flights from Manchester to Tenerife. The cost for a family of four to fly from London to New York and back would be bumped up by up to £855 – a price hike with significant implications for those on a tighter budget in a country where an estimated 15 per cent of the population already take over 70 per cent of flights, and over half of people do not take any flights at all in a given year.
“They’re using carbon pricing to reduce demand, and that both means that ticket prices would be really quite a lot higher and even if we accept all their assumptions they’re quite a bit higher,” Leo Barasi, climate policy specialist and co-author of the analysis, tells BusinessGreen. “But if we start questioning whether every single one of their assumptions about technology and biofuels – which are all at the upper end of optimistic – if any of those don’t happen then the carbon pricing that they suggest would have to be higher still.”
It is important to note the expected increased in flights over the next few decades means flight numbers are still likely to increase everywhere, so that other areas will only be hit relative to the increase in flights they could have expected if no London airport expansion was delivered.
But the report echoes a warning made in June last year by the Aviation Environment Federation (AEF) that by 2050, an extra runway at Heathrow would result in 55 per cent fewer passengers per year flying in and out of airports in the West Midlands, alongside a 14 per cent cut in the North West, a 36 per cent reduction in the South West, and a 11 per cent cut in Scotland compared to business-as-usual.
The new report argues the Airports Commission are likely already aware of the potentially huge impact of aviation carbon prices and have in fact concluded there would still be enough extra demand in London for a new runway to be economically worthwhile despite the assumed carbon price. However, while there are certainly reasons to believe London flight numbers will keep climbing, it is also important to note that Office for National Statistics data shows that the number of overseas business flights by UK residents has actually flatlined for the past 20 years, making up a smaller proportion of overall flights each year. Meanwhile, holidays abroad and family visits are the main growth areas for the UK aviation industry – a fact that also likely contributed to the UK’s rising tourism deficit this year reaching £17bn.
“I think they’ve applied a very narrowly economic lens to the question and I have no reason to doubt their view that the most economically efficient thing to do might well be to continue to prioritise growth in the richest part of the country and the place where most immigrants and businesses want to be,” says Barasi. “But then it’s a question for the country as a whole about where we want to put our investment in infrastructure and where we want to pursue growth.”
It’s also important to note says Barasi, that fears that London could lose out competitively compared to other European airports such as Amsterdam when it comes to being a global flight hub could be misplaced. “What’s always missed in that is that all of our European competitors that might build an alternative hub have in fact the same challenges that we do, so it’s not like we’re the only one struggling with this,” he argues.
With Department for Transport’s own projections showing the UK is currently set to exceed its aviation emissions target by 25 per cent even without increased airport capacity in London, Theresa May and her transport ministers face what should be a very tough decision on Heathrow. However, while local environmental impacts were cited as one of the main reasons for the most recent delay to the decision in December, the government has so far given little indication it would consider shelving plans for London airport expansion. Either Heathrow or Gatwick are set to be expanded, with all the implications that has for aviation emissions, carbon pricing scenarios, aircraft fuel efficiency, and regional airports.
When asked about the findings of the new report, a spokeswoman for the Department for Transport told BusinessGreen the government is fully committed to delivering runway capacity on the timetable set out in the Airports Commission’s report. “The Secretary of State and his ministerial team will consider all of the evidence very carefully before the government reaches a view on its preferred scheme,” she added.
But the CBT analysis shows if expansion goes ahead, the implications on an already tight carbon budget could be severe, while the question will also be raised as to whether people who can less afford it will accept the potentially huge rises in the costs of flights, even if such price hikes are deemed environmentally necessary.
“It feels like this is the first really difficult climate decision that the UK’s had to face, that so far it’s either been relatively small scale decisions that aren’t that expensive or things that you can present as a win-win,” says Barasi. “It’s perhaps a sign of some of the challenges that we’ll have to confront in the future.”
With aviation only representing six per cent of the UK’s carbon emissions, a failure to reach the allocated budget wouldn’t necessarily mean we breach the Climate Change Act, assuming even deeper emissions cuts are delivered elsewhere. But considering the challenges already facing the country as it strives to decarbonise other sectors of the economy on schedule, giving aviation a free pass would certainly make complying with the Climate Change Act considerably more difficult.