Public to foot £62bn bill for climate damage from airport expansions – which the aviation sector should pay for
Analysis by Alex Chapman, working for the New Economics Foundation (NEF) has found that in allowing airports around the country to expand, the government is letting the aviation industry off the hook for £62bn of damage to the climate. The amount of carbon that airports, and mainly aircraft, emit has a negative impact on the global climate – and thus to society. Governments can put a figure on this cost, for each tonne of emitted carbon. In September 2021 the government increased the carbon value figure from around £70 per tonne to £245 per tonne (central value) for 2021 rising to £378 per tonne by 2050. The new NEF analysis found the aviation industry will only pay for 16% of the emissions clean-up costs (through the UK ETS) of the 8 airport expansions currently moving through UK planning processes (Heathrow, Gatwick, Stansted, Luton, Bristol, Southampton, Leeds Bradford and Manston). The higher, more realistic, price for carbon makes these expansion schemes uneconomic, if the carbon is properly paid for. The government does not have a comprehensive mechanism for recouping these costs from the aviation industry.
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Public to foot £62bn bill for climate damage from airport expansions
27.1.2022
New Economics Foundation NEF) – by Alex Chapman
Aviation industry will only pay for 16% of the emissions clean-up costs of UK airport expansions
In allowing airports around the country to expand, the government is letting the aviation industry off the hook for £62bn of damage to the climate, analysis out today from the New Economics Foundation (NEF) finds.
The analysis calculates that the aviation industry will only pay for 16% of the emissions clean-up costs of the eight airport expansions currently moving through UK planning processes.
The analysis finds that new government guidance issued in September has more than doubled the climate cost of the eight airport expansions.
This is due to the expansion plans being developed based on out-of-date estimates of the cost of the climate crisis. The analysis shows that key expansion decisions have been made based on underestimated costs to the climate and society.
In September, the government updated its ‘carbon values’ – the cost of cleaning up each tonne of emissions released into the atmosphere – to reflect its latest net-zero emissions target.
As a result, short-term carbon values have more than tripled, meaning that the clean-up costs associated with infrastructure projects are much higher than previously assumed. The government does not have a comprehensive mechanism for recouping these costs from the aviation industry. The analysis finds that the main emissions taxation policy, the UK Emissions Trading Scheme (UK ETS) is full of industry loopholes and does not take into account the government’s updated carbon values, meaning that the aviation industry will only pay for 16% of the clean-up costs of airport expansions. The remaining bulk of the clean-up cost will fall to wider society and the taxpayer.
There are eight airport expansion projects which are active in legal planning procedures, ranging from projects in early consultation phases, like Gatwick airport, to projects which have been approved, but are subject to legal challenges, like Southampton airport.
Previous NEF analysis showed that the climate impact of proposed regional airport expansions will be up to eight times worse than previously claimed, as airports have not been presenting the full climate cost of their schemes. The new analysis finds that all eight airports have had their climate costs underestimated even further.
Heathrow:
Heathrow, the UK’s largest airport, is planning a new runway capable of increasing passenger departures by 40m a year. As a result of updated government carbon values, the cost of emissions from Heathrow’s proposed expansion from 2025 to 2050 has doubled, from around £50bn to over £100bn.
As a result of the change in carbon values, and taking just departing flights into account, the analysis finds that:
The clean-up cost of emissions from the Heathrow airport expansion cost has doubled to £49.2bn, of which only 15% will be paid for by the aviation industry.
Gatwick:
The Gatwick airport expansion emissions cost has doubled to £9.1bn, of which only 7% will be paid for by the aviation industry.
Luton:
The Luton airport expansion emissions cost has doubled to £5.2bn, of which only 26% will be paid for by the aviation industry.
Manston:
Manston airport expansion emissions cost has more than doubled to £5.1bn, of which only 25% will be paid for by the aviation industry.
Stansted:
Stansted airport expansion emissions cost has more than doubled to £2.4bn, of which only 23% will be paid for by the aviation industry.
Southampton:
Southampton airport expansion emissions cost has more than doubled to £954m, of which only 22% will be paid by the aviation industry.
Leeds Bradford:
Leeds Bradford airport expansion emissions cost has more than doubled to £913m, of which only 24% will be paid for by the aviation industry.
Bristol:
Bristol airport expansion emissions cost has more than doubled to £645m, of which only 23% will be paid for by the aviation industry.
Alex Chapman, researcher at the New Economics Foundation, said:
“More than two years on from adopting our 2050 net-zero target, the government has finally updated its estimates of how much it will cost to clean up greenhouse gas emissions from any new infrastructure projects. The huge increase means that decisions have been made, including on eight proposed airport expansions, on the basis of grossly underestimated costs to the climate and our society.
Only 16% of the £74bn tab for cleaning up the emissions from these expansions will be covered by the aviation sector. The rest will be picked up by wider society and the taxpayer. In essence, a colossal subsidy is being passed to polluting big business, and a debt passed on to future generations.
“As the majority of aviation emissions are made by a small number of wealthy frequent flyers, this is the opposite of ‘levelling-up’.
In light of this new evidence all active UK airport expansions should immediately be paused, and re-evaluated in line with the new guidance. In addition, loopholes in current carbon taxes should be closed, and a Frequent Flyer Levy introduced to make sure the costs of cutting carbon emissions are passed on to the biggest polluters and the wealthiest in our society.”
Contact
Margaret Welsh / 07776340574 / margaret.welsh@neweconomcis.org
Notes
The New Economics Foundation is a charitable think tank who are wholly independent of political parties and committed to being transparent about how it is funded.
The analysis, The £62bn carbon giveaway, can be found at https://neweconomics.org/2022/01/the-62bn-carbon-giveaway
Greenhouse gas emissions resulting from each proposed project are derived from each airport’s own planning application documentation or, in the case of Heathrow Airport, from Department for Transport modelling. NEF analysis calculates the total cost of emissions from each airport expansion over the period 2025-2050 using carbon values released by BEIS in September 2021. Discount rates are applied according with the methodology recommended by the Treasury’s Green Book. NEF compared these costs against the same costs calculated under previous guidance and using BEIS 2020 carbon values. The traded cost (ie, the price paid by aviation sector businesses) is calculated using BEIS forecast traded carbon prices.
For further information on the calculation of emissions costs from airport expansion, including the estimation of non-CO2 emissions, see NEF’s 2021 report Turbulence Expected: The Climate Cost of Airport Expansion
Table:
Cumulatively, the eight ongoing UK airport expansions are expected to result in a giveaway of emissions worth £62bn.
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Net present value in £millions (2025-2050) of emissions associated with eight airport expansions using BEIS 2021 carbon values, compared against net present value (2025-2050) of traded emissions using the latest BEIS (2018) traded emissions prices series.
Cost of emissions from departing flights (£m) – 2021 carbon values Forecast price paid for traded emissions (£m) Proportion of climate cost paid Implied cost to wider society and taxpayer (£m)
https://neweconomics.org/2022/01/the-62bn-carbon-giveaway
Source: NEF analysis of Department for Transport, and planning documents submitted by Gatwick airport, Luton airport, Manston airport, Southampton airport, Leeds Bradford airport, Bristol airport. *Emissions from Stansted airport have been adjusted as described in NEF, 2021.
https://neweconomics.org/2022/01/the-62bn-carbon-giveaway
See earlier:
BEIS sets new much higher prices for the valuation of greenhouse gas (GHG) emissions in policy appraisal
The government (BEIS) sets the price it uses for the valuation of greenhouse gas (GHG) emissions in policy appraisal. This has been updated in September following a cross-government review during 2020 and 2021. Greenhouse gas emissions values (“carbon values”) are used across government for valuing impacts on emissions resulting from policy interventions. They represent a monetary value that society places on one tonne of carbon dioxide equivalent (£/tCO2e). They differ from carbon prices, which represent the observed price of carbon in a relevant market (such as the UK Emissions Trading Scheme). To reach net zero in 2050 and meet UK 5-yearly carbon budgets, there needs to be a realistic value on GHG, in order to reduce emissions. The price has now been set, for 2021, at £245 per tonne (central value) rising to £378 per tonne by 2050. Even that may be too low. The prices now are around £70. This will have significant implications for the forecast economic costs/benefits of future infrastructure, such as airport expansion projects. The claimed economic benefits will be lower, with the realistic carbon prices, than the current low levels. Airport expansion plans will need to be reassessed.
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