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Introducing environmental decision making
Introducing environmental decision making

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5.6.1 The European Union Carbon Emissions Trading Scheme

The mitigation of the greenhouse effects of aviation emissions will be a major issue of contention in the near future. The aviation industry is strongly resisting any introduction of taxation and/or regulation that would limit emissions. Any unilateral taxes are perceived to prejudice the aviation industry’s competitiveness, so an EU and/or global approach is required. But the UK has been at the forefront of resisting aviation tax harmonisation across the EU. Instead, the UK government proposes an introduction of a global carbon trading mechanism as already prototyped by the Kyoto Protocol Signatories. An emissions trading scheme would require governments to set emissions quotas for each industrial sector. This would require industries which exceed their quotas to buy ‘carbon credits’ which would compensate for their excesses. The trading scheme would work on a supply and demand basis, where certain industrial sectors able to emit less carbon than their quota would be able to sell their credits. The price of the carbon credits would then depend on the supply from efficient or contracting industries and the demand from inefficient or expanding industries.

Globespan Bureau de Change
Figure 28 Globespan Bureau de Change

The BAA has strongly favoured this approach, estimating that it would cost the aviation industry up to 40 times less than any potential taxes on fuels. The UK government is pushing for the inclusion of the aviation industry into a new European Union carbon emissions trading scheme to be relaunched in 2008. The European Union’s goal of limiting global temperature rise to an average of 2 degrees centigrade is estimated by many scientists to centre around an atmospheric CO2 concentration of 450ppm (current levels are 380ppm). This provides an indication for the emission allowances that EU governments need to establish for various industries in order to not exceed the 450ppm ceiling.

(Parts per million is a unit for measuring gas concentrations for those gases found in relatively low concentrations in the atmosphere. Another way to represent CO2 atmospheric concentrations is in percentage terms – 0.038 per cent, i.e. 0.038 parts per hundred. Using parts per million (ppm) avoids using lots of zeroes.)

‘Quick! Stick some more money in the meter – the exhaust’s cut out!
Figure 29 ‘Quick! Stick some more money in the meter – the exhaust’s cut out!

The jury is still out on whether carbon trading will effectively reduce emissions, or whether it will just provide a smokescreen for ‘business as usual’. Many believe that the inclusion of the aviation industry in the scheme will create such a demand for credits that the price will reach astronomical levels and ruin the whole scheme. There are therefore many issues to resolve before 2008 and even European commissioners are favouring the introduction of aviation taxes as an interim measure. The UK government is resisting this.