Why not put a carbon tax on aviation rather than relying on REDD offsets? Because a tax lacks “environmental integrity”, says ICAO’s Jane Hupe

Last week, REDD-Monitor looked at the aviation industry’s plans to offset its ever-growing emissions using REDD credits. Kevin Conrad and the Coalition for Rainforest Nations are behind the plan. It’s supported by nine mainly US-based NGOs. And it’s opposed by more than 80 NGOs internationally.

In December 2015, the Shift Project organised a side event during the UN climate negotiations in Paris. The side event featured the International Civil Aviation Organisation (ICAO) and looked at the possibilities of using REDD carbon credits to offset the ever increasing emissions from the aviation industry.

The side event provides a fascinating view inside the machinations of REDD proponents as they scramble to find a market for REDD credits, and the aviation industry as it tries to avoid reducing its greenhouse gas emissions.

REDD-Monitor wrote about Kevin Conrad’s contribution to the side event, under the headline, “A recipe for burning the planet. Cooked up by Kevin Conrad and the aviation industry, with a little help from the UN“.

Carbon taxes versus carbon offsets

During the questions following the panel’s presentations, ICAO’s Jane Hupe was asked why a carbon offsetting mechanism is preferable to a carbon tax on aviation. She was asked variations of the same question three times. In each case she evaded important parts of the question.

Hupe points out that discussions are not yet finished, but that currently ICAO is leaning towards a carbon offsetting mechanism.

In her responses, Hupe talks about taxes and outlines the problems with government collected taxes – mainly, from her perspective, that taxes impose a cost on the aviation industry, they provide no benefits to the aviation industry, and there are no guarantees about where tax money ends up. She calls the last point a lack of “environmental integrity”.

But what if a carbon tax didn’t go to governments but went directly to rainforest protection?

A carbon tax might put some people off flying. This would reduce emissions, but it would be a regressive tax, as it would be more likely to stop people with less money from flying than the rich.

Obviously, a carbon offsetting mechanism looks more attractive to the aviation industry because it would allow aviation emissions to increase, while allowing the industry to claim to be addressing its emissions.

Cheap offsets on the ETS

The first question addressed to Jane Hupe is about the failure of the EU Emissions Trading System to put a meaningful price on carbon. The current price for carbon credits under the clean development mechanism is €0.43. Of course, such a low price is beneficial to the aviation industry because it would mean cheap offsets, but the price is far too low to make trees worth more standing than cut down.

Here are the questions, followed by Hupe’s responses in full.

Jean-Marc Jancovici from the Shift Project: I’m afraid I’m going to ask a stupid question, but nevertheless I’m old enough now to dare. Before this conference I understood that the mechanism was actually a straightforward mechanism, with some kind of a carbon tax levied on the plane tickets, going to a place where they should be distributed to projects, as you have a sum of money that you know in advance, you know to which extent you can finance what.
 
Now I understand that you have a market mechanism and we have witnessed in Europe what a market mechanism can yield and what it cannot yield. And the only thing it cannot yield is a predictable price. And if you do not have a predictable price, you don’t know whether a given project is going to be viable or not.
 
So how do you expect to overturn this difficulty?
 
Jane Hupe: The first thing I have to say right now, we don’t know, because we are still working on it. So again, bear with me, we are still developing something and I’m very happy that you brought that issue to the attention of the others in the room. There has been many proposals that we have considered in ICAO for a market measure. Right now the basis for the development of our global MBM is global offsetting and that’s what we are working more in developing right now.
 
The difficulties that we would have with a simple tax that we found was the lack of environmental integrity. Because we have a goal, we have a carbon neutral growth. We have to measure what the amount of emissions that we have to achieve to keep carbon neutrality. So for us, it has to be a scheme that allows for that integrity, and to account for all those emissions in a very clear and transparent manner.
 
And also, together with the market based measures, what we have is what we call the state action plans, where each state voluntarily selects the measures that they are going to be taking to reduce aviation emissions. The important point being that they will continue to trigger the other elements in the basket of measures, to minimise the use for a market mechanism. Because the ultimate objective that we have is to reduce within aviation.
 
So, you have probably heard two weeks ago we had the first aviation, it’s domestic aviation, but the first aviation project that went to the CDM board. At the same time that we are considering are the emissions units that we can have for an aviation scheme, we have many states in ICAO that say well but couldn’t be a market incentive and projects that would reduce also in aviation, could be in domestic aviation, but at least it would be aviation, so that’s also a consideration that we are having.
 
In terms of the price, which was your specific question, we are considering some sort of sunset clause. If things really get completely out of control, many of our states are very reluctant to honour market measures, and they need some safeguards, how that safeguard is going to play, or not, we don’t know because we are still developing.
 
But there were discussions on a possible sunset clause, or safeguard, that’s something we will be looking into that. Being an MBM it is very difficult to put a cap on price, because the definition of an MBM should be a cost effective measure, so complicated to connect the two. But some sort of safeguard, some sort of proportions, some sort of sunset clause in the scheme I think at the end there will be something there in this regard.

A little later, a journalist from the Norwegian newspaper Aftenposten asked Jane Hupe, “Why wouldn’t it be smart to have a carbon tax, with a specific price on each 100 kilometres, for instance?” Here’s Hupe’s response:

Jane Hupe: I think I have already responded to that question. The way we see it is a temporary measure and we want a market based measure that gives us environmental integrity. A tax doesn’t give you environmetal integrity.
 
A tax usually goes to the coffers of the governments, and you have no way of knowing where this money is going to go. And in the name of the environment we have seen a lot of taxes going on, even in aviation. And when we digged a little bit more, with everything but environment.
 
In a discussion that’s already very politically charged on the environment, and where you have developing, developed countries, etc, some of the developing countries in ICAO bring the view that they are still growing as airlines, where in other parts of the world they are already mature. They say why are we now then paying the bill of the environment without seeing a real environmental response for aviation? That’s one part of the answer.
 
The other part of the answer is we have a lot of islands that depend fully on aviation. And if we have criteria for our market based measure that we will really try to trigger projects that are in developing countries, for example forests, you have a huge quantity of forests that are rainforest countries that are developing countries.
 
And there are other ways, other criteria that we could follow that would benefit more investment in developing countries.
 
These countries come to us. And what they say is any tax on aviation is to take the money from the left pocket and put the money in the right pocket, but do that with a diminishing and an impact on our tourism. And they are against it. So we have to think what we want to do, and what are the real impacts that are going to be caused.
 
So, a tax on aviation is the easiest thing someone can do. Why? Because it’s fully organised, everybody talks about the one dollar tax on aviation for AIDS, for woman protection, for child protection, for blah, blah, blah. Seriously, if you have every really looked to your ticket, and on top we have to hear that aviation is not taxed, but if you have ever looked into your ticket, you have some parts of the world right now where the price of the ticket that you are paying is 20% of what you are seeing you view, and 80% is tax, you have no idea where it is going.
 
So in terms of developing for some of the developing world that are completely reliable on air transport because they have no other means continuing to just go on taxes and taxes and not look into the overarching future is what they are not wanting us to do.

The Norwegian journalist had another go. “Could it be an alternative to have not a tax which goes to government coffers, but a fee which goes directly to rainforest projects, which the airlines collect?” he asked. The question is clear, but once again Hupe fails to answer the question.

Jane Hupe: It’s exactly the same. The minute you do a measure where you have the state being sovereign to use the funds, and sorry to say that, once the fund is collected by the state as a tax, and you have probably heard that many times from many parties and many states, they are sovereign to use the tax the way they please. There is no way that you can guarantee that use.
 
And that would be defeating the purpose that we have for the market based measures which is really to reach carbon neutrality for international aviation and again it is hard enough in a process for us to have an agreement of 191 states, they are the same states that are here, some of those discussions are also replicated in our forum, to have an agreement on a simple offset, every time that you try to make it more complicated, put more elements, put more options etc, you are only complicating the solution.
 
And we have now looked into emissions trading, emissions trading with a fee, a tax, I cannot even remember how many options we have looked at, and at the end of all the studies what seems to be more straightforward, with more environmental integrity, and more practical to implement, has come to global offsetting.
 
That’s the current state of discussions. Again, that’s not a final decision in ICAO, and that we will only have in the next assembly, and I’ll be pleased to after the assembly come here and say what was the decision of our assembly. Thank you.