The ‘polluter pays’ principle is a well-established concept that has recently been reaffirmed by the UK Government through its programme Environmental Principles Policy Statement. Carbon pricing is also a key element of the Jet Zero strategy, but – unlike all ground transport – fuel duty does not apply to jet fuel and most emissions fall outside the current scope of the UK and EU Emissions Trading Schemes (ETS). It is absolutely baffling that the government is failing to charge airlines for a significant proportion of the greenhouse gases they emit.
T&E analyzed 2021 emissions from UK-registered commercial airlines and found that this government failure favors some airlines more than others.As can be seen below, the UK and EU ETS cover different levels of emissions from airlines.
Figure 1. Source: CORSIA data provided by the Environment Agency.
Both Virgin Atlantic and British Airways don’t have to pay anything for the vast majority of environmental damage they cause: in Virgin Atlantic’s case, they get away with paying nothing 99% of the emissions it produces. British Airways doesn’t pay for 88% of its emissions. Conversely, easyJet does not pay for 7% of emissions, while Jet2 does not pay for 6%.
The question then becomes: How much would airlines have to pay on top of existing carbon pricing schemes if all their emissions were charged? The chart below shows the minimum amount airlines would have had to pay if their uncovered emissions were part of the UK ETS.
Figure 2. Assuming a carbon price of £42.40 per tonne, equivalent to the UK minimum ETS rate in 2021. Source: Ember Carbon Price Tracker.
Should British airlines be charged a fee? minimum At the level at which the UK stock trading system traded in 2021, an additional £301 million could have been raised for governments around the world. If they had been charged at the minimum EU ETS rate for 2021, they would have been charged an additional £191 million. In fact, some of this money is money given away by the Treasury because the government is not applying its own principles. Surprisingly, the bulk of this sum – just over £200 million if charged to the UK’s minimum emissions trading rate – would have come from British Airways, which has the absolute highest volume of “free” emissions.
Not charging airlines for the environmental damage they cause goes against the government’s principles, slows the decarbonisation of aviation, and deprives the government of revenue at a time when it is needed most. It is time to address this issue, either by introducing a kerosene tax, or extending the scope of ETS to all departing flights.
