Jet Fuel: Tax or Carbon Trading?

From Reuters via Planet Ark,

UK Favors Carbon Trading Over Jet Fuel Tax

LONDON – Britain wants to curb rising aviation greenhouse gas emissions through a European trading scheme and possibly a tax on passengers, rather than a British tax on jet fuel, climate change minister Ian Pearson said.

Emissions of heat-trapping carbon dioxide from aviation rose 85 percent between 1990 and 2004 says the European Union, and its part in mankind’s total contribution to climate change is set to rise.

Britain favours a tough approach to including the sector in a European carbon trading scheme — which caps industry emissions but allows firms to buy pollution cuts from each other — rather than a unilateral tax on jet fuel, Pearson said on Thursday.

“I don’t think a unilateral (fuel tax) approach would be effective,” he told a conference on aviation and the environment, referring to possible resulting distortions to flight paths.

But Britain was also considering a tax on air passengers, possibly through requiring them to offset emissions by funding green initiatives like tree-planting.

“We are exploring using this (air passenger duties) to capture emissions costs. We should maybe move to a mandatory (offsetting) system…”

Low cost air travel is great. Taxing passengers directly will cut the number of travellers without providing inventives for cleaner and more fuel-efficient aircraft engines. Taxes on jet fuel or emissions would provide such incentives. Carbon trading will not limit other pollutants such as carbon monoxide, lead, ozone, particulate matter, nitrogen dioxide, and sulfur dioxide. As for tree-planting offsets, there is no solid scientific evidence that shows how well they work.

“Britain favours a tough approach” is obviously not true. The minister wants to be seen as doing something, but what he suggest may not work at all.

There is nothing wrong with increasing taxes on jet fuel if taxes on income are lowered at the same time. Pigovian taxes work. Read also Greg Mankiw on gasoline taxes in the U.S. in the Pigou Club Manifesto.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s