Why is the OECD not reviewing the taxation of aviation?

I have written about the need to review the taxation of aviation given the low level or zero level of taxation. Aviation produces significant emissions, and yet as I have described in my book, Zero Carbon Our Choice, its emissions are taxed as a much lower level than other sectors, a policy framework which makes no sense and contradicts the policy of reducing global emissions to zero.

Carbon Watch has suggested “There are several options to implement a tax on aviation, ranging from taxes on fuel to ticket taxes, or per flight taxes. Independently from national measures taken, a deeper and more transparent dialogue among the Member States or clearer guidelines directly from the European Commission are required to better harmonize a possible European aviation tax.”

The European Commission has a role to play in this, but the body which has the most influence in developing global frameworks and standards is the OECD.

The most recent OECD document which a google search produces states:

“The momentum behind climate action is growing, with more countries taking action to price carbon and regulate emissions. But achieving the targets countries have set for themselves will require a sharp acceleration of effort,” said OECD Environment Director Simon Upton.


“Countries are running out of time to make the policy adjustments needed to meet their targets and keep alive the long-term goal of limiting the temperature rise to 2 degrees. Governments need to construct a policy pathway that will lead to zero net carbon emissions by the end of the century.” 2015

One might expect that the OECD would be reviewing all aspects of carbon pricing, but that is not the case with aviation emissions. There are no current projects to review aviation in both consumption and environmental taxes (there is no budget for this work). Surely, this should be a priority policy review area for the OECD as we look forward to what the economy should look like after Covid 19 and in terms of a decarbonising world economy?

OECD Headquarters

Such a review, as Carbon Watch suggests, should include:

Taxes on airline tickets or flight taxes

VAT treatment of ticket sales

VAT and treatment of airline fuels – what is the justification for zero rating?

Duty treatment of airline fuels

“Taxing aviation kerosene sold in Europe [by duty on all departing flights to all destinations of €0.33/litre] would cut aviation emissions by 11% (16.4 million tonnes of CO2) and have no net impact on jobs or the economy as a whole while raising almost €27 billion in revenues every year, a leaked report for the European Commission shows.” Airport Watch

A failure to conduct such a review would call into question how serious the OECD is about policies to reduce emissions. Now is the time to scope and start such a review. It should be an urgent priority for the leadership of the OECD.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

Airport expansion in Europe – Emissions consequences

Copenhagen Airport Expansion

I have written about the issues regarding the third runway at Heathrow. But the same issues apply to European airports and as I’ve pointed out if one expansion does not go ahead but another does more emissions result.

The following is from the Airports Council international website:

“Airport capacity is one of the most pressing issues facing European mobility today. As competing global hubs in the Middle East and other emerging economies power ahead with their own infrastructure roll-outs, European air traffic is set to be heavily congested in the coming decades. EUROCONTROL estimates that by 2040 up to 1.5 million flights will not be accommodated, meaning 160 million passengers unable to fly. Yet expansion of airport capacity in Europe faces a range of obstacles, from economic regulation and planning rules to political intervention and financing challenges. There is a need to both invest in new airport capacity and to make the best use of existing capacity. This should be achieved through integrated operations and collaborative decision-making, as well as through the airport slot allocation system. Airports need to see their capacity enhanced and allocated so as to develop air connectivity to the socio-economic benefit of the regions they serve, while limiting environmental impacts.” 

The question is do we need those 1.5 million extra flights? Those 160 million passengers “unable to fly” would create an extra 80 million tonnes of carbon on their 1.5 million flights.

Its interesting that there is no indication how environmental impacts are limited by ACI. An extra 80 million tonnes of carbon a year doesn’t appear to be a limited environmental impact.

To put this in perspective, these additional emissions are over twice Denmark’s annual emissions, being added every year, when the aim is to reduce emissions to zero. More flying means more emissions, so how can this be described as “limiting environmental impacts”?

Helsinki Airport expansion gets 230m euro loan from European Investment Bank

And why does the European Investment Bank fund this?

© Chris Lenon and http://www.zerocarbonourchoice.com  2020. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.