Business Blockbuster - Helpng business to be more visible on Google

Daily Bulletin

Why our carbon emission policies don't work on air travel

  • Written by: Francis Markham, Research Fellow, College of Arts and Social Sciences, Australian National University
Why our carbon emission policies don't work on air travel

The federal government’s National Energy Guarantee aims to reduce greenhouse gas emissions in the electricity industry by 26% of 2005 levels. But for Australia to meet its Paris climate change commitments, this 26% reduction will need to be replicated economy-wide.

In sectors such as aviation this is going to be very costly, if not impossible. Our modelling of the carbon price introduced by the Gillard government shows it had no detectable effect on kilometres flown and hence carbon emitted, despite being levied at A$23-$24 per tonne.

If Australia is to meet its Paris climate commitments, the National Energy Guarantee target will need to be raised or radical measures will be required, such as putting a hard cap on emissions in sectors such as aviation.

Read more: Obituary: Australia's carbon price

Our analysis of domestic aviation found no correlation between the Gillard government’s carbon price and domestic air travel, even when adjusting statistically for other factors that influence the amount Australians fly.

This is despite the carbon price being very effective at reducing emissions in the energy sector.

To reduce aviation emissions, a carbon price must either make flying less carbon intensive, or make people fly less.

In theory, a carbon tax should improve carbon efficiency by increasing the costs of polluting technologies and systems, relative to less polluting alternatives. If this is not possible, a carbon price might reduce emissions by making air travel more expensive, thereby encouraging people to either travel less or use alternative modes of transport.

Why the carbon price failed to reduce domestic aviation

The cost of air travel has fallen dramatically over the last 25 years. As the chart below shows, economy air fares in Australia in 2018 are just 55% of the average cost in 1992 (after adjusting for inflation).

Given this dramatic reduction in fares, many consumers would not have noticed a small increase in prices due to the carbon tax. Qantas, for example, increased domestic fares by between A$1.82 and A$6.86.

The carbon price may have just been too small to reduce consumer demand - even when passed on to consumers in full.

Consumer demand may have actually been increased by the Clean Energy Future policy, which included household compensation.

Read more: Carbon pricing is still the best way to cut emissions, if we get it right

The cost of jet fuel, which accounts for between 30 and 40% of total airline expenses, has fluctuated dramatically over the last decade.

As the chart below shows, oil were around USD$80-$100 per barrel during the period of the carbon price, but had fallen to around USD$50 per barrel just a year later.

Airlines manage these large fluctuations by absorbing the cost or passing them on through levies. Fare segmentation and dynamic pricing also make ticket prices difficult to predict and understand.

Compared to the volatility in the cost of fuel, the carbon price was negligible.

The carbon price was also unlikely to have been fully passed through to consumers as Virgin and Qantas were engaged in heavy competition at the time, also known as the “capacity wars”.

This saw airlines running flights at well below profitable passenger loads in order to gain market share. It also meant the airlines stopped passing on the carbon price to customers.

Read more: The Paris climate agreement needs coordinated carbon prices to be successful

A carbon price could incentivise airlines to reduce emissions by improving their management systems or changing plane technology. But such an incentive already existed in 2012-2014, in the form of high fuel prices.

A carbon price would only provide an additional incentive over and above high fuel prices if there is an alternative, non-taxed form of energy to switch to. This is the case for electricity generators, who can switch to solar or wind power.

But more efficient aeroplane materials, engines and biofuels are more myth than reality.

What would meeting Australia’s Paris commitment require?

Given the failure of the carbon price to reduce domestic air travel, there are two possibilities to reduce aviation emissions by 26% on 2005 levels.

The first is to insist on reducing emissions across all industry sectors. In the case of aviation, the modest A$23-$24 per tonne carbon price did not work.

Hard caps on emissions will be needed. Given the difficulty of technological change, this will require that people fly less.

The second option is to put off reducing aviation emissions and take advantage of more viable sources of emissions reduction elsewhere.

By increasing the National Energy Guarantee target to well above 26%, the emission reductions in the energy sector could offset a lack of progress in aviation. This is the most economically efficient way to reduce economy-wide emissions, but does little to reduce carbon pollution from aviation specifically.

Airline emissions are likely to remain a difficult problem, but one that needs to be tackled if we’re to stay within habitable climate limits.

Authors: Francis Markham, Research Fellow, College of Arts and Social Sciences, Australian National University

Read more http://theconversation.com/why-our-carbon-emission-policies-dont-work-on-air-travel-99019

Business News

The Growing Demand for Durable Plastic Packaging Supplies Across Australia

Why Do Australian Businesses Need Reliable Plastic Packaging Supplies? Businesses need packaging that can withstand everyday handling, storage, and distribution without creating avoidable delays. Pla...

Daily Bulletin - avatar Daily Bulletin

Office Cleaning Melbourne: Choosing the Right Scope for Your Office

A well-planned office cleaning Melbourne arrangement starts with a clear understanding of the premises and the people who use it. An office may include private work areas, shared desks, reception, mee...

Daily Bulletin - avatar Daily Bulletin

How Businesses Can Prepare for Unexpected Power Outages

Power failures can occur quickly. The supply may be interrupted by bad weather, issues with the electricity network, damaged equipment or local construction work. This can be just a hassle for a fam...

Daily Bulletin - avatar Daily Bulletin

How Chatswood Tutoring Can Fit Into a Student’s Weekly Routine

Create a Predictable Weekly Structure A consistent weekly routine can make study easier to manage when students are balancing several subjects. Chatswood tutoring can provide a fixed learning point a...

Daily Bulletin - avatar Daily Bulletin

The Rise of Digital Marketplaces in the Australian Trade Sector

For decades, the Australian trade and construction sector operated almost entirely on word-of-mouth recommendations and local community networks. Small business owners typically relied on local newspa...

Daily Bulletin - avatar Daily Bulletin

How Immigration Lawyers Can Help

Introduction Visa decisions can shape employment, family life, study plans, travel, and future residence. A small omission can lead to delay, added expense, or refusal. Immigration lawyers assess l...

Daily Bulletin - avatar Daily Bulletin

How Industrial Drying Equipment Supports Efficient Processing

Many industrial processes require moisture to be removed from compressed air, products or process materials before they move to the next stage. Excess moisture can affect equipment performance, produc...

Daily Bulletin - avatar Daily Bulletin

Practical Ways a Whiteboard Can Improve Workplace Communication

Effective communication helps teams stay organised, share ideas and keep track of important information. While digital tools are now common in many workplaces, a whiteboard continues to provide a simp...

Daily Bulletin - avatar Daily Bulletin

Designing Eco-Friendly Custom Water Bottles for Your Next Event

The Evolution of Sustainable Event Merchandise Event planning has undergone a massive transformation over the last decade. Gone are the days when organizers could hand out cheap, single use plastic...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Plumbing Call-Out Fees in Perth Explained

When you hire a plumber to fix a problem with a dripping tap, leaking pipe, or whatever it might be...

Workshop Tool Maintenance: A Practical Guide to Drills, Sanders and Table Saws

A drill that strips every screw head. A sander that leaves swirl marks however long you work the pan...

How Architecture and Engineering Firms Can Improve Project Profitability

Project profitability remains one of the most persistent challenges for architecture and engineering...

The Blossoming World of Fresh Flower Delivery: An In-Depth Exploration

In recent years, the demand for fresh flower delivery in Sydney has soared, driven in part by the ...

How Penrith SMEs Can Keep Stock and Equipment Working for the Business

For Penrith SMEs in 2026, efficient inventory starts with reliable stock data: what is on hand, wher...

Cybersecurity Services and Solutions for Complete Digital Protection

Businesses leverage Cybersecurity solutions for protection against digital threats of the modern era...

What Australian Entrepreneurs Should Know About Streamlining Their Financial Processes

Running a small business in Australia demands much more than just delivering a great product or serv...

Supporting Joint Health in Young and Growing Horses

Anyone who has raised a foal through to a rising three-year-old knows how deceptively fast the gro...

Why Is My Switchboard Buzzing? What a Humming Breaker Is Telling You

Most people never hear their switchboard. It sits quietly in a cupboard, a hallway or a meter box ou...