'Green' tax not enough to reduce aviation emissions

Aviation has once again come to the centre of the global warming debate following this week's Pre-Budget Report.

Describing climate change as a one of the greatest challenges for this generation, Chancellor Alistair Darling added a green tone to his pre-Budget report by announcing more spending in environmental initiatives and a consultation to reform of air passenger duty (APD) to encourage more fuel-efficient aviation.

"Aviation represent 2% of global greenhouse gas emissions, but its environmental impact is much higher because emissions at altitude cause other effects that exacerbate global warming," said Vicki Bakhshi, associate director at F&C's Governance & Sustainable Investment team.

But from an environmental point of view, Bakhshi believes that aviation remains an undertaxed sector compared to, for instance, road transport. The sector is excluded from the Kyoto Protocol and therefore international efforts to tackle emissions from flying have been limited.

"The UK's APD is a very blunt instrument that doesn't reflect the actual emissions from each flight, and therefore has had very little impact in limiting emissions growth in the industry." , said Bakhshi.

"There is a need for a system that better reflects actual emissions and encourages more efficient flying practices and new technologies, and therefore we welcome the Government's consultation. Ultimately, we would like to see a multinational solution to aviation emissions, which is why we support the inclusion of aviation in the EU emissions trading scheme" , she adds.

The Chancellor also announced the Government will spend £400m in the next three years to support technologies to combat climate change and £2.4bn on flood defences. F&C's expertise in climate change related issues has been recently reflected on the launch of the F&C Global Climate Opportunities Fund, which invests in companies that provide technologies and systems that will help to reduce greenhouse gas emissions.