30th October 2006 – Stern Review on the Economics of Climate Change

The Stern Review on the Economics of Climate Change has been published and 
states that there does not need to be a trade-off between economic growth, such as 
airport development, and the protection of the environment. The review identifies 
carbon trading, technology policy and energy efficiency as the three best methods 
for providing an effective response to climate change.

Stern says that limiting airport capacity and preventing expansion is an inefficient 
way of regulating demand whilst carbon trading would be an effective way of pricing 
emissions. The review recommends that aviation should pay the full costs of its 
climate change emissions by being included in the EU Emissions Trading Scheme 
(EU ETS).

Aviation is on course to join the EU ETS in 2011 and emissions trading is a 
deliverable and efficient way of dealing with aviation CO2, recognising that some 
activities will reduce emissions more than others. With emissions trading airlines 
and their passengers will have to cut emissions or pay to offset growth.

Airlines believe that taxation would have negative social and economic 
consequences with limited environmental benefits. Emissions trading would ensure 
that total emissions in the economy reduce at a known rate, whereas taxation 
simply makes it more expensive for people to fly and offers no guarantee of a 
reduction in emissions.


 

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