Emissions Trading

1
Emissions Trading Sustainability

• Sam Barone, President CEO
• Air Transport Association of Canada
• September 16, 2007
• ICAO-McGill University Institute of Air and Space
  Law
• Aviation Safety, Security The Environment The
  Way Forward Conference
• Montreal, Quebec

2
Presentation Outline

• Aviation and the environment Clearing the Air
• Operational Measures to consider before ETS
• ETS Sustainability The need for Balance
• ETS Considerations for Public Policy makers
• Conclusions

3
Aviation and the Environment Clearing the Air

• The air transport industry is under attack by
  environmentalists.
• Exaggerations of our industrys role in climate
  change abound Bishop of London has said flying
  is a sin.
• Aviations environmental impact is small, but
  increasingly in the spotlight.
• Response is to tax and ground aviation, with no
  regard to financial, social and economic impacts
  or sustainability!

4
Aviation and the Environment Clearing the Air (2)

• Fuel has become airlines largest operational
  cost, creating a strong incentive to
• Operate modern aircraft and accelerate
  technological progress.
• Shorten air routes, open new ones i.e. polar
  direct tracks.
• Aviation needs international standards and global
  policies, not unilateral, piecemeal short sighted
  fixes.
• In Canada, Transport Canada and ATAC have a
  voluntary agreement for fuel efficiency gains and
  Greenhouse Gas reductions.

5
Operational Measures Before ETS

• Aviation industry committed to reduce
  environmental impacts by improving operational
  efficiency and harnessing future technologies.
• Before considering ETS, need to harness the scope
  in better ATC management at national, regional
  and local levels to generate efficiencies.
• Better routings, result in better aircraft
  utilization and less fuel burn and emissions.

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Operational Measures Before ETS (2)

• Aviation needs better infrastructure enhancements
  fuel is wasted on the ground.
• Congestion and capacity shortages hamper
  environmental improvements
• Flying greener approaches i.e. Continuous Decent
  approaches
• Continue RD in aircraft technologies power
  plants and materials.
• Alternative fuel development PROSENE
  Synthetics, Hydrogen based fuels.

7
Sustainability A Need for Balance

• Sustainable development calls for a balance and
  is linked to economic, social and environmental
  sustainability.

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Sustainability A Need for Balance (2)

• Sustainable development calls upon aviation to
  meet the growing demands of our customers in a
  sustainable manner, balancing economic progress,
  with social development while being
  environmentally responsible.
• Policy makers need to recognize the role of
  aviation in a sustainable economy.

9
9
Sustainability Juggling Impacts
NOx Emissions
Airlines
Noise
Fuel Cost
GHG Emissions
Canada and the World
Airports
ANS Providers
Local Communities
Transport Canada
Economic, Social, Environmental
10
ETS Public Policy Considerations

• ETS impact assessments may not reflect market
  realities.
• Airlines are already treated as cash cows.
  Assumption that airlines can pass on costs to its
  customers without affecting demand is not
  accurate.
• Cannot compare ETS economics of aviation with
  other regulated or unregulated sectors of the
  economy.
• Airline profitability will also be impacted
  because of reduced demand and increased costs of
  ETS.

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ETS Public Policy Considerations (2)

• In general, consumers will also be impacted.
• Less choice, service limitations, frequency
  reductions, reduced range of services.
• Service to northern and remote airports may be
  compromised.
• ETS could lead to market distortions.

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ETS Public Policy Considerations (3)

• For Canada with its vast territory service to
  northern and remote points is essential.
• Cannot transplant EU solution to Canada, with
  small population and vast territory. Inter-modal
  substitution is not an option as in EU.
• Economies require connectivity, ETS could reduce
  or even eliminate connectivity and positive
  economic impacts.
• Puts sustainability at risk from economic and
  social perspective i.e. Tourism and regional
  development

13
The Way Forward

• Many Policy Options being considered
• Options include Economic instruments to tackle
  climate change impacts of aviation Fuel taxes,
  emissions trading, emission charges, air
  passenger duties.
• Canadian industry view is that we should exhaust
  other avenues before we undertake another cash
  grab from an industry treated as a cash cow.

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The Way Forward (2)

• Industry advocates technological solutions to
  develop more fuel efficient aircraft and engines
  with lower emissions.
• Operational measures such as better routings and
  ANS.
• Carbon offsetting where Passenger decides to
  mitigate the environmental footprint of their
  travel. WestJet and Air Canada have implemented
  different forms of this.

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The Way Forward (3)

• All aviation industry players must work together
  to
• Agree on a global approach to further improve
  environmental performance
• Better communicate their environmental
  achievements and commitments
• Improve public acceptance and
• Drive proactive, voluntary and innovative
  solutions.