Runways as white elephants (part 1)
The Institute of Public Policy Research has attracted quite a lot of coverage for its argument that the proposed third runway at Heathrow will become a white elephant unless aviation can be made greener – and the industry agrees to tough conditions on emissions. While this is alright as far as it goes, if you look at the planned expansion of Heathrow through a futures lens – which obviously goes beyond climate change – it’s likely to become a white elephant no matter what the aviation industry does. The lack so far of a futures perspective on a twenty-to-thirty-year decision has been striking.
The industry advocates have treated the futures risks of the third runway as being almost entirely down to climate change, and therefore about carbon emissions, and even at this level have ducked the implications. The government proponents regard it as an economic benefit, apparently because they believe that Britain’s economic future depends on London’s financial services sector driving a ‘greater South-East’ which is a global region. There is minimal evidence to support the economic claims made that aviation causes economic development rather than being correlated with it.
And looking across the trends, it’s hard to make the case for the runway. Almost all of them are now running against it.
Unlike other powered travel, the opportunities for “greening” the plane’s energy supply are limited. The nature of the lift and propulsion required means that it needs kerosene, a liquid fuel derived from oil, and quite a lot of it.The quantities required are such that biofuel alternatives will not make a dent in them – not without starving a substantial proportion of the world’s population. (To be clear: I am sure that at some point algae, or similar, will be developed to produce aviation fuels, but not in significant quantities relative to overall demand.).
In other words, aviation will remain locked in to carbon-emitting fossil fuels while other transport modes are moving away from them. As BA’s chief executive Willie Walsh told The Guardian, “In the short term, aviation does not have an alternative.”
The best estimates we have are that oil prices will be volatile, and that they will also trend upwards quite sharply. The International Energy Agency’s latest forecasts, based on a detailed assessment of oil reserves and potential alternative oil supplies, projects an oil price of $200/barrel by 2030, even if alternatives come onstream. We know that when fuel prices rise, demand for transport falls.
Challenges on carbon emissions
On the carbon issue, unless the forthcoming Copenhagen Agreement continues with the current practice of giving emissions permits away to polluters, the cost of carbon-emitting services will rise relative to those which don’t, pretty much no matter which mechanism is used. So the relative cost will also increase for this reason – meaning another dampener on demand. The Tyndall Centre, meanwhile, has published a string of respected reports over the past few years arguing that expansion of aviation at the rate that is planned for in government policy documents – a trebling from 2003 t0 2030 – it will make Britain’s chances of meeting targets to cut emissions by 60% (now 80%) all but impossible. Its view has been endorsed by the House of Commons Environmental Audit Committee.
[Update 24.010.09: The Tyndall Centre's Kevin Anderson has this to say of the Heathrow decision (opens in pdf):
If aviation emissions in 2050 will be no more than they were 2005 (as announced today by the Transport Secretary) then by 2050 the aviation sector will consume all of the UK?s permitted carbon budget.]
It should also be observed that there are signs of attitudinal shifts about flying, at least at the edges. People are choosing, on occasion, not to fly, either using other modes of transport or changing their travel destinations. The evidence for this is largely anecdotal, but is in keeping with the findings of the Henley Centre’s Green Consumer Segmentation.
A weak economic case
The economic arguments which underpin the case for expansion are largely based on a series of related assertions, which elide seamlessly into each other, about the nature of the global economy. The consultation document issued last year by the Department of Transport had this to say (at the start of Chapter One):
International connectivity – and Heathrow is our main gateway to the global economy – supports billions of pounds of British exports and thousands of UK jobs, and encourages hundreds of international businesses to locate in the UK. The service sector accounts for some 70 per cent of UK GDP and the UK is the world’s second largest exporter of services. The financial services sector requires six times more air travel than other businesses.
I know that the argument – which appears risible in early 2009 – was almost certainly drafted by a civil servant before the credit crunch started to bite; but even then there were clues that the long quarter of a century global boom was starting to slow. There’s an underpinning idea of “international competitiveness” (which is generally presented as an unproblematic ‘good thing’) which also assumes that travel is a critical element. As I said earlier, the first problem with this is that the causation is not clear. The second is that the underlying claims of economic benefit are based on an Oxford Economics report largely funded by the aviation industry whose methodology and assumptions (which tend to ‘best case outcomes’) have been strongly challenged in a later report by the Dutch researchers CEDelft. (Even the Economist is sceptical).
Globalisation in decline?
The third is that we have almost certainly passed the high water mark of this wave of globalisation for the foreseeable future. As with previous waves, it has started to subside because the financial system has over-stretched itself. High energy and transport costs – as we have seen – also shorten supply lines and reduce global trade, and therefore reduce the need for trade-related travel.
It’s not surprising, then, that Simon Retallack of the ippr comments, “The economic advantages of building a third runway at Heathrow have been greatly overstated and the environmental case against it is overwhelming.”
Published Jan 13, with small additions later the same day.