Taxation is a blunt instrument, says IATA chief Willie Walsh

IATA: Environmental tax is a 'blunt instrument' to provide a sustainable footprint in aviation

The aviation industry needs more carrots and fewer sticks going forward to become more sustainable, according to the director general of the International Air Transport Association.

Speaking at CNBC’s Sustainable Future Forum on Friday, Willie Walsh was asked if subsidies and tax breaks to encourage investment in cleaner energy were more effective than firms or consumers being taxed for emitting high levels of carbon.

“Honestly, all the evidence we have available shows that the carrot is far more effective than the stick,” Walsh said.

Developing his point, Walsh went on to describe taxation as being “a very blunt instrument – in many cases, actually, it will make our industry less efficient”.

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“I don’t think it will stop the number of planes flying, it will definitely reduce the number of people flying on planes,” he added. “And that would be a ridiculous thing to do.”

“What we need to do is to ensure that our planes are more full than less full, and provide incentives to produce sustainable aviation fuel that will have a real impact on aviation’s environmental footprint.”

The European Union is currently revising the energy taxation directive. Among other things, this will see both maritime and aviation fuel taxed.

Net zero goals

In October 2021, the airline is a member of IATA pass the resolution “They are committed to achieving net-zero carbon emissions from their operations by 2050.”

Due to the fact that it is an important cog in the global economy, the conversation about aviation and its effect on the environment will certainly take place at the COP27 climate change conference held in Sharm el-Sheikh, Egypt.

This is because despite its importance, aviation has described by the World Wildlife Fund as “one of the fastest growing sources of greenhouse gas emissions driving global climate change.”

WWF also says air travel “is currently the most carbon-intensive activity that an individual can do.”

During his appearance at the Sustainable Future Forum, IATA’s Walsh was asked how difficult it would be for the airline industry to decarbonize compared to others.

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“It’s very difficult … we calculate about 2.4% of human-made CO2 today,” he said.

“We recognize however, as other industries decarbonize – and for many of them there is a relatively simple path to decarbonization – our contribution will increase, because we will continue to depend on kerosene to power our aircraft,” he added.

“Now, technology will provide some solutions but … we are not ready to depend on something developed in the future, we realize that we have to do something now.”

“So for us, the key to our goal is the use of sustainable aviation fuel – the science is proven.”

“What we need to do is transform the very low production levels of sustainable fuels into widespread availability.”

This, Walsh argued, represented a real opportunity not only for the industry but “countries around the world to start producing sustainable jet fuel.”

Such a move would “address environmental issues but … also create jobs.”

Meetings like COP27 are 'very important,' says aviation CEO

The main idea behind sustainable aviation fuels is that they can be used to reduce aircraft emissions.

In terms of content, aircraft maker Airbus has described SAF as being “made from renewable raw materials.” It states that the most common food ingredients “are plant-based or use cooking oil and animal fat.”

There is a major concern in some tribes that increasing the uptake of SAF could, among other things, lead to significant deforestation and create a squeeze on crops crucial to food production, a problem Walsh touched on earlier this year.

Back at the Sustainable Future Forum, Walsh struck an optimistic tone about the sector’s future prospects, while acknowledging that work lies ahead.

“I think the fact that we are committed to net zero by 2050 is important, but showing that we have a credible path to … net zero is equally important,” he said.

“And people are starting to recognize that through sustainable aviation fuel and other initiatives … we can achieve a clear goal.”

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