Ticket tax: Both minimally effective AND incredibly impactful?

The Swedish government is tackling the soaring emissions from aviation through an extra fee on airline tickets. There has been significant industry pushback about the extra costs, stating concerns both about economic impacts and low environmental benefits. We agree that in order to drive real transformation of the most polluting of all transport modes, overall emissions must go down, but what does that mean for the carbon price?

Joining the ranks of Germany and the UK, Sweden has implemented a climate charge for planes departing from Swedish airports ranging from 6-40 euros per passenger depending on the length of the flight route.

Aviation is responsible for about 2.1% of the global greenhouse gas emissions, and its pollution is expected to grow by 300% by 2050. According to the International Civil Aviation Organisation (ICAO), international carbon pricing is not expected to impact business as usual growth for the sector. Therefore, the Swedish government  – encouraged by the support of their citizens – needed something more impactful to achieve its domestic transport reduction target of 70% emission reductions by 2030.

The aviation industry – unsurprisingly – opposes the tax. Their arguments, however, are muddled as they claim that the environmental benefits will be minimal while at the same time warning that the tax will reduce traffic – thus pollution – substantially. Carbon taxes have been around in Sweden since the early 1990s, and an analysis by the London School of Economics shows that from 1990-2005 Sweden’s carbon tax alone resulted in transport emissions reductions of 6.3%. That’s equal to 1.5 million metric tons of CO2 per year.

Environmental benefits?

The industry is right though, in that, the tax will not lead to an environmental impact that decreases emissions overall. The Swedish government’s research found that the tax will result in a small decrease in demand for air travel, between 1.5% and 4.8%. So while the growth of transport emissions may be slowing, there is a rising trend in aviation emissions overall.

When airlines say that the Swedish levy is an “ineffective measure that cripples the economy while having almost no impact on the environment” we therefore assume that it’s because they see an effective environmental policy as reducing the overall emissions – and we agree.

To get the emissions curb down we either need to fly less or get over the technology hump preventing electrifying planes, and carbon pricing can play a role in both scenarios. Either way, it is clear that the price should be higher given the pollution growth. This would give the airlines and their engineers the incentive, and maybe even the money, to develop solutions to truly curb aviation’s emissions.

So when we say “minimally effective for the environment”, we mean “we need a higher carbon price”, right?