A head of steam, or perhaps a vapour trail, is building up in Strasbourg over the carbon cost of air transport. The European Parliament is to vote in July on a report from its Environment Committee which recommends that airlines be drafted into an emissions trading scheme, similar to the one that operates for European industry.

It is a policy initiative that the Parliament hopes will egg on the European Commission’s rulemakers but the sound of lawmakers sharpening pencils is creating alarm within the aviation community.

MEPs in the green camp want to stem the rapid growth in aircraft carbon emissions and they reckon that the best way is to ensure that the cost of carbon has a monetary impact on air travel, thereby creating incentives to curb emissions.

It’s logical but it probably won’t work for two reasons: demand for air travel is proving relatively insensitive to fuel surcharges, and the airline industry is so inefficient that it can probably absorb more fuel costs as it eliminates chronic waste and subsidies.

Aircraft fuel consumption per passenger mile is falling rapidly, having declined 70 per cent since the 1970s. IATA, the airline industry lobbyist, reckons aircraft are now just as fuel-efficient as your car. Even if you don’t believe that statistic, aircraft still account for just 2-3 per cent of global carbon emissions. Planes are not yet the big problem.

Meanwhile, growth in demand for air travel is proving strangely unaffected by the rubber band of price. Airlines pay no tax on energy consumption — jet kerosene is free of fuel duty and VAT so the surge in the raw cost of a barrel of oil has an immediate impact on overheads.

The extra cost of the kerosene is being quickly passed on in hefty fuel surcharges to passengers but IATA reports that international traffic grew by 6.9 per cent from January to April. The rate of increase seems to be rising with the cost of fuel — April traffic was up 10 per cent on the previous year.

Travellers shrug off the extra charges because there is no alternative, unless they remain at home. Moreover, the budget carriers are challenging the cost economics of air travel. Having stripped the expensive glitz from flying, their margins are fatter and better able to absorb a $20 increase in the oil price. They can then use the promise of cheaper fares to lure consumers into making more journeys.

If green MEPs are genuine in wishing to curb pollution by aircraft, they must first address the continuing range of subsidies available to near-bankrupt national airlines that fly half-empty planes.

This industry has never had it so good but it is still running at a colossal financial deficit. If it is possible for the world’s airlines to absorb a $21 billion increase in the fuel bill, to suffer a collective $3 billion loss and at the same time transport 10 per cent more passengers, there is a government somewhere doling out cash and favours.

Emissions trading may be the worst solution because governments will award the carbon caps or permits, exposing any system to the same flaw that has made a mockery of the EU’s existing carbon trading scheme. The biggest, oldest and ugliest carriers would get the biggest allocation of carbon and the US would refuse to cooperate.

Better to tax kerosene. Its impact would be direct. Long-haul aircraft could avoid some of the tax by filling up outside the EU but that effect would be marginal. Unlike emissions trading, it would not penalise European transatlantic carriers over American rivals because the latter would have to buy some fuel in the EU.

The biggest dispenser of subsidies is, of course, the United States and its continuing post-9/11 patriotic bungs but every government helps with privileged landing rights for carriers, sweetheart deals at municipal airports and, best of all, duty-free kerosene. Why impose a tax when you can remove a subsidy?

Hamburgers relish a slice of EU aid

HAMBURG is not known for its deprivation, but if there is urban blight in the Hanseatic port city, it will soon be papered over with acres of euros. A region on the fringe of the city, which counts as one of the richest in Germany, is to receive €900 million (£615 million) in European Union grants, according to Der Spiegel magazine.

The handout ranks alongside the rice producer in the Camargue who collected a subsidy of almost €900,000 for a farm employing 14 workers.

The generosity towards the wealthy Hamburg suburb, known as the “pork belt”, is an anomaly: because the residents work in the city, their income is recorded there, not where they live. Despite being among the highest earners in Europe, the region falls below 75 per cent of the EU average, the level at which regions qualify for aid.

It’s a silly mistake, but no one asks the obvious question: if there are deprived German regions, surely Germans can assist unaided? Why is the EU taxpayer involved?

carl.mortished@thetimes.co.uk

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