Talking the talk but not walking the walk

Malcolm Latarche

Malcolm Latarche · 17 January 2020

ShipInsight


Two reported decisions by two European governments are being seen by environmental campaigners as sending the wrong signals over CO2 emission controls.

The governments concerned are not the usual suspect members of the EU from Eastern Europe defending the use of coal and other fossil fuels but two of the most outspoken on promoting carbon cuts. The UK has been attacked over its decision to allow a regional airline in financial difficulties to defer payment of airport passenger taxes and Germany has apparently rejected an EU call for a €1 trillion fund for cutting carbon emissions.

Eu
Ursula Gertrud von der Leyen - President of the European Commission since 1 December 2019

The criticism against the UK government from environmental groups is based around the fact that airport passenger duty was originally introduced some 25 years ago as a measure aimed at curbing the environmental impact of air travel. Although the money raised was not used for any environmental purpose, the idea was that it would deter some people from making unnecessary flights. Environmental groups have argued that the APD must be increased to prevent people from flying and no concessions should be given.

When the regional airline Flybe asked the government this week to allow a deferment of payment of the tax already collected by the airline, it argued that without some immediate respite from cash flow problems it would ned to close with the loss of at least 2,000 jobs. The government has agreed to look at the matter of APD and may consider a reduction – it has increased steadily over the years and is based upon the distance flown. It has not cancelled the airline’s liability and indeed if the airline did collapse, the government would be first in line for payment from any sums raised by disposal of assets.

Contrary to the environmentalists’ arguments, the levy of APD has come in for criticism since its introduction by UK organisations dependent on tourism and also from countries abroad where tourism from UK citizens is an essential source of income. Especially developing countries in Africa.

Germany’s rejection of the EU’s call for a massive fund is even more of a blow to the environmental cause. Earlier this week, the EU’s Commission President Ursula von der Leyen unveiled details of the bloc's ambitious €1 trillion Green Deal, alongside a call for additional funds for the EU budget to make it happen.

In December last year, all member states agreed to green their economies over the next 30 years to tackle the effects of climate change, but Poland held out, wanting to see financial initiatives. Besides Poland, the regions with the highest number of jobs in the coal sector (mines and power plants) are located in Bulgaria, Czech Republic, Germany, Greece, and Romania, according to figures from the European Parliament.

The long-awaited Just Transition Mechanism (JTM) will be a part of the Sustainable Europe Investment Plan, which will cover the social dimension of the Green Deal, supporting fossil fuel-dependent regions - especially those depending on coal, lignite, peat or oil shale.

Ms von der Leyen says that under the broader investment plan, half of the cash would come from the EU budget. National governments would also contribute €100 billion, with €300 billion from the private sector.

The request for more funds has not been accepted by the German government. In an answer to a question from a German Green MP, German ministers said the federal government sees "sufficient leeway to provide the necessary funds to achieve the climate protection goals by setting priorities" rather than increasing funding. Germany has already committed €54Bn to climate related policies over the next four years.

This week Germany released figures for its economy in 2019 which showed the slowest growth for six years. A very slight improvement in the final quarter has raised hopes that the worst is over but the country’s manufacturing sector – particularly car manufacturing – is not in good shape.

Most pronouncements from European governments would seem to suggest a deep commitment to the environmental cause but while many pay lip service to the idea, the loss of jobs leading to increased welfare payments and loss of tax revenues does mean that in the final analysis more pragmatic decisions have to be taken. Neither of these developments are directly related to shipping but are illustrative of how governments are beginning to move from established positions on carbon emission reduction when faced with important economic operations in their countries are put in jeopardy.

Shipping may have benefitted from some research grants and funding towards emission reduction but at nowhere near the level needed if real progress is to be made. It is already becoming apparent how far freight levels have been lifted to meet the cost of the 2020 sulphur cap, the cost of meeting the decarbonisation targets will be even higher.

These charges are the shipping industry passing on its increased costs to customers who in turn will be passing it on to end consumers.

It is all very well for the EU Commission to talk of money coming from governments and private sources but in the end that all falls back on the public.

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