In general the climate change levy (CCL) is imposed on numerous industries with the intention of inducing a reduction in carbon emissions by that industry.
Briefly, it works as follows:
- in the first year of the scheme an industry receives from the government an aggregate allocation of carbon emissions certificates (CEFs) - representing the industry's total allowable emissions for the period;
- for that year each business in the industry is allocated a portion of the industry's aggregate allocation - representing the business's total allowable emissions for the period;
- if during that year a business needs to emit more than the allocation given to it, it must either a) buy CEFs from others in the industry, or b) become more energy efficient by say, investing in plant and machinery for improved energy efficiency.
This year air transport will become within the ambit of the CCL. An immediate response has been to raise passenger air fares for cover the CCL. A longer term strategy, if not already started, will be to find ways of avoiding the tax. I am still seeking examples but possibilities (to be confirmed) include:
- investing in lighter aircraft so that fuel consumption is reduced;
- investing in more efficient aero-engines as and when they become available;
- use exempt fuels (if any) (adapting or changing engines, if necessary).
For passengers....? Review airlines' strategies and seek out energy efficient carriers. See who is buying the best aircraft or aero-engines - I presume that as time passes their prices will reflect their ability to:
- save by flying faster;
- save on aero-fuels;
- save by selling-off their surplus CEFs!
As a general rule a governemnt endeavours to wider the tax base. In recent years environmental taxation has come to the fore a widening part of the UK tax base. This post briefly examines the nature of air passenger duty (APD). It is an important environmental or "green" tax concerning those flying to overseas destinations from the UK.
APD was introduced by the Finance Act 1994 (as amended) - see sections 28 to 44 and schedules 5A and 6. In addition a hotch-potch of statutory instruments in the form of regulations and orders help to bewilder the seeker of truth!
In essence, the tax applies according to the individual passenger's destination and the class of travel. IN effect there are a) four destination bands; and, b) two rates for each band.
The tax is not an insignificant cost on relatively long distance flights. At least three impacts may be identified:
- the passenger traffic is likely to be diverted to other modes of transport as prices increase;
- some destinations are no longer attractive for discretionary flying (tourists);
- avoidance may be attempted by seeking any lower or nil tax regimes - so flying from other countries.
The attached link is useful http://www.travel-rants.com/2011/11/30/air-passenger-duty/
