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Foreign aviation research and a proposed departure tax could benefit New Zealand
by CILTNZ
What He Pou a Rangi report means for freight
By Greg Miller, Group Chief Executive KiwiRail
KIWIRAIL IS CAREFULLY considering the Climate Change Commission’s report and is encouraged by the commission’s support for rail, and its recognition of the part rail can play in meeting the country’s commitment to reducing emissions. In FY20, using rail instead of road for freight meant a saving of nearly 237,000 tonnes of CO2e emissions. The commission’s proposal is to shift an additional 4% of New Zealand freight task from the road to rail and coastal shipping. KiwiRail has the capacity to meet this increased demand. Improvements to the network’s resilience are being made as a result of substantial Government investment to address the legacy of underfunding in rail infrastructure and rolling stock. The commission proposes the complete electrification of Auckland to Wellington and to electrify Hamilton to Tauranga (ECMT) by 2026. These are not currently on KiwiRail’s workplan, but we are open to exploring all options. From Hamilton to Tauranga would require electrifying approximately 127 kilometres of single track of the East Coast Main Track line (and the Mission Bush branch). The biggest challenges in this section would be the supply of power from the grid, rather than the electrification of the line, and the need to replace the current signalling system as it is not compatible with having electric traction. Other elements which would need to be considered include the availability of electric rolling stock, which would need to be bought on the international market, and making the necessary improvements to depots to accommodate that rolling stock. A substantial part of the cost of electrification is civil works in the rail corridor and installing the foundations for the traction poles. This could be done by New Zealand firms that have a history in rail construction. However, currently these are generally at capacity with other rail upgrade projects and the City Rail Link underway, so it could be difficult for this work to scale up without major offshore support. Configuring and stringing the wires is specialist work. Completing the work by 2026 would be very ambitious but not impossible. The commission has used a figure from 2016 of $2.5 million per kilometre. These estimates will need to be reviewed and reassessed to reflect current costs, which may be as much as double that in some parts of the network. In addition, there are other factors to consider such as the cost of improving clearances in tunnels. Separately, the introduction of two new rail-capable ferries middecade will have a big impact on KiwiRail’s carbon footprint. From day one they will reduce the Interislander’s emissions by about 40%, supporting our goal to reduce carbon emissions by 30% by 2030 and to be carbon neutral by 2050. The prospect of true low/zeroemissions propulsion systems for trains, and more particularly freight locomotives, is an exciting one that KiwiRail continues to monitor closely. KiwiRail is committed to helping New Zealand meet its emission targets, and we continue to investigate the ways in which we can do this. New energy systems and improved technology will be part of our response.
Foreign aviation research and a proposed departure tax could benefit New Zealand
COVID-19 BROUGHT INTERNATIONAL tourism activity in New Zealand to a halt, devastating many businesses involved directly and indirectly with the sector. James Paul looks at the solutions the Parliamentary Commissioner for the Environment proposes to redesign the tourism industry. West Coast residents made a plea to the Government for more support and a nearly $35 million wish list to keep communities afloat.
Nevertheless, the pandemic provided Parliamentary Commissioner for the Environment, Simon Upton, the opportunity to implore decisionmakers to address some of the long-standing environmental and social issues associated with New Zealand’s tourism industry. In the report Not 100% – but four steps closer to sustainable tourism, Mr Upton says there is broad support for the idea that protecting tourism livelihoods in the short-term should not morph into a slow but inexorable return to the status quo in the long-term. According to Statistics New Zealand’s International Travel and Migration, the number of visitors arriving by plane has increased steadily from 1.6 to 3.8 million between 2000 and 2019. In the year ended March 2019, 98% of international visitors arrived via plane. The number of New Zealanders travelling overseas displayed similar growth, with annual departures increasing from 1.2 million to 3.1 million between 2000 and 2019.
Additionally, prior to the COVID-19 disruption, tourismrelated international aviation emissions had grown persistently, increasing by 25% between 2010 and 2017. In contrast, New Zealand’s gross emissions remained relatively static over the same period. While the pressures of so many international tourists arriving in New Zealand have subsided due to the collapse in demand for air travel, the eventual recovery of key international markets makes it likely that this respite will only be temporary, the report states. The Tourism Export Council of New Zealand (TECNZ) expects the industry’s recovery to return to pre-COVID-19 visitor levels by May 2024, in its 2020 New Zealand International Tourism Recovery Roadmap (the Roadmap).
Sourcing its data from Statistics New Zealand’s International Visitor Arrivals as at year end March 2020, the Roadmap highlights international visitor arrival recovery and timeline per year and market. Should the Roadmap’s prediction of a transTasman border opening occur by May 2021, it forecasts the number of Australian visitors to our shores will recover by 20% of preCOVID-19 levels (or 298,250 people). It’s what is described in the Roadmap as the “reignite” phase, with the recovery trend continuing upwards to 100% of pre-COVID-19 levels of Australian visitors by May 2024 (1,491,252 people). The Roadmap also assumes that 12 other countries’ arrivals will follow similar trends: a recovery of between 40-50% of people coming to New Zealand a year after the trans-Tasman border opens, with a full recovery in 2024. Therefore, after wide consultation with industry groups, government departments and local authorities, the Commissioner has outlined four proposals to combat the environmental challenges facing New Zealand.
The first is to introduce a departure tax on all international flights leaving that reflects the environmental cost of doing so. The proposal’s revenue would be utilised in two areas: supporting the development of low-emissions aviation technologies and providing funds for Pacific Island nations at risk of climate change. Mr Upton proposes a departure tax could be incorporated into the ticket price with revenue collected by airlines to avoid inconveniencing passengers and passed to the relevant authority. “Levying a departure tax on the basis of distance travelled provides a crude means of differentiating the tax based on the emissions attributable to a particular passenger’s travel. For the purpose of administrative simplicity, the tax could be differentiated based on broad distance bands.
“For example, a short-haul flight to Australia or the Pacific Islands would incur a lesser charge than a long-haul flight to Europe. The tax could further be differentiated by travel class to reflect the larger emissions footprint associated with business and first-class travel.
“In New Zealand’s case, a tax with three distance bands seems appropriate given key international tourist markets fall broadly into three distinct geographical regions: Australia/Pacific Islands, Asia, and North America/Europe. “Accordingly, the tax could consist of a shorthaul band that covers flights to Australia and the Pacific Islands, a medium-haul band that applies to destinations in East and South-East Asia, and a long-haul band that covers the rest of the world.”
The report estimates that applying a range of rates to passenger movements for New Zealand’s top ten tourist markets in 2019 could generate between NZ$100–$400 million.
The lower bound estimate is based on a tax rate of NZ$35 per tonne of carbon dioxide – roughly equivalent to the New Zealand Emissions Trading Scheme price as of October 2020.
For passengers travelling economy class to the United Kingdom or the east coast of Australia, for example, that would translate into departure charges of around NZ$60 and NZ$6 respectively. What may be interesting to Logistics and Transport readers is what Mr Upton describes as the “several additional layers of complexity” within the aviation sector. “As a result of its inherently global character, international aviation is subject to unique governance and legal arrangements, with regulatory decisions typically made at the international level. Accordingly, attempts to introduce policy measures that could address emissions from this sector have often been pursued through multilateral agreements. “These governance and legal settings are further compounded by technical challenges specific to the aviation sector. The absence of cost-effective technological solutions severely limits the set of potential mitigation strategies that can be deployed in the immediate term.”
While technological advancements in improved fuel efficiency from aircraft design has offered some reductions in the past – estimates show the average fuel burn of new aircraft fell by about 45% or 1.3% per year between 1968 and 2014 – such improvements are offset by growth in aviation activity. Other sustainable aviation fuels and alternative energy sources – such as biofuels, carbon-based synthetic fuels, hydrogen and other non-carbon-based synthetic fuels (e.g., ammonia), and battery electric – have all received considerable attention as a way of decarbonising air travel. However, they each have their own constraints, and the United Kingdom’s Committee on Climate Change considers that major technological breakthroughs in aviation are unlikely to make a significant difference to aviation emissions by 2050. Nevertheless, Mr Upton believes that directing departure tax revenues towards research and development could enhance opportunities for aviation subsidies to support the introduction and deployment of lower carbon technologies. While research and development will not have any immediate tangible impact on emissions, it forms a critical component of long-term efforts to decarbonise the aviation sector.
“Hypothecating revenue from aviation taxes for research and development appears to be increasingly perceived as an appropriate use of revenue,” the report states. “For example, Germany recently announced its intention to reform its aviation taxation regime and hypothecate funds for the development of alternative fuels and energy sources.
“Ultimately, the emphasis here should be on fostering the development of a basket of technologies that, over time, have the potential to become cost competitive substitutes for conventional kerosenepowered jet engines. “As in any other area of research and development policy, reserving public money for the development of a particular ‘winner’ technology comes with the risk of unintended consequences and the creation of ventures whose existence relies on ongoing public financial support.” Researchers around the globe are investigating options for decarbonising aviation, and Mr Upton says New Zealand needs to get in on the action. The development of carbon-neutral synthetic liquid fuel derived from sunlight and air is currently being progressed by researchers at ETH Zurich in Switzerland.
Delft University of Technology in the Netherlands have focused on more efficient aircraft designs and sustainable energy and propulsion technologies, including synthetic kerosene.
“Foreign aviation research programmes have often been established to assist their own aviation industry or advance national economic interests.
“Having the appropriate legal and governance arrangements in place would be needed to safeguard any investments and ensure New Zealand is able to appropriate any benefit from research activities conducted overseas.”
Read the full report here - www.pce.
