Grilling Michael O’Leary

Michael O’Leary is scheduled to appear this afternoon in front of the UK Parliament Transport Select Committee as part of their study of UK Aviation Strategy. This extract from my recent book Fly and be Damned provided some background they should be digging into.

‘Ryanair’s business approach goes beyond adding capacity to match demand. Ryanair builds capacity and then generates demand to fill it. When a new European city enters the Ryanair network it draws in new tourists providing uplift to the local economy. Ryanair understands the value of the new cheap air route to the local municipality so negotiates very hard before opening a new route, or deciding to retain an existing one. The airline requires a runway and a terminal building, that might be little more than space in a cargo building. It also expects to pay very little for the use of the facilities. The pressure for the best deal goes further; Ryanair often seeks, or is offered, ‘marketing support’ from the local area to bring in paying tourists. Ryanair is doing nothing illegal, running a successful business within the letter of the rules.

Creating capacity that stimulates demand, particularly in the creative and hard-nosed manner of Ryanair, is good business for the airline but creating demand also creates environmental stress. Sustainable policy would start with seeking to control demand through reducing the need to fly. Generating demand to fill capacity is the complete reverse of sustainable policy for aviation.’

Links:

http://zedbooks.co.uk/paperback/fly-and-be-damned

EU Stops the Clock on Aviation Policy

Yesterday the EU Commissioner for Climate Action, Connie Hedegaard announced her intention to ‘stop the clock’ with regard to enforcement of emissions trading for flights into and out of Europe:

"This has been a very long story of the world not being able to get a deal to limit CO2-emissions from aviation. Now there is some positive movement; it is very positive.”

 “Our regulatory scheme was adopted after having waited many years for ICAO to progress. Now it seems that because of some countries' dislike of our scheme many countries are prepared to move in ICAO...”

When the EU decided to include aviation in the EU Emissions Trading Scheme (ETS) from the beginning of 2012, it was a very small step towards acknowledging the need to take action. The US and China were incensed that their airlines would have to join with European airlines to pay the charges. This was odd when the price added to each ticket was just a few euros, hardly enough for passengers or airlines to notice, so why did it meet with a storm of protest?

 Some countries and some airlines are concerned that EU action might be the thin end of the wedge as the world gets a grip of emissions from aviation. So it should; bold action is both necessary and sensible, and will lead to a transformation of the industry launching it into a new golden age of low-carbon flight. There should be no reason to oppose the changes when everyone understands what is at stake and that aviation will be hugely better after the transformation. Of course it is something we should do without delay. However it may bankrupt those parts of the industry which have bet heavily on defending the status quo. This has seemed a safe bet; so far, with the US acting as deadweight on the industry holding it to the outdated policy framework agreed in Chicago in 1944.

The EU is backing down apparently to allow the International Civil Aviation Organization (ICAO) the space to reach a global agreement over the next year leading up the next ICAO Assembly in autumn 2013. This is a triumph of hope over reality.

‘The ICAO is resolutely defending the Chicago Convention and continued growth of air transport. It is inherently incompatible to seek to grow aviation, reduce carbon emissions and maintain tax-free fuel. This odd stance limits the scope for effective and ambitious action. It is the Chicago Convention that is now the policy block that has to be overcome. Instead of negotiating around the convention, world leaders need to find the courage to confront its provisions. The Chicago Convention was conceived in time of crisis; it should be renegotiated as a response to the climate crisis.’

Extract from: Fly and Be Damned: What now for aviation and climate change?

It is time for real action, not political posturing. Replacing the Chicago Convention is the only realistic way forward.

Links:

http://zedbooks.co.uk/paperback/fly-and-be-damned

http://www.greenaironline.com/news.php?viewStory=1620

http://europa.eu/rapid/press-release_MEMO-12-854_en.htm?locale=en#PR_metaPressRelease_bottom

Calling America

If Europeans could vote in the US Presidential election, Barack Obama could relax; he would win by a mile. He is much more European than Mitt Romney, which is strength in the eyes of the wider world but a liability to many in America. He pushed through healthcare reform to nudge the US towards the European ideal of universal healthcare. He has also prodded America to wards considering the possibility of taking action over climate change. These small changes are welcome but could be lost if Obama loses.

It is now for the US electorate to decide. This is the electorate that brought George Bush to power effectively killing international climate negotiations and taking the country down a path that made the US, which had been widely admire and respected, into the bogeyman of world affairs to many people in the Middle East and across the world, fermenting the terrorism he purported to fight. From a European perspective, electing George Bush was a mistake; to re-elect him after finding out his true colours, smacked of foolishness.

The US people have a choice, whether to rebuild the international reputation of America or retreat into a particular set of American values espoused by Mitt Romney, which look increasingly outdated for the challenges the world now faces. There is a worrying precedent in history; one-term president Jimmy Carter tried to take the US down a track of environmental responsibility but he was ousted by Ronald Reagan, who on entering the White House took the symbolic step of taking down the solar panels installed by Jimmy Carter.

America, it is your choice and the world is watching and waiting.

Outrageous Claims

Nissan have a website making an outrageous claim http://www.nissan-zeroemission.com/EN/index.html

On it they claim that the Nissan Leaf has reduced CO2 emissions world-wide by 31,764 tons. 

 I clicked on the button with the name ‘what exactly do these numbers mean?’ This is the explanation:

‘If powered by gasoline Nissan Leaf would produce 31,764 tons of CO2’

I own and drive a Nissan Leaf to get a feel for electric cars as I believe they will be part of the future. I can also plug it in on a bright sunny day and fill it up from the solar panels on my roof but usually it gets charged at night on the cheap electricity tariff. This electricity comes off the grid which includes a whole range of power stations including my local power station at Didcot which burns coal. Taking the overall carbon intensity of the UK power grid, I have done the calculation (I admit on the back of a scrap of paper) and the overall carbon emitted to charge the Nissan Leaf is comparable with the carbon emitted by an efficient small diesel car – like the one I used to drive.

 The Nissan Leaf is a compact 4-seat family car for short local journeys and it works fine. I also had quite liked the idea that driving the Leaf was a statement that I was interested in the transition to a low-carbon future. For example, the solar panel on the roof to charge the small battery for the car electrics is a nice touch. However I am disgusted that Nissan is making such outrageous and unjustifiable claims. Overall, the Nissan Leaf has not saved the world from significant CO2 emissions. Nissan can claim to be a pioneer in the technology of a low-carbon future but allowing their marketing people to make claims like these will backfire and loose support. Those of us who campaign for a greener future do not want to be aligned with such corporations.

I would be happy for Nissan to show me their calculations and defend their claim but as far as I can see this is a case of ‘greenwash’ and they should be ashamed.

Where is the Economy going?

"This sucker's going down."

George Bush's pithy description of the US economy during the 2008 financial crisis has been lampooned by comedians the world over but the joke may be about to end. Not renowned as being a deep thinker, George Bush was more prescient than he could have realised; it was only the timing he got wrong.

The fundamental economic facts in 2012 have changed little since 2008. The debt overhang and imbalances in the global economy remain huge; such that a major correction is required, somehow, some way. There is a belief that a smooth correction will be possible but for many countries the debt is beyond their ability to pay. The Eurozone in particular has huge internal imbalances which require either the pooling of debt (which the Germans and Finns won’t allow) or break up. There is not a third way ‒ despite the smoke and mirrors that European policy makers are using to uphold the belief that the euro will survive intact.

World leaders and central bankers have worked hard to hold the world economy up over the last four years through pumping in new money and buying up distressed assets. This is like a doctor loading up their patient with increasing doses of anti-depressants despite knowing that withdrawal will be much harder beyond the immediate crisis. Policy is focussed on bolstering confidence and encouraging the belief that all is well.

The point will come when confidence evaporates and a rush into real assets begins. The clever money has already moved, when the rush begins there will be few exits available and the world’s markets will move in unison.

I could be wrong; I hope I am wrong; but reality has to return eventually.  The world economy is more connected, more interdependent, more indebted and more imbalanced than at any previous time in history. Whichever way it goes, we will all go together. Perhaps we are like a cartoon character that has just run off a cliff and is hanging in mid-air, legs still running, defying gravity for as long as possible. The trouble is we don’t live in the fantasy world of international finance; we live in the real world where facts cannot be ignored indefinitely.