Original Publication Date: October 21, 2015
Author: Gaspard Granger, Aviation and Shipping Policy Assistant at T&E
Introduction
In a BBC World Service program titled In the Balance – Profit and the Planet, prominent business leaders Richard Branson (Virgin CEO), Paul Polman (Unilever CEO), and Mo Ibrahim (founder of Celtel) discussed the pressing need for businesses to take action against climate change. The discussion centered on the necessity of implementing a global carbon tax to hold companies accountable and drive sustainable practices.
The Call for a Global Carbon Tax
Richard Branson emphasized the critical role of government intervention in addressing climate change, advocating for the removal of fossil fuel subsidies and the introduction of a worldwide carbon tax. He specifically called for the aviation industry—often considered a major contributor to emissions—to be included in such taxation. Branson acknowledged that while this would lead to short-term price increases, long-term sustainability could result in lower costs and greater environmental benefits.
Paul Polman echoed Branson’s views, underscoring the importance of quantifying environmental impacts by establishing a carbon price. He pointed out that over 1,000 companies had already endorsed this initiative at the 2014 UN Climate Summit, pushing for a binding agreement at the upcoming Paris Climate Conference (COP21).
Mo Ibrahim brought attention to the inequitable distribution of fuel subsidies in developing countries, arguing that the wealthiest individuals, who own multiple cars and power-intensive homes, benefit disproportionately. He stressed that removing subsidies would primarily affect the privileged few rather than the broader population.
The Stark Reality of Aviation’s Environmental Impact
Aviation remains a luxury largely enjoyed by the wealthier segments of the population, with less than 5% of the global population flying. Over 40% of airline revenue comes from business travel, and international aviation continues to enjoy a tax exemption on fuel, amounting to over €65 billion annually. Originally introduced after World War II to support the aviation industry, this exemption is now outdated and contributes significantly to unchecked emissions growth.
Proposed Solutions and Future Outlook
The International Civil Aviation Organization (ICAO) has proposed an offsetting scheme, aiming to neutralize emissions beyond 2020 levels by purchasing carbon offsets starting in 2021. However, this measure, estimated to cost the aviation industry between €1.9 and €6.5 billion per year by 2025, pales in comparison to the continued fuel tax exemption, which is projected to rise to €87 billion by that time due to increasing demand.
Experts argue that while offsetting is a step in the right direction, it is insufficient without direct carbon pricing measures that would create real incentives for emissions reductions within the aviation sector.
Conclusion
The discussion highlighted the urgent need for political action to introduce carbon taxes across industries, particularly aviation, to drive meaningful climate action. Business leaders like Branson and Polman are increasingly advocating for structural changes that align economic incentives with environmental responsibility. With the COP21 negotiations approaching, the pressure is mounting for governments to adopt policies that reflect the true cost of carbon emissions and push industries toward a more sustainable future.