Jakarta – A recent analysis by the International Council on Clean Transportation (ICCT) delves into the potential of an aviation ticket tax as a reliable financial pillar for the Loss and Damage Fund. According to their findings, imposing a USD 30 tax on economy-class tickets and a USD 120 tax on premium-class tickets could amass approximately USD 164 billion annually.
In a landmark decision at COP28 last December, the world’s most vulnerable nations achieved a significant victory with the agreement to establish a Loss and Damage Fund. This initiative aims to redistribute financial resources from wealthier countries to developing ones hardest hit by the effects of climate change. Amidst this progress, the call for sustainable and diverse funding sources has intensified, spotlighting proposed levies on sectors like aviation, maritime shipping, and financial transactions to bolster the fund.
This proposed tax structure aims to reflect the higher carbon footprint of premium seating while considering the financial feasibility for passengers across different economic backgrounds. To protect the burgeoning aviation markets and tourism industries in lower-income countries, exemptions for economy tickets to and from these nations are proposed, which would slightly reduce the total revenue.
France’s “solidarity tax on aeroplane tickets” emerges as a precedent, having generated over EUR1 billion for global health initiatives through Unitaid. This demonstrates the viability of aviation taxes in supporting international causes. Additionally, the ICCT suggests that a frequent flyer tax could target the affluent demographic responsible for a significant portion of aviation emissions, thus promoting equity in climate finance.
However, the ambitious goal of decarbonising international aviation, necessitating up to USD 5 trillion by 2050 in technological advancements, presents a parallel financial challenge. Prioritising investments in emerging technologies from the outset could optimise the impact on emission reductions. Policymakers are encouraged to initially allocate tax revenues towards mitigation efforts, gradually shifting focus to adaptation, loss, and damage support for developing countries.
Despite these strategic proposals, the projected revenue from aviation taxes may only partially meet the annual USD400 billion needed for loss and damage globally. Yet, even partial funding could dramatically benefit nations like the Small Island Developing States (SIDS), which, despite their vulnerability, require comparatively modest sums due to their smaller size and population.
The ICCT underscores the potential of aviation taxes in contributing to a comprehensive financial strategy for addressing climate change, provided these measures are implemented fairly and with a dual focus on industry decarbonisation and support for the most affected nations. This approach aims to mitigate the environmental impact and offers a path towards equitable climate resilience. (nsh)
