Hammersmith and Fulham Liberal Democrats

Government must come clean on Heathrow climate costs - Hughes

• THE Government has put off an assessment of the environmental impact of a third runway at Heathrow that would undermine the economic case behind its decision to give it the go-ahead, Lib Dem research has revealed.

In its original consultation paper on the impact of a third runway, the Government said the climate change costs associated with the project would be £4.8 bn through to 2080. However, the Government was content that a third runway would provide a net benefit to the UK economy of between £4.4 bn and £5.2 bn.

This summer the Department of Energy and Climate Change revised its guidance on the cost of CO2 emissions to be used in all Government planning assessments. But in response to a Parliamentary Question* by the Liberal Democrats, the Government admitted that it had not included the new guidance in its assessment of the economic case for a new runway.

Research by the Liberal Democrats based on the Government's own economic models indicates that the new DECC guidelines on CO2 costs would increase the environmental damage caused by a third runway to £9.3 bn. This figure - an increase of £4.5 bn on the Government's original assessment - would all but wipe out any benefit estimated in the Government's original decision.

Commenting, Liberal Democrat Shadow Energy and Climate Change Secretary, Simon Hughes said: "It is time for the Government to come clean on Heathrow. Ministers know the economic rationale for a third runway is a sham because their own figures prove it. By giving the green light to a third runway, the Government has allowed hundreds of thousands more flights, creating a climate change disaster. The Government's ability to show leadership on reducing emissions is fatally undermined when it follows catastrophic policies like the third runway at Heathrow and a new generation of coal power stations. It cannot hope to meet its carbon reduction targets when it is wedded to high-polluting industries like these. While the Liberal Democrats have long campaigned against a third runway, the Tories are wavering on airport expansion and Labour are ploughing full steam ahead. The Government can only begin to regain credibility on the environment by reversing this disastrous policy."

• Notes:

1. Annex B of the Department for Transport's [DfT's] Heathrow consultation document [http://snipurl.com/rr9c1] shows the Government estimates that 'Option 1' - a third runway at Heathrow with a new terminal to be open by 2020 - would generate additional air transport movements of around 222,000 per annum by 2030 or 180.8m tonnes of carbon dioxide from the time of opening to 2080.

2. Defra adopted a 'Shadow Price of Carbon' in 2007 of £25/tCO2e [tonne of CO2 equivalent] (this is variable over time). The DfT used Defra guidance on climate change costs to put the damage caused by additional CO2 emissions from a third runway, through to 2080, at £4.8 bn (2005 prices).

3. Annex B of the Department for Transport's Heathrow consultation document also estimates the net benefit of a third runway (Net Present Value of 'Option 1') through to 2080 at between £4.4 bn and £5.2 bn.

4. This summer, the Department of Energy and Climate Change [DECC] launched new guidance on how to value greenhouse gas emissions in Government appraisals in its report: Carbon Valuation in UK Policy Appraisal: A Revised Approach [http://snipurl.com/rr9d4]. The report gives a short-term traded price of £25 per tonne of CO2e in 2020, and long-term traded prices of £70/tCO2e in 2030 and £200/tCO2e in 2050.

5. To make a comparison with the DfT's work on Heathrow, a linear interpolation is used to form a price series between 2020 and 2030, and 2030 and 2050 (as far into the future as DECC's guidance goes). The annual rate of increase is 4% between 2040-50 and it is assumed that this continues beyond 2050 through to 2080 with a Shadow Price of Carbon of £648/tCO2e in 2080. Using these new DECC-based estimates brings the carbon costs of a third runway up from £4.8 billion to £9.3 bn, an increase of £4.5 bn.

• "Simon Hughes [North Southwark & Bermondsey, LD]: To ask the Minister of State, Department for Transport whether his Department has revised its net present value estimate for a new runway and terminal at Heathrow airport to take account of the new methodology for carbon pricing in appraisals provided by the Department for Energy and Climate Change.

Chris Mole [Parliamentary Under-Secretary, Department for Transport; Ipswich, Lab]: The assessment of the economic case presented in Adding Capacity at Heathrow Airport Impact Assessment followed the guidance on the shadow price of carbon, issued by DEFRA following the Stern Review. In developing the Impact Assessment, the Department for Transport considered the potential impact of significantly higher values and concluded that the economic case remained robust.

However, no revised net present value estimate for a new runway and terminal at Heathrow airport that takes account of the new carbon values published in July 2009 by the Department for Energy and Climate Change are available. Preliminary work since the January Heathrow decision indicates that the economic case for Heathrow's third runway is robust to the new carbon values.

The Department for Transport currently expects to publish the next generation of air passenger demand forecasts in 2010."

Source: http://tinyurl.com/yb6gad7