New European climate policy directly affects Schiphol and KLM

Tackling climate change will be tightened up considerably, if it is up to the European Commission. This afternoon in Brussels, Dutch Vice-President Frans Timmermans presented the plans that have already leaked out. “This problem will not solve itself. The earth will not cool down by itself. We have to act now if we want to prevent further global warming,” said Timmermans. The Commission wants less emissions from industry, more electric cars and insulation of houses and offices.

Where the Paris Accord and the Dutch Climate Change Agreement virtually ignore aviation and shipping, the European Commission does not. Aviation will have to bleed along with a general tightening of European emission rights in order to be allowed to emit CO2 . Moreover, Timmermans wants to levy tax on aviation fuel paraffin, something that has not happened to date to the dismay of environmental organisations and left-wing political parties.

Europeans have been flying more and more over the last 30 years. As a result, CO2 emissions from aviation in Europe have more than doubled. This has to change, Timmermans believes. Short-haul flights in Europe must disappear; instead, there must be fast train connections.

Aircraft must become more economical and work must be done on alternative, less polluting fuels than paraffin. KLM, for example, has been blending ‘biofuel’ from deep-frying oil for almost ten years, and Schiphol has a pilot plant in Rotterdam where synthetic paraffin’ is made.

Incidentally, experts do not believe that alternative fuels will solve the aviation CO2 problem in the short term. For example, there is far from enough biofuel available in the world and the process of making synthetic paraffin is still very expensive. Moreover, the same applies to synthetic paraffin as to hydrogen: it is produced using electricity and is only sustainable if there is a surplus of electricity from solar, wind or hydroelectric power.

For the time being, therefore, the only serious solution to the CO2 problem of aviation seems to be to fly less. Something that has already happened spontaneously in recent months as a result of the coronavirus. Flights were cancelled, tourists stayed at home, business people now meet via video links.

Government drip

Meanwhile, the national airlines in Europe are all on the government drip. Lufthansa in Germany for EUR 10 billion, Air France for EUR 7 billion and KLM for EUR 3.4 billion. It is not certain whether this is enough to keep the airlines afloat in the long term.

It is not for nothing that KLM receives the government support in the form of hedged loans. Costs have to be cut drastically and staff salaries have to be cut. The number of night flights must be reduced from 32 000 to 25 000. Furthermore, KLM must ensure that CO2 emissions per passenger are cut by half by 2030.

This is in addition to the stricter climate requirements in Brussels. By the beginning of October at the latest, KLM must have submitted plans to Minister of Finance Hoekstra to demonstrate that they can meet the requirements.

The question is what will happen to KLM after the corona crisis. Economist Walter Manshanden has been researching aviation in the Netherlands for 25 years. He does not think that aviation will fully recover from the corona crisis and expects that KLM will have to make substantial cutbacks.

“There is a good chance that in a few years’ time KLM will only have a third to half of its current size,” says Manshanden. He estimates the chance that KLM will be a profitable airline by then at 50%. Minister Hoekstra also announced Sunday in Buitenhof that the future of KLM is not guaranteed.

In Manshanden‘s analysis, KLM and Schiphol lose the so-called ‘hub function’. The Netherlands now has a relatively large international airport with a relatively large airline, with connections to almost all the major cities in the world. This is often mentioned as a condition for prosperity and economic growth, but Manshanden puts this into perspective. He foresees a temporary dip of one year, after which the Netherlands – like other countries that have lost this role – will recover.