Can the Tourism Sector Survive in a Decarbonized World?

In a couple of days time, the 21st session of the Conference of the Parties (COP-21) will be happening in Paris to agree upon a fresh global agenda restricting increases in average global temperature to 2°C relative to pre-industrial temperatures. Currently, the tourism sector globally is pretty much completely reliant on energy from fossil fuels. Direct emissions contribute an (highly conservative!) estimated 5% to global anthropogenic CO₂ emissions, more than all but 5 countries worldwide! Furthermore, one business as usual scenario (which even incorporates optimistic advances in energy efficiency) predicted tourism's CO₂ releases will increase by ~135% from 2005-2035 with an increase in travel numbers, frequency and distance largely from rapidly developing countries.

In order to have a likely (i.e. not even certain!) change of achieving COP-21’s target, the IPCC stated that current worldwide CO₂ emissions need to be lowered 40 - 70% by 2050. The United Nations World Tourism Organisation (UNWTO) has endorsed a sectorial carbon emissions reduction target of 50% by 2035 (relative to 2005 emissions). Put bluntly, the coordinated national and international policies required throughout the global tourism sector to achieve such emission reductions do not currently exist. In fact, none of the available decarbonization scenarios designed to achieve the 2 °C target even explicitly discuss tourism, despite its substantial contribution to global emissions. We shall wait with baited breath as to the outcome of the COP-21 negotiations, but the question remains regardless: how will the tourism sector survive in such a decarbonized global economy?

In this post I will compare the effectiveness of two distinct policy strategies tourism could take to reduce CO₂ emissions: carbon offsetting and emissions abatement.

Carbon offsetting or trading is a market-based mechanism which involves purchasing emission reduction credits achieved in sectors outside tourism. Although effectively avoiding the costs and any technological limitations of actual emission reduction, offsetting has so far been implemented with highly variable and non-standardised verification and credibility. Beyond problems of credibility, offsetting without legally binding emission reduction targets and caps for sectors can result in total global greenhouse gas emissions remain pretty much the same – essentially a business as usual scenario justifying continued inaction and attracting high levels of criticism from activists.

On the other hand, emissions abatement refers to explicit reduction of carbon emissions within the tourism sector, through mechanisms such as efficiency improvements to reduce energy usage and a transition to lower-carbon fuels. The potential for reducing tourism’s emissions is dependent on subsector, being especially expensive and tricky for air-travel as fuel efficiency advances and low-carbon fuel alternatives are both limited. Conversely, sizeable reductions in emissions (20 - 50%) are possible for the accommodation subsector at an initial negative cost as shown in Figure 1, via investment in energy efficiency, biofuels and renewable power.

Figure 1. A comparison of tourism sub-sector emission reduction and carbon offset prices with time. Source.

A recent paper modelled the financial costs of two emission reduction scenarios with either solely carbon offsetting, or offsetting in combination with abatement. Although the difference is slight, the results in Figure 2 show that emission abatement combined with offsets to strategically target aviation, is less expensive than carbon offsetting on its own, for both emission reduction scenarios. In fact, the additive cost throughout the thirty five years is 5.2% lower for the combination of abatement and offsetting (scenario 2) than scenario 1.

Figure 2. Cost of exclusive carbon offsetting, or offsetting combined with emission abatement for two emission scenarios: either a -50% reduction by 2035 (from 2005 levels) and subsequent stability, or a -50% reduction followed by a -70% reduction till 2050 after 2035. Source.

Importantly, in practical terms, the costs for emission reduction appear attainable as a proportion of overall global tourism revenue. Significant investment is required – starting at approximately US $1 billion annually beginning in the 2020s – but relatively speaking, this investment is lower than 0.1% of the predicted global tourism income for 2020. For example, if the projected costs for achieving scenario 2 by 2030 ($ 70 billion) was spread amongst the projected 6.6 billion domestic and international travellers for that year (under a medium growth projection for population), the per trip cost would be approximately US $11 - on par with many existing tourism fees and taxes set by governments and private companies that have had little, if any, impacts on the overall economic growth of thesector.

So what is your opinion, my curious reader? Is a global system of carbon trading the best way forward, investment in emissions reduction, or a combination of the two? And would you be willing to pay the extra $11 to carbon neutralise your holiday and ensure sustainability of the tourism industry? Personally, the path seems straightforward – beyond the comparative cost effectiveness of emission abatement with strategic carbon offsetting, future international agreements such as those expected at COP-21 may impose stricter emission and carbon trading limits for the tourism sector. Without investing in emission reduction now, this would leave the sector exposed to potentially increasing carbon trading costs and struggling to rapidly reduce emissions, hindering future economic growth of the sector.

Increased temperatures are really not in tourism's best interest. Many popular tourist destinations and activities, from the skiing industry to iconic species, are negatively affected by climate change. As could be expected, the modest $ 11 cost per traveller for the required investment has been widely shouted about in the media – almost exclusively in a positive light, with catchy slogans such as “are we willing to pay less than the price of an extra checked bag…?” and, my personal favourite: “the $11 solution to cleaning up the tourism business”. This is a good thing. Raising public awareness of the global environmental impacts of tourism and its potential management pathways is necessary. But the cost isn't the only thing to consider: emission reductions will not be easy. The tourism sector will require its own clear, globally integrated and consistent strategic policy framework that all subsectors and countries are on board with, combined with a sector-wide systematic emissions monitoring system. Without these, business leaders and investors will be unwilling to invest in low-carbon technologies for the sector, leaving it with little hope of achieving its emission reduction plans. Greater discussion and coordination amongst the tourism industry, governments and researcherss is necessary to address both of these challenges. The model discussed above assumed a well-functioning governance systems, yet this will not always be the case, especially in developing countries. Yet in light of the rising consumer activism against heavily carbon-emitting sectors, the global tourism industry will not be able to hide for long – it needs to make itself heard in international discussions such as COP-21, and it needs to start taking responsibility for its actions if it is to become truly sustainable.