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<p>The Government has introduced several fiscal measures to reduce emissions from
the aviation sector. The aviation sector is subject to a carbon price via the Emissions
Trading Scheme, meaning that airline operators must pay for each tonne of carbon that
they emit. Some airline operators in the scheme receive free allowances which reduces
their exposure to the carbon price. Following a consultation last year, the UK ETS
Authority has announced its decision to phase out free allocation for domestic aviation
by 2026.</p><p> </p><p>Air Passenger Duty (APD) is the principal tax on the aviation
sector. It is expected to raise £3.8 billion in 2023-24 and the primary objective
of the tax is to ensure that airlines make a fair contribution to the public finances.
The banding structure for distance ensures that those who travel furthest, and thus
have a greater impact on the environment, incur a greater tax liability.</p><p> </p><p>Further,
the Government has committed £685 million to the Aerospace Technology Institute over
this Spending Review period to help drive the development of more carbon efficient
and zero-emission aircraft. At the Spending Review the Government also guaranteed
funding for the Aerospace Technology Institute to 2031. Plus, £165 million has been
allocated to directly support the production of more sustainable aviation fuels in
the UK.</p><p><strong> </strong></p>
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