Sustainable aviation fuel policy in the European Union (EU)
The EU is developing a policy framework for sustainable aviation fuels (SAFs) to achieve net zero aviation. The ReFuelEU Aviation Initiative mandates SAF blending, with targets rising to 70% by 2050. Supporting measures include the Net Zero Industry Act and the EU Emissions Trading Scheme. Significant investment is required for this transition.
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OVERVIEW
The EU recognises sustainable aviation fuels (SAFs) as key to achieving net zero aviation. It is developing a policy framework to support the SAF market’s growth, focusing on the ReFuelEU Aviation Initiative and further actions like the Net Zero Industry Act and EU Emissions Trading Scheme.
ReFuelEU aviation initiative
Finalised in 2023, this initiative mandates jet fuel suppliers blend SAFs into the fuel delivered to EU airports. SAFs include advanced biofuels, recycled carbon fuels, and synthetic fuels. The mandate sets incremental targets, requiring 2% SAF by 2025, rising to 70% by 2050, with a growing emphasis on synthetic fuels.
Net Zero Industry Act
In early 2024, the EU classified SAF as a strategic technology, facilitating production through expedited permitting and administrative support. The Net Zero Industry Act aims to break down barriers to scaling SAF along the fuel value chain.
EU Emissions Trading Scheme
The EU Emissions Trading Scheme supports SAF uptake with a revenue certainty mechanism, offering €2 billion in funding for SAF purchases. This scheme allows airlines to reclaim the price difference between conventional jet fuel and SAF, promoting high-integrity synthetic fuels.
Funding
The EU has allocated significant funds to support SAF market growth, estimated at €10.4-10.5 billion by 2050. Funding mechanisms include the Clean Aviation Joint Undertaking, Alternative Fuels Infrastructure Facility, EU Innovation Fund, Horizon Europe, Clean Hydrogen Joint Undertaking, and EU funds via ACT-SAF.
Recommendations
The EU should continue updating ReFuelEU, consider a kerosene tax, and expand the Emissions Trading Scheme. Addressing renewable energy costs and carbon capture incentives is crucial for reducing SAF production costs and ensuring market viability. Further policy interventions may include the EU Taxonomy and addressing feedstock barriers to enhance SAF production sustainability.
This policy framework aims to set a global trend in SAF adoption, encouraging other regions to follow suit in achieving net zero aviation targets. The collaboration between public sector initiatives and the investor community is vital for accelerating SAF market growth.
