Scope and methodology

This study updates T&E’s analysis of green jet fuel production in Europe, initially published in June 2022. It examines the challenges e-kerosene producers face, focusing on projects compliant with EU legislation. These projects must derive fuel energy from renewable electricity and CO₂ recycled from biogenic sources, industrial emissions, or direct air capture.

General context: the role of e-kerosene to decarbonise aviation

E-kerosene, made from renewable energy and CO₂, provides a scalable alternative to fossil kerosene. With zero-emission aircraft expected by the 2040s, e-kerosene will be crucial for meeting aviation fuel demands while reducing CO₂ emissions.

Mapping e-kerosene production in Europe

A good dynamic driven by ReFuelEU

The report identifies 45 e-kerosene projects in the EEA, including 25 industrial and 20 demonstration projects, up from 28 companies in the previous analysis. New major projects include a consortium led by DHL Group, HH2E, and Sasol, planning to produce 200,000 tons of e-fuels annually in Germany by 2030. France has also announced significant projects, such as BioTJet and Take Kair, projected to produce 300,000 tons by 2030.

Norway, France and Germany stand out as future leaders of e-kerosene production in Europe

Norway, France, and Germany lead investments, with Norway benefiting from stable, low-cost renewable energy. These countries are expected to account for 80% of e-kerosene production capacity by 2030, with Norway alone projected to produce 420,000 tons. Sweden follows with four e-biofuels projects leveraging local forestry biomass.

Carbon sources: an exclusive reliance on biogenic CO₂

All industrial e-kerosene projects plan to use biogenic carbon sources. The shift from industrial point sources to biogenic sources results from the EU Delegated Act allowing the indefinite use of biogenic CO₂ while limiting fossil CO₂ sources until 2041. The high cost and limited policy incentives for direct air capture (DAC) have led all projects to rely on biogenic CO₂, which may become a bottleneck for scaling up production.

Beyond ReFuelEU, many challenges ahead

Some regulatory loopholes

Regulatory gaps include the lack of incentives for pre-2030 supply, potential use of e-fuels in the road sector, and exclusion from the Net Zero Industrial Act’s strategic technologies. The European Parliament’s proposal to incentivise e-kerosene by 2025 was not adopted, and countries are encouraged to set ambitious national targets for early supply.

High production costs

High production costs remain a barrier for securing offtake agreements with airlines. Although projected to decrease, e-kerosene will remain more expensive than fossil kerosene until at least 2050. Contracts for Difference (CfDs) and EU financial penalties aim to address cost gaps.

Insufficiently targeted public funding and cautious banks and private investors

E-kerosene projects face funding challenges, with limited public funding from EU initiatives like the Innovation Fund and cautious private investors. France is the only country with specific funding programmes for SAF/PtL projects. The deployment of a green hydrogen ecosystem is also critical but currently delayed, impacting project viability.

Control by oil majors

Oil majors control the downstream supply chain, posing barriers for new e-kerosene producers. This control includes refineries and fuel terminals, potentially restricting market access for independent producers.

Public acceptance, an emerging challenge

Local communities have raised concerns over biomass, water, and electricity use in e-fuel projects. Environmental risks and the classification of production facilities as Seveso sites add complexity to gaining social acceptability and securing environmental permits.

Policy recommendations

Member States should set pre-2030 targets for e-kerosene supply and earmark 25% of ETS revenues for production. EU funding should prioritise hydrogen use in aviation and shipping. Contracts for Difference (CfDs) can help reduce production costs. Effective jet fuel taxation and integration of all emissions within the EU carbon trading scheme are essential. Avoid diverting e-fuels to the road sector and develop DAC policy incentives. Ensure fair access to jet fuel infrastructure to promote a competitive market.