After two decades of attempts to improve the performance of Europe’s fragmented air traffic network through better airspace integration, the EU’s legislative bodies have reached a provisional agreement that could finally lead to the substantial carbon emission savings, by as much as 10%, offered by the reform. First launched by the European Commission in 1999, the Single European Sky initiative has faced procrastination and delay, not least by a number of EU member states seeking to maintain their national interest, particularly over air navigation charges. Under the agreed reform, the aim is to increase Europe’s constrained capacity, lower navigation costs and increase the adaptability of the airspace system, while also reducing aviation’s climate impact. The agreement has been welcomed by air navigation service providers but representatives of Europe’s airline industry fear the reform will not go far enough.

“I am delighted with this result, concluded under our presidency, which will enable major progress to be made in reducing CO2 emissions from the aviation sector, and will also give member states more tools to limit the nuisance generated by aeronautical activity,” commented Belgium’s mobility minister, Georges Gilkinet, in a Council statement. “Although much remains to be done to help the sector achieve carbon neutrality, and we will continue to work towards this, the efforts made by all parties to bring this new legal framework for Europe’s skies to a successful conclusion are to be applauded.”

The text agreed by the Council, representing EU member states, and the European Parliament provides for binding targets and incentives to make flights more efficient and climate friendly, with an independent and permanent advisory Performance Review Board (PRB), set up under the regulatory EU Aviation Safety Agency (EASA) and funded by the EU, to help the Commission and states take decisions on the implementation of these plans. The Commission will adopt EU performance targets on airspace capacity, cost efficiency and climate and environmental factors for air navigation services, with performance reviewed at least every three years.

The Commission will also be required to conduct a cost-benefit study to help define how charges levied on airspace users – airlines or private aircraft operators – for the provision of air navigation services could encourage them to use the most fuel-efficient routing available and/or clean propulsion technologies. Mandatory modulation of en route charges will be introduced to encourage users to support improvements in environmental and climate performance.

The deal also provides the potential for more competition in the air navigation services market. It also requires member states to designate a national supervisory authority (NSA) to assess compliance of air navigation service providers (ANSPs) with economic requirements, such as financial sustainability and organisational structure, in cooperation with the national competent authority in charge of ANSP certification. The NSAs and the Commission are together to assess the performance of air navigation services “in accordance with the subsidiarity and proportionality principles”.

Following the introduction of the Single European Sky (SES) initiative in 1999, two legislative packages were adopted: SES I in 2004 and SES II in 2009. The Commission presented a revision in 2013, the SES 2+ package, which was adopted by the Parliament in a first-reading position in 2014, but the Council could not agree a complete position and an upgrade was subsequently proposed by the Commission in 2020.

The new provisional agreement is now subject to approval by member state representatives through the Council, the European Parliament’s transport committee and the full Parliament before the draft legislative acts are formally adopted by the co-legislators.

“The deal signifies a shift towards efficiency and sustainability in air traffic management. The current nationalistic airspace architecture hampers progress, leading to longer flights, increased emissions and unnecessary costs,” said Marian-Jean Marinescu, the Parliament’s lead rapporteur on the SES file, in a statement. “It’s high time to finally prioritise efficiency over nationalism, to pave the way for safer, more cost-effective and environmentally-friendly air travel in Europe.”

The agreement has been welcomed by CANSO, the trade body for ANSPs, which said it hoped the legislation would help the EU achieve its “seamless skies” ambition.

“We note that SES 2 will introduce mandatory modulation of en route charges to encourage airspace users to follow fuel-efficient routings, subject to a cost-benefit analysis,” said CANSO. “We call for this to encompass the principle of revenue neutrality for ANSPs, so that they receive the same fees for the provision of their services. It will be important for ANSPs to be able to balance offering environmental routings with the provision of capacity to airspace users.”

Added CANSO Director Europe Affairs Tanja Grobotek: “We look forward to receiving and analysing the final text. CANSO stands ready to provide support to the EU institutions when they draw up the implementing legislation to ensure there is a common interpretation, legal certainty and efficient implementation.”

However, Ourania Georgoutsakou, Managing Director of Airlines for Europe (A4E), expressed doubts over the package. “We are currently digesting the final agreement. We have been consistent in calling for a SES that delivers for airlines, passengers and the planet. On first look, it seems this agreement is still some way off this,” she said. “This will not be the end of A4E’s efforts to achieve a seamless, digital and a truly Single European Sky that will reduce delays, improve efficiency and reduce carbon emissions.”

A4E has concerns over the scope and independence of the PRB, with states potentially having the opportunity to influence the body and reduce the chance of actual improvements. It questions whether the PRB and/or NSAs will have enforcement powers and whether states can determine and also deviate from targets as they wish.

The European Regions Airline Association (ERA) described the provisional agreement as disappointing and a missed opportunity. “Based on ERA’s initial assessment, and subject to a detailed and thorough review, it is understood that this agreement does not go far enough to address the needs of Europe’s regional airlines, the needs that ERA has consistently advocated for since the Commission published to recast proposal in 2020,” it said.

Added ERA Director General Montserrat Barriga: “At first glance, several concessions appear to have been made that unfortunately reduces the likelihood of the substantial improvements that we have pushed for in terms of airspace capacity, operational efficiency and sustainability. It’s clear that further efforts will be required to address today’s aviation challenges effectively.”

Eurocontrol’s latest flight trends forecast shows the number of flights in the 44-state ECAC region is likely to reach 10.6 million in 2024, a growth of 4.9% compared to 2023 and accounting for 96% of 2019 levels. It expects this trend to continue, with an increase to 10.9 million (99%) in 2025, and further to 11.2 million (101%) by 2026. Beyond 2025, and subject to political and economic uncertainties, flight growth is expected to average 2.0% per year, rising to over 12 million flights in 2030.

Photo: The Bremen air traffic control centre (© DFS Deutsche Flugsicherung GmbH) 

A European aviation industry coalition has welcomed the inclusion of sustainable aviation fuel as a ‘strategic net zero technology’ under the EU Net-Zero Industry Act (NZIA), which has received provisional agreement between the European Parliament and Council. The Act is a central part of the EU’s Green Deal Industrial Plan, which aims to follow the example of the United States’ Inflation Reduction Act in stimulating domestic manufacturing capacity in clean energy technologies, with the intention of reaching at least 40% of expected EU demand by 2030. The European Commission says the Act will create the regulatory conditions necessary to attract and support investment, and help build more production facilities in a faster manner. The Commission has also recommended an EU-wide 90% net GHG emissions reduction target by 2040 compared to 1990 levels and put forward a series of measures to achieve it, including through the use of SAF. The industry alliance said while the inclusion of SAF in the NZIA would pave the way for the development of a strong EU SAF market, further policy action was needed to meet the updated 2040 climate ambitions.

The NZIA will enhance the competitiveness and resilience of the European cleantech industry and support the creation of green, quality jobs as the EU seeks to reach climate neutrality by 2050, claims the Commission. The regulation identifies a broad set of net zero technologies that can be supported through strategic projects such as solar photovoltaic, onshore and offshore wind, fuel cells, electrolysers, batteries, grid technologies and sustainable alternative transport fuels, including SAF.

“The NZIA political agreement is a significant stride towards realising our ambitious climate and economic objectives,” said the Commission’s President, Ursula von der Leyen. “It demonstrates our collective commitment to build a more sustainable, resilient and competitive industrial sector in Europe. Together, we are making the EU a global frontrunner in the clean energy transition.”

The Act aims to create a simplified and enabling regulatory environment that will reduce the administrative burden for cleantech manufacturing, accelerate CO2 capture and storage in the EU, facilitate market access for net zero products and support the development of net zero skills and innovation. It also foresees the creation of a ‘Net-Zero Europe Platform’ to serve as central coordination hub, fostering information and exchange to facilitate the implementation and supporting investment of initiatives throughout the EU.

Renewable hydrogen is seen as one of the key technologies of the NZIA and indispensable in reaching the EU’s 2030 climate targets and 2050 climate neutrality. “By scaling up its production, we will reduce the use of fossil fuels in European industries and serve the needs of hard-to-electrify sectors,” said the Commission. To this end, it is to set up the European Hydrogen Bank to support the uptake of renewable hydrogen within the EU, as well as imports from international partners, and unlock private investments in hydrogen value chains.

The EU has a legal target to reduce GHG emissions by 55% by 2030 compared to 1990 levels and has adopted a ‘Fit for 55’ legislative package to accomplish this goal, including the ReFuelEU regulation on mandating SAF uptake at EU airports. The new recommendation for a 90% reduction by 2040 target will help European industry, investors, citizens and governments to make decisions in this decade that will keep the EU on track to meet its climate neutrality objective in 2050, says the Commission.

“It will send important signals on how to invest and plan effectively for the longer term, minimising the risk of stranded assets,” it said on announcing the target. “With this forward-planning, it is possible to shape a prosperous, competitive and fair society, to decarbonise EU industry and energy systems, and to ensure that Europe is a prime destination for investment, with stable future-proof jobs.

“The EU will continue to develop the right framework conditions to attract investment and production. A successful climate transition should go hand-in-hand with strengthened industrial competitiveness, especially in cleantech sectors. Public investment should be well targeted with the right mix of grants, loans, equity, guarantees, advisory services and other public support. Carbon pricing should continue to play an important role in incentivising investments in clean technologies and generating revenues to spend on climate action and social support for the transition.”

Achieving the target would require both emissions reductions and carbon removals, added the Commission, with the deployment of carbon capture and storage technologies, as well as the use of captured carbon in industry. Carbon capture should be targeted to hard-to-abate sectors where alternatives are less viable and carbon removals will also be needed to generate negative emissions after 2050.

Under the ReFuelEU Aviation regulation, aviation fuel suppliers are obligated to ensure that all fuel made available to aircraft operators at EU airports incorporate 6% SAF in 2030, with 1.2% of fuels in 2030 being synthetic fuels. From 2040, the minimum share of SAF rises to 34%, of which a minimum share of 10% of synthetic fuels, reaching 70% and 35% respectively by 2050.

The 2040 recommendation will be followed by a legislative proposal made by the next Commission, after the European elections in June.

The inclusion of SAF in the NZIA is only the first step in developing a world-leading SAF industry in Europe, said the Destination 2050 cross-industry alliance of European airline, airport, civil aeronautics industry and air navigation service providers, which came together in 2021 to commission and then publish a decarbonisation roadmap for the European aviation sector.

“The Commission’s communication recommending the new 2040 target expressly recognises the need to address barriers to SAF deployment at scale, giving the aviation sector priority access to feedstocks and putting incentives in place to close the price gap between SAF and conventional kerosene. SAFs are a crucial component that will enable European aviation to accelerate its decarbonisation, in full alignment with the bloc’s ambitious climate agenda,” said a statement by the five members of the alliance – Airlines for Europe, ACI Europe, ASD, CANSO Europe and European Regions Airline Association.

“The international race to become a SAF leader has started and further policy incentives to scale up the production and uptake are required for Europe to become a leader in the global competition for SAF. These include the extension of the SAF flexibility mechanism beyond 2034; the extension of the current 20 million allowances threshold and 2030 time-limit under the SAF allowances mechanisms; and increased financial support for development of SAF, including through the Innovation Fund, as well as simplifying the administrative procedure for accessing these funds.”

Christopher Surgenor

Editor

• Linkedin

Political progress has been reached on two key pieces of legislation to bring the European aviation sector into line with the ‘Fit for 55’ goal to reduce net greenhouse gas emissions by at least 55% by 2030 and achieving carbon neutrality by 2050. After protracted negotiations, the European Parliament and the Council, representing EU member states, have agreed on the ReFuelEU Aviation proposal that will require fuel suppliers to blend sustainable aviation fuels with kerosene in increasing amounts from 2025. A more ambitious target than proposed by the European Commission was reached on the level of supply of synthetic fuels, or e-kerosene, from 2030. The Parliament and Council have also adopted rules on tightening the EU ETS Aviation that will see free allowances to airlines phased out by 2026, although 20 million free ‘SAF allowances’ will be set aside to incentivise the uptake of SAF in the EU and 5 million allowances will be transferred to the EU’s innovation fund for low-carbon technologies.

Aviation emissions in Europe increased by an average of 5% year-on-year between 2013 and 2019, and are expected to grow still further following the Covid-19 hiatus. “The increased climate ambition of the aviation sector will be crucial for the EU to reach its climate objectives under the Paris Agreement and make the European Green Deal a reality,” said the Commission.

Welcoming the agreement on its ReFuelEU Aviation proposal, the Commission said the measure on its own is projected to reduce aircraft CO2 emissions by around two-thirds by 2050 compared to a ‘no action’ scenario, as well as cleaner burning SAF providing climate and air quality benefits by reducing non-CO2 emissions. The Council said the proposal had aimed to increase both demand for and supply of SAF while ensuring a level playing field across the EU transport market. The mandate, it added, should provide a way out of the situation that was hindering SAF development and supply, and prices that were much higher than the fossil equivalent.

Under the mandate’s rules, aviation fuel suppliers must supply all flights departing from an EU airport from 2025 with fuel containing a minimum share of 2% SAF, rising to 6% in 2030 and gradually to 70% by 2050. The negotiators agreed to a 1.2% synthetic fuel mandate between 2030 and 2031, and 2% between 2032 and 2035, an increase from the Commission’s proposal of 0.7% between 2030 and 2035. Airports will be required to make sure their fuelling infrastructure is available and fit for SAF distribution.

“Since it will apply throughout the EU, the new mandate will ensure a level playing field within the EU internal market, provide legal certainty to fuel producers and help kick-start large-scale production across the continent,” said the Commission after the deal was reached by Parliament and Council negotiators. “It will also increase the EU’s energy security by reducing dependencies on third-country sourced energy products and create thousands of new jobs in the energy sector. The EU’s airlines will have access to increasing amounts of sustainable aviation fuel throughout the EU.”

Rules were also agreed in the trilogue negotiations to prevent aircraft operators deliberately carrying excess fuel on flights to avoid refuelling with SAF at EU destination airports, a practice called tankering. There will be an obligation for operators to ensure that the yearly quantity of aviation fuel uplifted at a given EU airport is at least 90% of the yearly aviation fuel required. However, exemptions from the tankering provisions could be granted in the event of serious and recurring operational difficulties or structural difficulties in SAF supply.

Reporting obligations for fuel suppliers and aircraft operators will also be enforced by designated competent authorities, with revenues from fines for non-compliance being directed to research and innovation into bridging the price differential between sustainable and conventional fuels. The data collection and reporting will be used to monitor the effects of the mandate regulation on the competitiveness of EU operators and platforms, and to improve knowledge of the non-CO2 effects of aviation emissions. The Commission is required to report in 2027 on the impact of the regulation on connectivity, on carbon leakage and distortions of competition, and on the future use of hydrogen and electricity.

Negotiators also agreed to extend the scope of eligible SAF and synthetic aviation fuels proposed by the Commission. For biofuels, the scope is extended to other certified biofuels complying with the Renewable Energy Directive sustainability and emissions saving criteria, up to a maximum of 70%, with the exception of biofuels from food and feed crops. The use of hydrogen and synthetic low-carbon aviation fuels has also been added to reach the minimum shares in the respective part of the regulation, although there are differing views among states on the role of low-carbon hydrogen, particularly nuclear-derived hydrogen.

Although controversial biofuel feedstocks such as food crops and palm oil by-products (PFADs) had been excluded, said Brussels-based NGO Transport & Environment (T&E), other “problematic” feedstocks had been kept in.

“Fuel suppliers will be able to meet targets with animal fats and used cooking oil (UCO), both of which are in limited supply,” it said. “Animal fats are by-products of the animal slaughter process and their inclusion risks creating shortages in other industries that already use them, like the pet food industry. Palm oil is very often used as a substitute for animal fats. Negotiators have not set a cap on the use of UCO, which could lead to a demand from European aviation outstripping what the continent can sustainably provide, leaving it reliant on imports and increasing the risk of fraud.”

In general though, T&E welcomed the trilogue outcome. “This pioneering deal is an unwavering endorsement of the world’s largest green fuel mandate for aviation. The EU doubled down on synthetic fuels, which are key to decarbonising the sector, and limited the use of unsustainable biofuels in planes,” said Aviation Manager, Matteo Mirolo.

It also welcomed the amendment to bring non-CO2 effects of aviation into the final agreement, following earlier failed legislation attempts. “ReFuelEU opens the door to regulating the quality of the fuel to ensure it has lower aromatic concentrations and sulphur content – this is a significant step,” it said.

Although the ramp-up of SAF could now start, there is still work to be done and ensuring the success of SAF will require industrial support policies for synthetic kerosene and stronger safeguards against unsustainable biofuels, said Mirolo.

With the first mandate of 2% SAF due by 2025, the agreement provides immediate certainty for airlines and the whole SAF industry, said Airlines for Europe (A4E). “EU policymakers should now turn their attention to ensuring Europe develops a strong SAF industry that can provide enough sustainable fuel for airlines to fulfil the mandates agreed,” said the industry body. “Widespread adoption of SAF is a critical component of European aviation’s roadmap for achieving net zero and policymakers need to throw their efforts behind building up Europe’s SAF industry.”

Laurent Donceel, Acting Managing Director of A4E, commented: “ReFuelEU is not the final destination for SAF in Europe. European policymakers need to ensure they now follow through and help build a world-leading SAF industry, strengthening fuel security and delivering sustainable jobs. The EU needs to think about SAF the way it thinks about wind turbines, solar panels and other sustainable technologies in order to support aviation’s energy transition whilst not pricing passengers out of the air.”

Some EU member states have already introduced SAF blending mandates, while other states have called for themselves to be granted differing SAF targets. However, agreement was reached on a uniform approach.

“The single EU-wide mandate for SAF will prevent fragmentation of the EU’s single market for aviation through differing national targets in different member states. The EU mandate should now supplant national mandates and harmonise all relevant legislation,” said A4E.

Parliament and Council also agreed on the creation of a Union eco-labelling scheme for flights from 2025 on environmental performance by aircraft operators “that will help consumers make informed choices and will promote greener flights.”

Responded A4E: “While we support providing consumers with information about their flights, we caution that any label should be based on a robust methodology and present an accurate depiction of the environmental impact of flights.”

A joint statement from A4E and four other European aviation associations (ACI Europe, ASD, CANSO and ERA) said: “The agreement marks an important and timely step necessary to the realisation of the ambitious targets of the decarbonisation roadmap to which the sector has committed. Sustainable aviation fuels play a decisive role in that endeavour and the agreement lays the foundation for all key stakeholders to move on in a concerted effort to reach the blending shares of SAF to kerosene agreed upon. This is expected to stimulate increased production and larger scale market uptake of SAF through to 2050.

“Through Destination 2050, announced in early 2021, the European aviation industry was the first in the world to commit to the realisation of a net-zero goal for all departing flights by 2050. Whilst the trilogue agreement is an important step into the right direction, further support is needed through complementary EU policies and initiatives.”

Speaking after the agreement had been reached, European Parliament rapporteur José Ramón Bauzá Diaz commented: “After months of intense negotiations, I am happy to conclude the ‘Fit for 55’ package. I am also proud to say the European Parliament has been successful in defending and advancing the ambitious development of sustainable aviation fuels across the EU. We have created a level playing field through harmonised rules and preserved EU air connectivity. With this regulation, the decarbonisation of aviation becomes closer.”

The agreement now requires formal adoption by the Parliament and the Council. Once this process is completed, the new legislation will be published in the Official Journal of the European Union and enter into force with immediate effect.

EU ETS reform adopted

This process has just been completed and adopted by both the Parliament and the Council in respect of revisions to the Directive for the EU Emissions Trading System for aviation. In December, they agreed more stringency of the existing system, which has covered aviation since 2012, to bring it in line with the ‘Fit for 55’ package and the Paris Agreement. The updated rules have just been adopted by both institutions.

The EU ETS will apply to intra-European flights, including departing flights to the UK and Switzerland, while the ICAO CORSIA carbon offsetting scheme will apply to extra-European flights to and from third countries participating in CORSIA from 2022 to 2027, a so-called ‘clean cut’ mechanism. If and when global aviation emissions under CORSIA reach levels above 85% of 2019 levels, European airlines will have to offset their proportionate share with corresponding eligible carbon credits.

The Council and Parliament agreed that after ICAO’s Assembly in 2025, the Commission is to assess whether CORSIA implementation is sufficient to reduce aviation emissions in line with Paris objectives. If deemed adequate, the Commission is required to make a proposal to extend the clean cut but if not, it is to make a proposal to extend the scope of the ETS to all flights departing the European Economic Area.

Free emission allowances will be reduced by 25% in 2024, 50% in 2025 and 100% from 2026, with all allowances fully auctioned from 2026. Five million allowances are to be transferred from the aviation sector to the EU Innovation Fund and 20 million free allowances set aside to encourage the uptake of SAF.

A4E said the SAF allowances would help stimulate and incentivise the rapid deployment of SAF in Europe. “Without them, the phase out of free allowances by 2026, well before truly effective decarbonisation solutions will be available at scale, could negatively impact air transport. This is because the cost of compliance for the ETS will likely increase fivefold by 2025, to over €5-6 billion annually, which would impact ticket prices, route availability and ultimately connectivity,” it said.

The co-legislators agreed that all fuels eligible under ReFuelEU, except fuels derived from fossil fuels, will be eligible for the SAF allowances and will be in place until 2030. Small islands, small airports and outermost regions will be able to cover the price differential between kerosene and eligible fuels with 100% of the SAF allowances in order to ensure availability in these locations with specific supply constraints. For all other airports, the coverage of the price differential will be modulated according to the type of fuel.

Under the legislation, the Commission is to improve transparency on aircraft operators’ emissions and offsetting, and also implement a monitoring, reporting and verification (MRV) system for non-CO2 aviation effects from 2025. By 2027, it will submit a report based on the MRV and by 2028, after an impact assessment, make a proposal to address non-CO2 effects.

Christopher Surgenor

Editor

• Linkedin

The EU’s Council and Parliament have reached a provisional agreement on revisions to the EU Emissions Trading System (EU ETS) rules applying to the aviation sector. A proposal by the Parliament, and backed by environmental groups and major European low-cost airlines, to include all international flights departing the European Economic Area (EEA) within the EU ETS was blocked by the Council, which represents EU member states. As a result of the trilogue talks, the EU ETS will apply only for intra-European flights – including departing flights to the UK and Switzerland – while ICAO’s CORSIA will apply to extra-European flights to and from third countries participating in the global scheme from 2022 to 2027. The two institutions agreed that after the next ICAO Assembly in 2025, the Commission will assess if CORSIA implementation is sufficient to reduce aviation emissions in line with Paris climate objectives. The co-legislators also agreed to fully phase out free emission allowances for aircraft operators between 2024 and 2026 but also set aside 20 million free allowances to incentivise the uptake of eligible SAF and to transfer 5 million allowances to an innovation fund. The agreement, which also addresses non-CO2 effects for the first time, has been both welcomed and criticised by the European airline sector.

Revisions to the Aviation EU ETS were first proposed by the European Commission in July 2021 as part of its ‘Fit for 55’ package to reduce overall EU emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050. EU member states and the Commission have shown strong support for CORSIA, which was considered necessary to secure international backing for an agreement to adopt the Long-Term Aspirational Goal (LTAG) at the ICAO Assembly in October. The inclusion of emissions from extra-European flights into the EU ETS also risked confrontation with third countries, including the United States, which has legislation in place to prohibit US airlines from compliance with the EU scheme. An agreement was also reached at ICAO during the Assembly to strengthen the CORSIA baseline, despite initial opposition from the airline industry not to change the baseline that had been altered during Covid-19 to help airlines deal with the added financial burden of CORSIA offsetting compliance.

However, CORSIA is criticised as an ineffective scheme by environmental groups and others, who do not see it in step with the Paris Agreement 1.5C climate target and the net zero by 2050 goal for aviation emissions adopted by both ICAO and the industry. Under the scheme’s rules, it will not be reviewed again until 2025.

European NGO Transport & Environment said the failure to include long-haul flights in the EU ETS would result in 58% of Europe’s aviation emissions being unaccounted for and accused EU governments of cowardice. The trilogue outcome would also make international aviation one of the only sectors of the EU economy that will not fall under an emissions cap, it added.

“EU governments lacked the grit to push through a deal that was good for the climate and social justice,” said Jo Dardenne, Aviation Director at T&E. “Average European families will continue to pay much more for their CO2 emissions than frequent long-haul flyers. We are about to see another lost decade of climate inaction.”

Low-cost airline Ryanair, Europe’s biggest carrier, also condemned the decision not to include departing international flights in the EU ETS, which it blamed on the Commission.

“The Commission’s failure to support the Parliament vote means that Europe’s most polluting flights – long-haul and transfer passengers – that create the majority of EU aviation emissions, will continue to be exempt from paying their fair share of ETS taxes,” commented Ryanair CEO Michael O’Leary. “While the richest Americans, Europeans and Asians on long-haul flights pay zero environmental taxes, Europe’s most price sensitive passengers and their families travelling on short-haul flights, many to peripheral member states and who have no alternative to flying, are forced to pay all of Europe’s ETS taxes, while they generate less than half of EU aviation emissions. This is clearly unfair.”

In actual fact, when emissions from flights to and from outside the EEA reach levels above 85% of 2019 levels (the revised baseline agreed at the ICAO Assembly), they will have to be offset with corresponding eligible carbon credits purchased by the flight operator to be invested in emissions reduction projects. Of ICAO’s 193 members states, 118 have agreed to participate in the voluntary pilot and first phases (2021-2026) of CORSIA. Major aviation players China and India have yet to join though, so flight emissions between the two countries and the EEA will not be covered by CORSIA during this period.

After the next ICAO Assembly in 2025, the Commission will carry out an assessment of CORSIA as to whether it is meeting the objectives of the Paris Agreement. If it is then the Commission will make a proposal to the Council and Parliament to extend the “clean cut” between the two schemes. If deemed insufficient, the Commission says it will make a proposal to extend the scope of the EU ETS to all flights departing from the EEA.

“The deal reached on the scope of the ETS shows that work towards an effective global carbon price for aviation has only started,” said a statement from trade association Airlines for Europe (A4E), whose members include both low-cost and long-haul airlines. “This will build on the outcome of the ICAO Assembly in October. We must not forget that airlines have been paying for their emissions through the EU ETS since 2012. The cost of compliance for the ETS is likely to have increased five times in size by 2025 to over €5 billion ($5.3bn) annually.”

A4E expects the annual cost of compliance to both the EU ETS and CORSIA schemes to rise from €0.95 billion in 2019 to €7.6 billion in 2030 and €9 billion by 2035.

Another conflicting position between the Council and Parliament was over the phasing out of the free allowances granted annually to aircraft operators under the EU ETS. The Commission proposed all free emission allowances be phased out by 2027, to be replaced by full auctioning of allowances, a position backed by the Council. Parliament, on the other hand, voted for a faster phase out by 2025. The trilogue produced a compromise of 2026, a year earlier than proposed, with a phase-out of 25% in 2024 and 50% in 2025.

“A4E is extremely disappointed about the decision to phase out by 2026 free ETS allowances currently granted to airlines,” said the A4E statement. “This is well before truly effective decarbonisation solutions will be available at the scale needed for them to be effective.”

On the other hand, A4E welcomed an agreement on a new system of sustainable aviation fuel allowances under the EU ETS to help stimulate the deployment of SAF and also the transfer of 5 million allowances from the aviation sector to the EU’s Innovation Fund, which uses EU ETS revenues to support innovative low-carbon technologies.

The co-legislators also agreed to set aside 20 million free allowances to further incentivise the uptake of fuels that are deemed to be in the short-term a promising path for aviation decarbonisation by aiming to bridge the price gap with conventional jet fuel. All fuels eligible under ReFuelEU, except those derived from fossil fuels, will be eligible for the SAF allowances under a mechanism to be in place until 2030. Small islands, small airports and outermost regions will be able to cover the price differential between kerosene and eligible fuels with 100% of the SAF allowances in order to ensure the availability of the eligible fuels in these locations with specific supply constraints.

For all other airports, the coverage of the price differential will differ according to the type of fuel: 95% for renewable fuels of non-biological origin (RFNBOs); 70% for advanced biofuels; and 50% for other eligible fuels.

The agreement also provides for the implementation of a monitoring, reporting and verification (MRV) system for non-CO2 effects in aviation from 2025. By 2027, the Commission is required to submit a report based on the MRV and by 2028, after an impact assessment, the Commission will make a proposal to address non-CO2 effects.

“I’m glad that we have found an agreement that effectively paves the way for meeting our objective of reducing transport emissions by 90% by 2050,” said Marian Jurečka, the Czech Minister of the Environment, which currently holds the EU presidency. “It will allow us to address aviation emissions within the EU but also outside by appropriately aligning the EU ETS with CORSIA and to ensure that all airlines operating flights on the same routes are treated equally.”

The provisional agreement now requires formal adoption by the Council and the Parliament.

Meanwhile, the UK has signed a Memorandum of Understanding with Switzerland that states the UK’s intention to include flights from the UK to Switzerland in the UK ETS “as comprehensively as possible” by 1 January 2023. The UK ETS, which replaced the UK’s participation in the EU ETS on 1 January 2021, covers domestic flights, flights between the UK and Gibraltar, and flights to the EEA. It is likely the UK will mirror the EU Council and Parliament agreement to apply CORSIA to all other countries that have joined the ICAO scheme.

A plenary session of the European Parliament has voted to adopt a report aimed at increasing the uptake of sustainable aviation fuels in the EU but with elements that go further than those proposed by the European Commission, including an accelerated introduction of SAF that should be made available at EU airports. Both sides agree that the minimum share of SAF should be 2% from 2025 but the Parliament is pushing for 37% share in 2040, compared to the Commission’s 32%, and increasing to 85% by 2050, as opposed to 63%. Other positions adopted include the expansion of the definition of SAF to include, for example, renewable electricity and green hydrogen. However, MEPs excluded food and feed crop-based fuels and those derived from palm fatty acid distillates (PFAD), intermediate crops and palm or soy-derived distillates, a move welcomed by both European airlines and environmental NGOs. The decision comes shortly after another vote in the Parliament to extend the scope of the EU ETS to include all EEA outgoing flights, a move now opposed by the Council of EU member states that supports the Commission’s proposal to restrict the scope to intra-EEA flights and apply CORSIA to other international departing flights. The co-legislators will hold trilogue negotiations to find common positions on both regulations.

The proposed regulation adopted by the Parliament last week looks to ensure the pool of eligible sustainable feedstock be as inclusive as possible “in order to maximise the potential for scaling up the production of sustainable aviation fuels at affordable costs”, and calls on the Commission to review the list of eligible feedstocks every two years.

Sustainable aviation fuels are generally considered to be liquid, drop-in fuels, fully fungible with conventional aviation fuel, compatible with existing aircraft engines and largely produced, at least currently, from used cooking oil, agricultural or forestry residues, bio-waste and animal fats. As well as synthetic fuels produced from green hydrogen and renewable electricity, which MEPs consider “very promising”, the proposed definition is extended to include recycled carbon fuels produced from waste processing gas and exhaust gas deriving from the production process in industrial installations. Fuels produced from animal fats could also be included in the aviation fuel mix until 2034.

MEPs agreed with the Commission’s proposal that for sustainability reasons, feed and food crop-based fuels should not be eligible because of high indirect land-use change risk. Specifically excluded by the MEPs are fuels made from palm fatty acid distillates (PFAD) and all palm and soy-derived materials, and soap stock and its derivatives.

“By explicitly excluding certain feed and food crop-based fuels, MEPs have further instilled legitimacy in the SAF system,” said a statement by trade association Airlines for Europe, which welcomed the PFAD exclusion. “Passengers can now trust that the ramp up of sustainable fuels in the coming years will not occur at the expense of food supplies for people or animals, nor damage our environment.”

Before the vote, European low-cost carrier easyJet and NGO Transport & Environment (T&E) published a joint letter calling on MEPs to exclude “problematic” feedstocks such as palm oil derivatives, which they said lead to deforestation. The letter quotes calculations by the International Council on Clean Transportation that the lifecycle direct and indirect GHG emissions of PFAD is more than 2.5 times worse than that of fossil fuel. They also argue that category 3 animal fats are used in food and feed and to make soaps and cosmetics. “If used for other purposes such as aviation fuels, then palm oil, being the cheapest alternative, would be the most likely substitute,” they said.

After the vote, with the eligibility of animal fats still included, T&E urged the Parliament, Council and Commission “to keep the momentum going by excluding the last remaining problematic feedstock” in their negotiations.

The European green group welcomed though the Parliament’s preference for synthetic fuels over biofuels. “They are the only fuels that can be sustainably scaled up to reduce aviation’s climate impact,” it said. “Lawmakers tripled the synthetic fuel volumes proposed by the Commission for 2030 and decided that in 2050, half of the total jet fuel use in Europe will be synthetic. The main synthetic fuel available now is e-kerosene, generated by combining green hydrogen and carbon dioxide. An ambitious mandate for e-kerosene will spur investment in the fuel, in a market where Europe is already a leader.”

T&E observed that mitigating the non-CO2 effects of aviation had made it into the final text, with the Parliament “paving the way to finally regulate the quality of fuel to ensure it has lower aromatic concentrations and sulphur content.”

A4E welcomed the possible introduction of a flexibility mechanism to supply SAF “in a cost-efficient way across the Union” through a book-and-claim system and also the Parliament’s support for the single aviation market through a single EU SAF mandate that would supplant national mandates and harmonise relevant legislation.

The flexibility mechanism proposed by the Parliament would have a 10-year transitional period from the start of the regulation, with elements of a book-and-claim system that would allow aviation fuel suppliers to use fuel containing higher shares of SAF to compensate for lower shares elsewhere or for the reduced availability of conventional aviation fuel at minor or logistically constrained airports, and for aircraft operators to buy a certificate linked to the amount of SAF acquired. After the transitional period, to prevent competitive distortions, all Union airports would have to be supplied with uniform minimum shares of SAF.

However, A4E remains concerned that proposed SAF blending targets, particularly for e-kerosene, could lead to high prices for customers, especially in the peripheral regions, because of the significant higher costs of these fuels. “It is key that targets remain reasonable and that policymakers work to limit the cost of the energy transition for passengers,” it said. “Mechanisms such as a system of SAF allowances through the ETS will help bridge the price gap between SAF and conventional fuels, but risk falling short if not designed to offset and the full loss of competitiveness and potential carbon leakage.”

MEPs also proposed the creation of a Sustainable Aviation Fund from 2023 to 2050 to accelerate decarbonisation of the aviation sector and support investment in SAF, innovative aircraft propulsion technologies that included hydrogen and electricity, research for new engines and direct air capture technology. The Fund would be supplemented by penalties generated by enforcement of the regulation and managed centrally through a Union body, with public transparency on investment decisions.

The report adopted by the Parliament also tasks the European Aviation Safety Agency with developing an EU labelling system for the environmental performance of aviation “to provide users of aviation services clear, transparent, comprehensive, user-friendly and easily understandable information.”

Commenting after the vote, the Parliament’s rapporteur on the regulation, Søren Gade, said: “Aviation is one of the hardest sectors to decarbonise. Today, we showed how to do this and sent a strong and ambitious signal to the citizens of Europe. We heard you when you called for climate action and we are working as hard as we can to achieve a truly green Europe.”

The SAF regulation is part of the ReFuelEU Aviation initiative under the EU’s Fit for 55 package that has the goal of reducing GHG emissions by at least 55% by 2030 compared to 1990 levels.

Fit for 55 also includes measures to strengthen the EU’s flagship climate mechanism, the EU Emissions Trading System (EU ETS). Last month, the Parliament diverted from the Commission’s proposals by voting to apply the scheme to all flights departing the European Economic Area (see article). While being welcomed by environmental groups and European low-cost airlines, the decision was greeted with anger from the wider airline industry, notably IATA.

However, a Council meeting of EU environment ministers has sided with the Commission by agreeing to continue with applying the EU ETS to EU operators for intra-European flights (including flights to Switzerland and the UK), while applying CORSIA to extra-European flights to and from third countries participating in the ICAO carbon offsetting scheme.

The Council also approved the phasing out free emission allowances for the aviation sector gradually by 2027 and also to set aside 20 million of the phased-out free allowances to compensate for the additional costs associated with the use of SAF. The agreement takes into account specific geographical circumstances and, in that context, proposes limited transitional derogations, said a statement.

T&E, which says the move would exempt 60% of the EU’s aviation emissions from the EU ETS, described the Council’s decision as “a step back for European aviation, as they continue to exempt huge chunks of emissions in this industry.”

The files will move to trilogues between the Council, Parliament and Commission.

Photo: European Parliament building in Strasbourg