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.”

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The European Parliament has approved the ReFuelEU Aviation regulation that will oblige fuel suppliers to blend increasing levels of sustainable aviation fuels, including synthetic fuels, in jet fuel taken on-board at EU airports. Starting from 2025, at least 2% of aviation fuels will be green, with this share increasing every five years to reach 6% in 2030, 34% in 2040 and 70% in 2050. In addition, a specific proportion of the fuel mix – 1.2% in 2030, 2% in 2032, 5% in 2035 and progressively rising to 35% in 2050 – must comprise synthetic fuels, such as e-kerosene. According to the new rules, the term ‘sustainable aviation fuels’, will include synthetic fuels, certain biofuels produced from agricultural or forestry residues, algae, bio-waste, used cooking oil or certain animal fats, and recycled fuels produced from waste gases and waste plastic. The adoption of the regulation by MEPs has been welcomed by representatives of the European aviation industry.

The new rules were adopted by 518 votes in favour, 97 against and eight abstentions, and once approved by EU member states through the European Council, will apply as of 1 January 2024 and some provisions as of 1 January 2025.

The ReFuelEU Aviation initiative is part of a package of policy proposals, known as ‘Fit for 55’, by the European Commission to reduce the EU’s GHG emissions by at least 55% by 2030, compared to 1990 levels.

“This is a tremendous step towards the decarbonisation of aviation,” commented the Parliament’s rapporteur, José Ramón Bauzá Diaz. “It is now time for EU governments to implement the new rules and support the industry to ensure the cost-effective deployment of sustainable aviation fuels across Europe as well as meeting EU targets. There is no time to lose.”

Under the rules, feed and food crop-based fuels, plus fuels derived from palm and soy materials will not be classified as green as they do not meet agreed sustainability criteria. As they see it as a promising technology, MEPs agreed to include renewable hydrogen as part of the sustainable fuel mix.

“In a complex and competitive world, I fully believe that ReFuelEU is a great opportunity to position the European Union as a global leader in the production and use of SAF,” said the rapporteur.

A joint statement by five European aviation industry associations representing airlines, airports, the civil aeronautics sector and air navigation service providers, said the legislation would back up their Destination 2050 roadmap published in February 2021 that laid out a strategy to reach net-zero CO2 emissions from all flights departing the EU, UK and EFTA by 2050, with SAF a “crucial component”.

They said the clear signal to investors and industrial partners would ensure the required uptake of SAF consumption and boost the European SAF industry. To become a global SAF leader, the ReFuelEU Aviation regulation should be complemented with further incentives to scale up SAF production and uptake in Europe, they suggested. They called for the inclusion of SAF into the EU Net-Zero Industry Act, mirroring the US approach in the Inflation Reduction Act.

Wider promotion of SAF around the world is also strongly recommended, said the Destination 2050 partners. “We call on states and the wider aviation industry across all world regions and at a global level to join forces and rally around ambitious and credible SAF objectives – to ensure aviation globally remains on track to attain the ICAO Long-Term Aspirational Goal of global net zero carbon emissions by 2050.

“A robust worldwide climate policy framework for SAF is needed. The November ICAO Conference on Aviation Alternative Fuels (CAAF/3) is a unique opportunity to put in place the right milestones and to deliver ambitious targets for SAF deployment worldwide.”

In further efforts to decarbonise the aviation sector and to better inform the public, MEPs also adopted a rule that as of 2025, there will be an EU label for the environmental performance of flights. Airlines will be able to market their flights with a label indicating the expected carbon footprint per passenger and the expected CO2 efficiency per kilometre. This is intended to allow passengers to compare the environmental performance of flights operated by different airlines on the same route.

The Parliament’s plenary session also agreed revisions to the Renewable Energy Directive, which includes rules on the eligibility of raw materials permitted in sustainable biofuels.

Welcoming the adoption of both pieces of legislation, Finnish renewable fuels producer Neste said they would create demand certainty and attract investment.

“Demand for renewable energy is only set to grow as we strive to meet our climate goals,” said Minna Aila, EVP Sustainability & Corporate Affairs at Neste. “We are better equipped to meet this demand if we have consistency in our legislation. Consistency allows stakeholders across the value chain to invest in the creation and provision of greater volumes of renewable products over a longer term and continue research and development in this field.”

Editor’s note: The ReFuelEU Aviation regulation and the ICAO CAAF/3 conference will be featured in sessions at Aviation Carbon 2023, co-organised by GreenAir News, taking place November 6/7 in London. GreenAir’s airline and aircraft operator readers can attend both days for free (subject to availability and T&Cs) by using the discount code 23-GREENAIR-100 when registering. Other readers can benefit from a special 20% discount by using the code 23-GREENAIR-20. The earlybird rate expires at the end of September so early booking highly recommended.

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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.

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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

As part of measures to revise the EU Emissions Trading System (EU ETS) to bring aviation in line with the bloc’s climate goals, the European Parliament has voted to apply the scheme to all flights departing the European Economic Area (EEA), to the anger of IATA. At present, the EU ETS covers only intra-EEA flights, as well as flights to Switzerland and the UK, but proposing to extend it to all international airlines serving the EU will raise concerns in countries outside Europe, says the airline body. The original scope of the scheme was to cover all flights arriving and departing EEA airports but after protests from third countries, particularly China and the US, the EU ETS was scaled back in 2013 under a ‘stop the clock’ mechanism to allow negotiations at ICAO on establishing an international agreement, which ultimately resulted in the CORSIA carbon offsetting scheme. The ‘stop the clock’ derogation ends in 2023 and unless extended again, the EU ETS reverts automatically to its original scope. Given Europe is pressing for a further agreement at ICAO on an international long-term emissions reduction goal, EU states will most likely oppose the Parliament’s position. Other measures agreed by MEPs include a quicker phasing out of free EU ETS allowances for airlines, the inclusion of non-CO2 emissions in the EU ETS and the creation of a SAF allowances pricing scheme.

Changes to the Aviation EU ETS is part of the EU’s ‘Fit for 55’ package that under European Climate Law plans to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, in order to reach climate neutrality by 2050.

In a plenary vote in Strasbourg on June 8, MEPs adopted their report on changes to the EU ETS for aviation with 478 votes in favour, 130 against and 32 abstentions, although proposals for the wider EU ETS were voted against and must now be revised, which may hold up the legislative timetable. Parliament representatives will hold trilogue discussions with the Commission and Council (EU member states) to agree a common position on the legislative proposals.

The agreement by Parliament to extend the EU ETS to apply to all flights departing from an airport located in the EEA, starting 30 April in the year after entry into force of the new rules, is necessary to ensure ambitious GHG emissions reductions in the aviation sector are in line with the Paris Agreement, “and to contribute to an international level playing field while ensuring equal treatment on routes,” said MEPs on the environment committee (ENVI), which has responsibility for the file.

As part of ‘Fit for 55’, in July last year the Commission proposed a number of amendments to the EU ETS Directive in respect of aviation’s contribution to the EU emissions reduction target. It provided for continued application of the EU ETS on intra-EEA flights, while applying CORSIA to extra-EEA flights. Industry association Airlines for Europe (A4E) warns the Parliament amendment to include extra-EEA departing flights in the EU ETS will have regulatory overlaps leading to a potential double burden for carriers, who may have to pay for the same emissions twice through both the EU ETS and CORSIA, it argues. However, the Parliament proposal attempts to get round this, stating: “In order to take account of the [European] Union’s commitment to, and its simultaneous participation in, CORSIA, the financial value of expenditure on credits used for CORSIA for flights from the EEA to third countries that are implementing CORSIA should be deductible from the financial obligations under the EU ETS.”

This would still leave flights to countries that have not yet agreed to join CORSIA, which include major aviation markets such as India and China, subject to inclusion in the EU ETS. When the EU decided in 2012 to include all flights to and from the EEA in the newly-adopted Aviation EU ETS, India and China, along with Russia, the United States and others formed a ‘coalition of the unwilling’ to fight the plan. China threatened to cancel a large order for Airbus aircraft and the Obama Administration passed legislation, which still stands, that gives powers to the Secretary of Transportation to prohibit US airlines from complying with the EU ETS. Trade body the Air Transport Association of America (now renamed Airlines for America) brought a case against the EU over the issue in the European Court of Justice.

Reaction from the global airline industry to the new proposal has been swift. “A unilateral decision by the EU to expand the scope of ETS extra-territorially to non-EU destinations will threaten the prospects for major global decarbonisation efforts,” said an IATA statement, which argued it would make the adoption of a long-term goal at ICAO unlikely and could “weaken and potentially dismantle the existing CORSIA agreement which states agreed would be the single global market-based measure applied to international aviation.”

Moreover, it added, expanding the EU ETS scope “would lead to serious distortion of competition and weaken the global competitive position of EU airlines and hubs.”

IATA Director General Willie Walsh described the Parliament decision as “disturbing”, adding: “Europe has already suffered the embarrassment of a unanimous global rejection of its misguided attempt to impose ETS extra-territorially in 2012. The impact of any regional initiative by the EU will be quickly neutralised or worse if it derails decarbonisation efforts in faster growing markets outside of Europe. Now is the time for Europe to support CORSIA and the adoption of ICAO’s long-term aspirational goal (LTAG), which will propel global decarbonisation efforts further.”

Unsurprisingly, the Parliament decision was welcomed by NGOs, including Transport & Environment (T&E), whose Aviation Director, Jo Dardenne, said: “Europe’s lawmakers have sent a clear signal. The bulk of Europe’s aviation emissions will no longer be ignored, marking a major step forward in tackling heavily polluting long-haul flights. It’s now up to national governments to make this a reality.”

More surprising is that there are major airlines in Europe that support a move to include all extra-EEA flights in the EU ETS. In February, T&E and four of Europe’s largest low-cost carriers – easyJet, Ryanair, Jet 2 and Wizz Air – issued a joint statement calling on EU policymakers “to address the imbalanced contributions of European airlines in tackling climate change” and that all flights departing from European airports “should abide by the same rules, regardless of destination.”

Said Michael O’Leary, Group CEO of Europe’s biggest airline, Ryanair: “It is crucial that legislative proposals, such as the ‘Fit for 55’ package, apply equally to all flights, regardless of destination or distance. There is no justification to exempt any flights, especially the most polluting indirect ones, which require at least two flights to reach their destination, and/or connect onto long-haul flights, which account for just 6% of Europe’s air passengers but over 51% of EU air travel CO2 emissions.”

Other proposals passed in the Parliament include a derogation from the EU ETS to be provided for emissions from flights between airports located in an outermost region and airports located in another EEA region, and flights between airports located within the same outermost region.

The Commission proposes the phasing out of free EU ETS allowances for aircraft operators towards full auctioning by 2027, but MEPs voted to bring this forward to 2025. However, their report calls for 75% of auction revenues primarily go towards innovations and new technologies to green the aviation sector, including for the development of sustainable aviation fuels. EU member states have so far rejected attempts by the Parliament to ring-fence auction revenues for aviation decarbonisation measures.

A4E said it was “extremely concerned” about the early phase-out of free allowances, which it says should be better aligned with the emergence of decarbonisation solutions, such as SAF, suggesting 2030 would be a better date “to mitigate competitive distortion with non-EU carriers and avoid carbon leakage.”

The trade body said airlines spent €950 million ($1bn) on EU ETS compliance in 2019, having to buy certificates for 60% of their emissions at a price of €25 ($27) per tonnes. “Buying allowances for 100% of 2019 emissions at today’s carbon price of €80 per tonne would amount to ETS compliance costs of €5.2 billion ($5.5bn) annually,” it estimates. “ETS costs may well reach €6 billion by 2025, even as aviation emissions decline.”

The decision by Parliament to include obligations for aircraft operators on non-CO2 emissions within the scope of the EU ETS was described as “premature” by A4E. “Further scientific and legal analyses are still needed on the exact impacts of non-CO2 emissions from aviation and how best to address them,” it said.

The Parliament report calls for a monitoring, reporting and verification (MRV) scheme for non-CO2 emissions – such as NOx, soot particles, sulphur dioxide and water vapour – from aircraft operators, “with a view to expanding the scope of the EU ETS to cover non-CO2 aviation emissions, if deemed appropriate.”

One proposal welcomed by A4E is for a newly created SAF allowances pricing scheme that would aim to bridge the price gap between conventional jet fuel and SAF. Airlines would be granted CO2 allowances equivalent to the amount of CO2 saved by uplifting SAF. Use of synthetic or renewable fuels of non-biological origin (RFNBOs) would count double. A4E believes such a scheme would reduce the total cost of the ReFuelEU Aviation proposal.

“For it to be successful, the SAF allowances system should increase overall SAF uptake across Europe and incentivise airlines to go beyond blending mandates, in turn reducing more CO2 emissions from the sector,” said A4E. “It would also strengthen local SAF production across Europe and help Europe to better compete with the US tax credit scheme of $1.50 to $2 per gallon.”

After the vote in the plenary, the ENVI rapporteur handling the EU ETS aviation file, Sunčana Glavak, said: “With the report, we are aligning the aviation sector with our climate goals. But within that process, we have to offer decarbonisation solutions for the sector, which we managed to achieve in the ENVI committee with the introduction of SAF allowances. We are all aware that we have to focus on our climate goals, but we also cannot allow the industry to bear the whole burden. We must preserve our mobility and industry.”

Photo: European Parliament plenary session

Two draft reports on European Commission proposals to amend the Aviation EU ETS directive and introduce a regulation to kickstart large-scale use of sustainable aviation fuels in the EU have been presented to European Parliament committees by their respective rapporteurs. The Commission is proposing a phasing out over three years of free allowances granted to aircraft operators under the EU ETS, with a transition to full auctioning in 2027, but the EP rapporteur calls for an accelerated transition. The amendments also take into account the introduction of the ICAO CORSIA international carbon offsetting scheme and the temporary geographic scope of the EU ETS, currently limited to intra-EEA flights under a ‘stop the clock’ measure, which is due to expire at the end of next year. The second proposal before the Parliament relates to the RefuelEU Aviation initiative that introduces a SAF blending mandate in the EU. The rapporteur calls for a flexibility mechanism for fuel suppliers and airlines to meet their obligations over a transitional period and the setting up of a new Sustainable Aviation Fund.

Both proposals are based on aviation’s expected contribution to the Union’s economy-wide emission reduction target laid out in the ‘Fit for 55’ legislative package published in July 2021, which envisions Europe becoming a climate-neutral continent by 2050 and reducing emissions by 55% in 2030 based on 1990 levels.

Opening a debate (recording here at 10:37:24) held by the Parliament’s environment committee (ENVI), the rapporteur responsible for the Aviation EU Emissions Trading System (EU ETS) legislative proposal by the Commission, Croatian MEP Sunčana Glavak, said “concrete and appropriate” measures were needed to reduce aviation emissions in line with EU climate law and commitments under the Paris Agreement.

Phasing out free allowances to aircraft operators one year earlier than proposed by the Commission, transitioning instead to full auctioning by 2026, would generate additional allowances to be auctioned in the period up to 2030, she said. The Commission puts the number of aviation allowances (each allowance gives the holder the right to emit one tonne of CO2) issued for 2021 at around 24.5 million, with 20.7 million issued for free and 3.8 million auctioned.

Volumes of EU ETS allowances are made available to the EU’s Innovation Fund, which is expected to provide around €25 billion ($28bn) of support over the period 2020-2030 for innovative low-carbon technologies. Glavak proposes in her draft report a “significant” amount of the fund should be earmarked for projects in the aviation sector, particularly those involving sustainable aviation fuels.

“It is important to consider instruments to help foster innovation and manufacturing inside the EU and to create a business ecosystem that would attract investment and result in new jobs,” said Glavak in the report. “This presents an opportunity for the EU to set the foundation for innovation breakthroughs in the global aviation industry.”

She said the EU was a global leader in the fight against climate change but it could not achieve the Paris Agreement commitments and environmental ambitions alone, and emphasised the need for a stronger CORSIA “fit for purpose” as part of the solution.

“Therefore, it is important to achieve the highest possible number of participating countries and to ensure that CORSIA is implemented in those countries by 2027 at the latest,” she said, adding that reported emissions data per airline should be published in a “user-friendly manner” by EU member states and the European Commission.

The original scope of the Aviation EU ETS, which was to regulate the emissions of all flights to and from airports in the European Economic Area (EEA), was curtailed shortly after the aviation sector entered the EU ETS in 2012 as a result of international pressure and to allow ICAO to agree a global market-based measure. Known as ‘stop the clock’, only flights within the EEA are currently subject to the EU ETS directive. However, this exemption ends automatically on 31 December 2023. The Commission proposal is to maintain the current coverage of intra-EEA flights, including departing flights to Switzerland and the UK (which have their own ETS schemes that include departing flights to EEA airports), and to apply CORSIA to flights to third countries that are participating in the ICAO scheme.

The rapporteur has agreed with the Commission’s proposal. However, there are some MEPs, such as Green MEP Bas Eickhout, who would like to see a reinstatement of the full scope.

Also calling for all flights to non-EEA destinations to be included in the EU ETS are four European low-cost carriers – easyJet, Ryanair, Jet 2 and Wizz Air – and European NGO Transport & Environment (T&E). They argue the proposal by the Commission fails to address the bulk of EU aviation emissions that take place on extra-EU flights, with departing long-haul flights alone representing just 6% of all flights but generating 51% of the emissions from European aviation.

“No exemptions should be granted, especially not to airlines operating transfer and long-haul flights, as some long-haul airlines and associated hub airports have asked for,” they said in a statement. “Their requests to have ETS and sustainable fuel costs subsidised for long-haul flights are unreasonable and unjustified.”

A spokesperson for T&E told GreenAir: “The Commission’s own findings show that CORSIA is the worst option for the climate and can’t be used to regulate emissions on extra-EU flights. It is a cheap offsetting scheme that continues to allow emissions to grow. And while industry often voices unsubstantiated claims of carbon leakage and competitiveness issues, the Commission’s study found that adding all flights to the ETS has large environmental benefits, relatively low cost impacts and the greatest positive impact on employment and the economy. Limiting the scope to intra-EEA not only fails to address the majority of aviation emissions, it also creates an unfair advantage for airlines operating predominantly in Europe.

“ICAO has had a decade to come up with an effective measure to reduce emissions and they have failed on all accounts. We cannot wait another decade trying to improve something that is doomed to fail. It is time for the EU to take action and do what is best for the climate.”

In June 2020, as a result of the dramatic downturn in 2020 traffic because of the Covid pandemic, ICAO agreed to an industry request to replace CORSIA’s 2019-20 emissions baseline (above which airlines from participating countries are required to offset emissions) with emissions from 2019 only. The Commission, in its legislative proposal, says the 2019 baseline should only apply in respect of emissions during the 2021-23 pilot phase of CORSIA and then revert to 2019-20 levels for subsequent years, which is agreed by the ENVI rapporteur.

Offering his support, Dr Peter Liese, a former rapporteur on the Aviation EU ETS and now rapporteur on the overall EU ETS legislation, said some had criticised the Glavak report as being unambitious while others had found it too ambitious, “but that is the essence of a good compromise.”

It is high time for full auctioning as there was little risk of carbon leakage in the aviation sector, unlike with other stationary industries, Liese told the ENVI debate. He recounted a meeting that had just taken place with a European shipping industry representative who had told him the EU should lead the way on tackling emissions from his sector as IMO, the UN’s maritime agency, had missed every opportunity for collective meaningful climate action.

“This is a voice from the maritime sector strongly criticising IMO,” said Liese. “My clear position, knowing both industries and the regulations, ICAO is worse. They have only delivered words, with no progress and not realising the climate challenge. We need to consider broadening the scope [of the EU ETS] when the time is right and keep this option on the table.”

He agreed that a significant part of the Innovation Fund should go towards aviation sustainability although funding should also be directed towards modal shift, particularly from air travel to railways.

While agreeing the aviation sector should benefit from the Innovation Fund, Bas Eickhout, a long-standing critic of the industry and ICAO, said financial support should go towards breakthrough technologies, like fuels, that offered “real innovation”, rather than to large companies like Airbus.

He revealed it was the intention to send again a group of ENVI members to Montreal to attend the ICAO Assembly in October. “I’m sure this time they will welcome us with open arms, as they didn’t last time,” he said tongue in cheek. “I’m looking for a change of heart there. If the EU had not taken steps in 2012 [when aviation was included in the EU ETS] I’m sure there would not have been any international action. We have to take the next step now. CORSIA, which is a pretty useless offsetting mechanism to be very honest, will not be enough. That is why I expected more ambition from the Commission in its proposal, both within Europe and also on flights going in and out of Europe. This is the moment to do that. We have to be tougher on the scope and free allowances.”

Eickhout also called for action on aviation’s non-CO2 effects. “How long has the Parliament being asking for this? We haven’t seen much movement from the Commission,” he complained.

Responding in the debate for the European Commission, Beatriz Yordi, Director for European and International Carbon Markets, said aviation was a key element of the ‘Fit for 55’ package and welcomed the Glavak draft report. Bringing forward the phasing out of free allowances by a year was a political decision, she said, but supported aviation participation in the Innovation Fund. Regarding aviation’s non-CO2 impacts, she said the Commission was fully aware of the issue but was concentrating on the impact of CO2.

She revealed that an impact assessment of the carbon costs of the EU ETS on intra-European flights would be less than 1% of airline operating costs by 2030, leading to an average extra cost of €2 per ticket.

Europe is playing a key role at the international level, said Yordi, adding: “We are supporting wide participation and a high level of ambition in CORSIA, and I stress the importance of the ICAO Assembly this year.”

A final position on the Commission’s proposals is expected to be discussed and voted in a plenary session of the full Parliament in early June.

EU SAF regulation

Meanwhile, Danish MEP Søren Gade, as the rapporteur responsible for the file, presented his draft report to the Parliament’s Transport and Tourism Committee (TRAN) on the Commission’s proposals (here and here) around introducing a blending mandate regulation to incentivise the uptake of sustainable aviation fuels in the EU as part of the EU’s strategy to decarbonise the air transport sector.

The Commission recognises the introduction of SAF will represent an additional fuel cost for airlines as they are currently more expensive to produce. “This is expected to exacerbate the pre-existing issues of a level playing field on the air transport market as regards aviation fuel, and to cause further distortions among aircraft operators and airports,” it says. “This regulation should take measures to prevent the introduction of sustainable aviation fuels negatively affecting the competitiveness of the aviation sector by defining harmonised requirements across the Union.”

In his report, Gade said the creation of a sound EU SAF market “will greatly depend on the credibility and sustainability of the final provisions that will be adopted under this regulation.”

Because competition for feedstocks between the energy and transport sectors will increase, he said it will be important to maintain the same European blending mandates across the EU. “This is to avoid a fragmentation of the SAF market, as well as a competition for feedstock that would lead to a severe shortage of supply in certain regions of the Union, undermining the ability of aircraft operators from those regions to decarbonise,” said the report. “Moreover, the rapporteur considers that it is of the utmost importance to preserve the integrity of the SAF and aviation internal markets, and in this respect the current blending mandate targets should be kept as they are because they reflect this limited availability of feedstock.”

The mandate proposed by the Commission starts from 1 January 2025 with a minimum share of 2% of SAF and with a 0.7% sub-mandate for synthetic fuels starting in 2030. Gade proposes the sub-mandate should be introduced from the beginning, with a minimum share of 0.03% of synthetic fuels.

Responding to concerns raised by the industry on the physical supply and uplift of the mandated SAF volumes at EU airports under the Commission proposal, Gade proposes a ‘flexibility mechanism’ for an eight-year period after the introduction of the mandate obligations. “This should act as a transitional period to provide for the necessary flexibility for fuel suppliers and airlines to meet their obligations of providing and uptaking sustainable aviation fuels in the most cost-effective manner, and to avoid imposing undue burdens on air transport operations at small airports. After the eight-year period, SAF will be available in the lion’s share of Union airports and be uplifted by the majority of aircraft operating from the Union.”

To further boost the uptake of SAF, he proposes that a part of the overall amount of EU ETS allowances, within the limit of the cap, should be allocated for free to aircraft operators for uplifting SAF. To avoid tankering, the proposed regulation requires all aircraft operators, both EU and from third countries, to annually uplift at least 90% of the aviation fuel required in those EU airports they depart from. For safety reasons, the rapporteur proposes an exemption from administrative fines if the operator proves non-compliance was caused by exceptional and unforeseen circumstances.

As aviation is an integrated and competitive international market, the rapporteur proposes text in the regulation that the EU sustains efforts at ICAO for an ambitious global system to incentivise the uptake of SAF and provides for an international level playing field.

In addition to SAF and synthetic fuels, Gade proposes that new technologies including hydrogen and electric, along with the appropriate airport infrastructure, should be included in the regulation to encourage and accelerate their development. He also proposes the introduction of an EU-wide labelling system, to be developed and implemented by the EU’s aviation regulatory agency EASA, to help consumers make more informed choices around the environment when choosing flights.

“A labelling scheme, with clear and comprehensive information, could provide the needed transparency in the market in order to drive consumers’ choices and further incentivise the use of sustainable aviation fuels and other sustainability measures by aircraft operators,” he says.

Lastly, the rapporteur proposes the setting up of a centrally-managed Sustainable Aviation Fund to provide the appropriate resources to stimulate innovation, research and investment in zero-emission technologies and sustainable infrastructure, with the revenues coming from fines collected under the regulation.

Photo: European Parliament