Globally announced sustainable aviation fuel production capacity significantly increased last year, driven by regulatory developments such as ReFuelEU, the new UK SAF mandate and incentives to support SAF uptake in the US. Additionally, other countries, particularly in Asia, are looking to introduce mandates and targets for production, leading SAF to increasingly be seen as a global tradeable commodity with emerging trade corridors involving the US, SE Asia, Europe and South America, says SkyNRG’s latest annual SAF Market Outlook. Voluntary demand signals have also continued to strengthen, with multiple airlines, cargo companies and corporates setting ambitious SAF targets. However, says the report, most announced facilities still face the challenges of raising capital, construction and commissioning, and this year will be critical for projects targeting operations before 2030.

For the first time, SkyNRG’s 2024 SAF Market Outlook, which is primarily focused on the period to 2030 and  was developed in collaboration with consultancy ICF, has been expanded to include a global coverage. It considered 349 announced projects before excluding those in the immature stage and those that hadn’t provided an update in the past two or more years, plus those with a high degree of financial and feedstock risk, Tom Berg, Senior Policy and Sustainability Manager at SkyNRG, told a launch event in Brussels.

The report says forecast global production capacity reached 17.3 million tonnes (Mt), the equivalent of around 5.7 billion gallons (Bgal), which is an increase of 4.0 Mt (1.3 Bgal) over a year ago. SAF demand is being driven by regulatory developments, with mandates and aspirational targets adding up to a total demand of 16.1 Mt (5.3 Bgal) across multiple countries.

Over the past year, the ReFuelEU legislation has been adopted requiring all fuel made available to aircraft operators at EU airports to contain a minimum share of SAF, starting at 2% in 2025, rising to 6% in 2030 and 70% in 2050. A further 1.2% requirement applies to synthetic, or e-fuels, from 2030. In the UK, legislation is now awaiting adoption of a national mandate, also starting in 2025, targeting a higher 10% share of SAF by 2030 and the government is consulting on a revenue certainty mechanism aimed at accelerating the development of domestic production capacity.

The United States has published long-awaited guidance on a federal blenders tax credit and several state low-carbon fuel standards are in place or under discussion. According to the report, SAF facilities announced in the US are also significantly larger compared to other regions, with capacities exceeding 300 Mgal (0.9 Mt) not uncommon. The report attributes this to the feedstock strategies chosen in these projects, which are mostly agricultural commodity based, such as corn and soy. SAF produced from agricultural feedstocks would not be eligible under EU and UK mandates, however, forgoing their export possibility to Europe but could be attractive to other overseas markets.

In Asia, Japan is now emerging as a major potential demand centre for SAF following the publication in 2023 by the government of a policy proposal to develop a national SAF mandate requiring 10% SAF use by 2030, which would represent a SAF demand of about 1.4 Mt (0.5 Bgal). India has communicated a policy proposal for a national mandate of 1% by 2027, doubling to 2% by 2028 (requiring around 0.2 Mt) and potentially increasing to 5% by 2030. Malaysia, Indonesia and South Korea too are considering mandates. Singapore has proposed a national target of 1% by 2026, potentially increasing to 3-5% by 2030, depending on global developments and availability of SAF, to be partially funded by a passenger SAF levy.

China has already established a SAF use goal of 50,000 tonnes, with industry expecting a blending mandate of 2-5% by 2030 to be announced. A 5% mandate would require 2.5 Mt of SAF use, which Berg said could be a game-changer for SAF provision globally. SAF capacity is rapidly expanding in China, with lead times seemingly shorter than in the rest of the world. “Based on current announcements, we expect China and Southeast Asia to have SAF capacity of 3.6 Mt (1.2 Bgal) by 2030,” notes the report.

Governments in other countries too are moving forward on SAF production requirements, such as Turkey, the UAE, Australia and New Zealand. Latin America, according to the report, is emerging as a potentially significant production hub for SAF, with an expected SAF capacity of 2.3 Mt by 2030, and is already a major exporter of agricultural commodities. Some US SAF projects are intending to make use of Brazilian ethanol, particularly as Brazilian sugarcane ethanol can achieve lower carbon intensities than US corn, it adds, “signalling that in the future, the US may be importing finished fuel.”

HEFA domination

Capacity announcements are heavily dominated by the HEFA pathway until 2030, around 85% of the total, stated Berg (see graph below). “What is clearly missing is the advanced fuels pathway, which while there is a pipeline of projects, there is no level playing field because they are more expensive and have to compete with cheaper HEFA-based fuels. We also need to see much more progress on the e-fuel pipeline to reach the sub-targets. The pipeline is big but the projects are almost all at the feasibility stage.”

He said there was a big uncertainty on the impact of the SAF price on demand and the future of next-generation fuels was dependent on strong demand-side policies such as mandates. “Before 2035, the next-generation pathways will have to take over from HEFA to reach the scale needed by 2050,” he said. “The choices we make today will have an impact on what happens in 2050. The direction is very clear: we need to invest, we need to innovate and we need to collaborate, and it’s very important we design efficient production processes.”

In the meantime, the report sees significant supplies of SAF coming from co-processing by petroleum refiners but found little publicly available information. “Since this pathway represents low capital investments relative to other SAF pathways, co-processing represents a cost-effective compliance method under ReFuelEU,” it says. “If EU refiners were to fully utilise their co-processing capacity to the ASTM limit of 5%, this could yield around 1.7 Mt of SAF per year.”

With current EU SAF capacity announcements to date, 3.8 Mt of SAF would be expected to be delivered by 2030, with a total of 5.5 Mt in the pipeline, suggesting only a rate of 50% of projects succeeding would have to be achieved to meet EU demand of 2.6 Mt (including 0.3 Mt of e-fuel) in 2030.

A concern is that since starting its market outlook, each year since 2022 has seen the capacity curve pushed back because of delays to projects. “The reasons can be many,” said Berg. “They might be awaiting policy certainty because the final details aren’t known yet, the financing risk is too high to progress to final investment decision (FID) or it could be technical difficulties.”

He also points to a potential problem with the EU 2035 target that will require 2.5 times the amount of SAF compared to 2030, meaning an extra 3 Mt needed to meet the target. “This may mean becoming much more import dependent and possibly at a higher cost as global demand increases,” he said. “The e-SAF mandate requirement will also triple in 2035 compared with 2030.”

In the US, SAF capacity announcements so far are expected to deliver 6.7 Mt, or 2.2 billion gallons, by 2030, with most used by the voluntary market. However, continued uncertainty on tax guidance pertaining to GHG methodologies and incentive levels, in combination with increasing pressure on feedstock markets, are expected to lead to further delays in SAF capacity expansion across the nation. Currently, only 2.1 Mt (0.7 Bgal) of SAF capacity is covered by facilities that are operational or under construction. The SAF Grand Challenge, a federal strategy to raise SAF production in the US, has an aspirational target of 3 billion gallons by 2030.

Looking ahead, SkyNRG estimates global SAF capacity could grow to around 250 Mt by 2050 if deployment of new pathways using biomass feedstocks and green hydrogen are derisked over the coming years and accelerate rapidly thereafter. To meet this production, between 500-800 SAF facilities are required at a cumulative investment of $1 trillion, assuming $2 billion per facility. This represents an average annual capex of $40 billion between 2025 and 2050, roughly equivalent to 8% of global annual upstream oil and gas capex in 2019.

“Collaboration between project developers and investors is vital for success. However, stable policy frameworks are also required for the transition to net zero aviation,” said Philippe Lacamp, CEO of SkyNRG. “The Market Outlook emphasises the need for early policy discussions to evolve swiftly into concrete proposals to enable the building out of the significant pipeline of SAF capacity that we identify in this report.”

Industry body Airlines for Europe said the Market Outlook showed European airlines and suppliers could meet the required levels of SAF usage until 2030 under ReFuelEU. At the report’s launch event, A4E Deputy Managing Director Laurent Donceel, however, outlined some of the challenges the European SAF sector faced, including the cost of production and cost of supply, access to renewable energy, access to SAF across the EU and ensuring the sustainability of feedstock.

“It is positive to see that SkyNRG forecasts there will be sufficient SAF to meet the requirements of ReFuelEU until 2030,” he commented. “But many European airlines aren’t stopping there. They want to do more so it is important that Europe designs a SAF industrial policy that addresses the cost of production, accelerates the supply and ultimately brings down the cost of SAF in Europe. Synthetic fuels in aviation, which will form part of the EU’s ReFuel mandate, will require particular attention in the coming months. E-SAF will require a large amount of clean energy and hydrogen for their production and yet have failed to catch enough attention from financial markets and policymakers so far.

“Growing a nascent SAF industry into one that will provide the majority of the fuel for airlines is a monumental task. For airlines, there is a need to work with airports to help develop the market for SAF, finance needs to flow into the sector and the energy industry needs to get serious about the transition away from fossil fuels. This report shows that a sustained effort from users, producers, policymakers and financers will ensure we reach our targets. The stakes are too important for them not to deliver and this report should be a clarion call to all to knuckle down and deliver.”

SkyNRG has recently secured investment from Macquarie Asset Management, which the Amsterdam-headquartered company says will enable its next growth phase, including realisation of SAF projects in Europe and the US.

Global SAF capacity announcements until 2030 (source: SkyNRG)

Top photo: KLM/SkyNRG

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The European Commission and EU consumer authorities have written to 20 European airlines notifying them of potentially misleading green claims being made over carbon offsetting or through the use of sustainable aviation fuels. The issue was raised after a complaint by BEUC, an umbrella group of European consumer organisations, which initially identified 17 airlines including Air France-KLM, Lufthansa Group airlines, Finnair, TAP, Norwegian and large low-cost carriers such as Ryanair and Wizz Air. The airlines have been “invited” to respond within 30 days and to bring their marketing practices in line with EU consumer law. The Commission and the network of Consumer Protection Cooperation (CPC) authorities accuse airlines of misleading consumers by informing them that the CO2 emissions caused by a flight could be offset by climate projects or through the use of SAF, to which they could contribute by paying additional fees.

“If we want responsible consumers, we need to provide them with accurate information. More and more travellers care about their environmental footprint and choose products and services with better environmental performance,” said Vĕra Jourová, the Commission’s Vice-President for Values and Transparency. “They deserve accurate and scientific answers, not vague or false claims. The Commission is fully committed to empowering consumers in the green transition and fighting greenwashing. We expect airlines, as well as any other industry operator, to make a responsible use of environmental claims.”

The Commission and CPC authorities say they have identified six types of what they consider are misleading practices among the airlines involved:

• Creating the false impression that CO2 emissions of a flight can be reduced or fully counterbalanced by paying an additional fee to finance climate projects with less certain environmental impact or the use of alternative aviation fuels;
• Using the term ‘sustainable aviation fuels’ without clearly justifying the environmental impact;
• Using the terms ‘green’, ‘sustainable’ or ‘responsible’ in an absolute way or use other implicit green claims that can mislead consumers on the environmental impact of the “highly polluting” aviation industry;
• Claiming that the airline is moving towards net zero greenhouse gas emissions or any future environmental performance without clear and verifiable commitments, targets and an independent monitoring system;
• Presenting consumers with a calculator for the CO2 emissions of a specific flight without providing sufficient scientific proof on whether such calculation is reliable and information regarding the elements used for the calculation; and
• Presenting consumers with a comparison of flights as regards their CO2 emissions without providing sufficient and accurate information on the elements of the comparison.

“This action aims at aligning the commercial practices of all companies in the air travel sector with EU consumer legislation, by attaining the required level of substantiation and communication of voluntary environmental claims,” say the consumer authorities, which coordinate their investigation and enforcement actions with the Commission. Under the Consumer Protection Cooperation Regulation, they can take action to address cross-border issues at EU level.

Consumer protection against misleading green claims can also be found in the Directive on empowering consumers for the green transition, which the Commission says explicitly bans claims, based on the offsetting of GHG emissions, that a product has a neutral, reduced or positive impact on the environment in terms of GHG emissions, as well as claims based on future environmental performance.

In this airline greenwashing action, the CPC authorities are lead by the Belgian Directorate General for Economic Inspection, the Netherlands Authority for Consumers and Markets, the Norwegian Consumer Authority and the Spanish Directorate General of Consumer Affairs.

After receiving replies from the airlines written to, the Commission says it will organise meetings with them and the CPC network to discuss solutions, with the Commission then monitoring the implementation of the agreed-upon changes.

“If the airlines involved do not take the necessary steps to solve concerns raised in the letter, CPC authorities can decide to take further enforcement actions, including sanctions,” warns the Commission.

Brussels-based BEUC, which launched the initial complaint in June 2023, is the umbrella group for 45 independent consumer organisations from 31 European countries.

“It is great news that authorities from across Europe acknowledge consumers have been fooled by airlines’ greenwashing,” commented Monique Goyens, BEUC’s Director General. “It is unacceptable that airlines have freely lured consumers into offsetting their flight’s emissions, sometimes at a high price. One can never be sure that the trees planted to compensate a flight’s high emissions will capture the carbon back into the ground – if they are planted at all.

“The fact that European consumer protection authorities are calling on airlines to get their act together shows there’s a wind of change. Greenwashing is no longer acceptable, and the fact that aviation is one of the most highly polluting sectors makes it even more intolerable. This crack-down on greenwashing is encouraging at a time when consumers are expected to shift to more sustainable lifestyles.”

Responding to the action, a statement by Airlines for Europe (A4E) said that although proposed EU legislation on green claims aimed to establish a clear legal framework for sustainability communications across all sectors, the current regulations varied significantly between countries and were still evolving.

“We recognise the importance of clear, transparent information about sustainability and our efforts towards achieving net zero carbon emissions. This clarity benefits consumers, regulators, fuel suppliers, NGOs and other key stakeholders involved in our transition,” it said. “A4E is engaged in ongoing discussions fostered by EU bodies to develop a common methodology for airlines to effectively communicate our sustainability efforts and progress.”

The trade body said it had already outlined an independently-produced roadmap to achieving net zero, with many airlines’ interim targets verified by SBTi. It added that it was, however, “particularly concerned” over the complaint concerning sustainable aviation fuels and the requirement for a clear justification of their environmental impact. “The EU has implemented an ambitious SAF mandate, supported and endorsed by the European Commission, and the science supports that this is a more sustainable alternative to regular jet fuel.”

The Commission has not named the 20 airlines it has written to, although BEUC listed 17 in its submission: Air Baltic, Air Dolomiti, Air France, Austrian, Brussels Airlines, Eurowings, Finnair, KLM, Lufthansa, Norwegian, Ryanair, SAS, SWISS, TAP, Volotea, Vueling and Wizz Air.

Following a greenwashing lawsuit brought by German environmental group Deutsche Umwelthilfe in March, the Cologne Regional Court found against Eurowings on claims that passengers could neutralise their flight emissions through paying a small sum towards forestry protection and cookstove projects. That same month, a group of environmental NGOs similarly won a lawsuit against KLM in a Dutch court after alleging the airline’s sustainability marketing breached the EU Unfair Commercial Practices Directive.

Photo: Brussels Airport

Christopher Surgenor

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Carriers meeting at the annual Airlines for Europe (A4E) Summit in Brussels called on policymakers to “supercharge” the production of sustainable aviation fuels across Europe through the introduction of competitive tax credits and the funding and support for nascent, emerging and established SAF projects or fuel producers. It is crucial that Europe supports affordable and reliable domestic production, they said in a “call to action”, particularly in the face of significant market pressure from global players outside of Europe. Meanwhile, A4E member Lufthansa Group has reported more than one million passengers have opted for its Green Fares tickets, which includes a provision for SAF offsetting, one year after their launch. European renewable fuels producer Neste has started supplies of blended SAF at Schiphol under an agreement with Emirates, while Sasol and Topsoe have launched their new joint venture Zaffra, located in Amsterdam, that will focus on SAF development and delivery.

At the forefront of A4E’s “call to action” is what it describes as “competitive decarbonisation” in a global market, to ensure Europe is a world leader in aviation’s net zero transformation.

“The next few years provide a real opportunity for change and we are setting out how we want to future-proof flying,” said A4E Managing Director Ourania Georgoutsakou at the opening to the trade body’s Summit in Brussels. “We are today making a pledge to improve the future of flying but can only do this if policymakers make the vital changes to support our decarbonisation efforts, providing real airspace reform, ensuring our sector remains competitive and completing a true single aviation market.”

A4E member airlines have been involved in a number of SAF commitments this month. International Airlines Group (IAG), made up of Aer Lingus, British Airways, Iberia and other carriers, signed a 14-year agreement with US startup Twelve for the supply of 785,000 tonnes of e-SAF, the groups biggest single SAF deal to date and the first e-SAF procurement by a European airline group (see article).

Following its purchase of 500 tonnes of SAF from Austrian energy company OMV last year, Ryanair reported it would take an additional 500 tonnes in 2024. Under an MoU between the two companies, Ryanair has access to purchase up to 160,000 tonnes of SAF during the period to 2030.

Another A4E member, AEGEAN, which first flew with SAF in 2021, is to expand its use of SAF under an agreement with Shell and MOH Aviation, who will supply a “significant” quantity of blended SAF at Stockholm Arlanda and London Heathrow airports. The Greek carrier said this marked the beginning of a gradual expansion of its SAF uplift programme, “where available”, throughout its entire network.

According to Lufthansa Group, an average of 3% of passengers have used its Green Fares tickets, with the tickets being selected by 11% of business class travellers via the Lufthansa Group portals. In total, travellers have offset around 77,000 tonnes of CO2. Offsetting of flight CO2 emissions is through SAF as well as by a contribution to high-quality climate protection projects. The group ensures the amount of SAF required for offsetting is fed into the airport infrastructure within six months of purchase.

Green Fares are available with Lufthansa, Austrian Airlines, Brussels Airlines, SWISS, Edelweiss, Discover Airlines and Air Dolomiti on more than 730,000 flights per year within Europe and to Morocco, Algeria and Tunisia. The group has been testing Green Fares on selected long-haul routes since November 2023.

Meanwhile, Finland-headquartered Neste has launched Neste Impact for businesses looking to reduce the carbon footprint of their air travel and transport activities. The solution is aligned with the Science Based Targets initiative (SBTi), enabling businesses to credibly report achieved emission savings and follows a book-and-claim approach. The related emission reduction achieved is third-party verified and further validated through the ISCC SAFc registry. Neste ensures the SAF is supplied to a partner airline and the purchased amount is verifiably used to replace fossil fuel.

UAE carrier Emirates has activated its fuel agreement with Neste at Amsterdam Schiphol and 2 million gallons of blended SAF will be supplied into the airport’s fuelling system over the course of 2024. The blended SAF will comprise over 700,000 gallons of neat SAF. The airline will track the delivery of SAF into the fuelling system and the environmental benefits using standard industry accounting methodologies.

Global chemicals and energy company Sasol and Danish carbon emission reduction technology specialist Topsoe have launched their joint venture, named Zaffra, which will be based in Amsterdam. The partners say the new company, to be headed by former Shell Aviation boss Jan Toschka, aims to advance SAF production and technologies.

Photo © Lufthansa Group

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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 EU Taxonomy Regulation, which entered into force in July 2020, is a classification system that establishes definitions of what is an ‘environmentally sustainable’ economic activity and is a tool to help investors and companies make informed decisions when determining the degree of sustainability of an investment. It is a cornerstone of the EU’s sustainable finance framework and aims to direct investments to the economic activities most needed for the green transition, in line with the European Green Deal objectives, and is intended to be updated regularly to reflect technological and policy developments. Last year, the European Commission signalled specific aviation-related activities such as aircraft leasing and the financing of new fuel-efficient aircraft could be labelled as ‘transition’ activities under the Taxonomy. However, a coalition of five environmental NGOs has launched a legal challenge to the Commission, requesting it to review the decision to label  “highly-polluting fossil-fuelled” planes, and also ships, as ‘green’ and therefore eligible for green finance.

“The Taxonomy is flying under the radar for most people, but if we don’t challenge it, these industries [aviation and shipping] will be allowed to rubber stamp planes and ships powered by fossil fuels as sustainable,” said Hiske Arts at Dutch NGO Fossielvrij. “This would mean money that is meant for climate solutions will end up fuelling climate disaster, as it encourages these polluting industries to sustain their unsustainable growth path.”

The NGOs point out that 100% of the aircraft books of low-cost European carriers Ryanair, easyJet and Wizz Air, and 90% of Airbus’ order books, could be considered ‘best in class’ under the Taxonomy criteria.

However, contends Moritz Nachschatt at Protect Our Winters Austria: “European airlines cannot be considered sustainable if they continue expanding the global fleet. The Taxonomy rules could allow them to get green finance to upgrade their fleets, while selling their old planes to other airlines, meaning the global fleet size – and global aviation emissions – actually increase.”

According to Barry Moss, an aircraft leasing expert and Co-Chair of aviation ESG consultancy PACE, while latest technology aircraft are 15-25% more efficient than those they replace, the growth of the world’s commercial fleet is outstripping ‘best in class’ aircraft fuel and emissions efficiencies. For example, he said, A320neo and Boeing 737 MAX aircraft will not become the predominant types in the world’s aircraft fleet until 2026-2028.

“That’s why EU Taxonomy transactions are subject to a cap on the world’s commercial aircraft fleet, requiring one old technology aircraft to be decommissioned for each latest technology aircraft financed or leased under the Taxonomy, and also require an increased use of sustainable aviation fuel over and above that mandated under the ReFuelEU Aviation regulation,” he explained.

On sustainable aviation fuel, from 1 January 2028, and in addition to the other criteria, an aircraft would need to be certified to run on 100% unblended SAF, and from 1 January 2030 the aircraft must be operated with 15% SAF, increasing by 2% annually thereafter.

The NGOs argue there is no robust scientific evidence for the criteria and that they potentially jeopardise climate mitigation efforts and the EU’s legally binding targets.

“All sectors and companies must be held accountable for their part in reducing emissions and the EU has a hugely important role in ensuring this,” said Carly Hicks, Chief Strategy and Impact Officer at aviation and shipping NGO Opportunity Green. “Instead this decision risks driving huge amounts of finance towards highly polluting activities. It is the worst kind of greenwashing. If the Commission doesn’t address the legal violations we believe we have identified, we will be forced to take action before the European Court of Justice.”

Central to the NGOs concerns is the ‘replacement ratio’ – the proportion of aircraft permanently withdrawn from use to aircraft delivered at the global level averaged over the preceding 10 years, which is to be calculated with independent data.

“For this policy to be truly sustainable, this should be the only application – a strict ‘one in, one out’,” Hicks told GreenAir. “However, allowing airlines to sell their old planes and apply the replacement ratio on their ‘best in class’ aircraft is problematic for a number of reasons. For example, no proof is required that an aircraft has actually been withdrawn from the global market and there is no transparency on the calculation or methodology of the ratio.

“Crucially, the Commission has not demonstrated what level of emissions will be reduced using the replacement ratio to justify the inclusion of this criteria. In light of the various loopholes and lack of clarity, we believe that the Taxonomy criteria for aviation activities fall far short of these standards and risk the achievement of the EU’s 2023 and 2050 climate goals.”

Having issued a request for internal review to the European Commission on the grounds that the decision contravenes environmental law, the NGO coalition expects a response by May or June.

A spokesperson for trade body Airlines for Europe told GreenAir: “European aviation is firmly committed to achieving Net Zero CO2 emissions by 2050. By rapidly adopting the latest aircraft technology, we will already make significant strides, cutting CO2 emissions by up to 25%. This approach aligns with the Commission’s Taxonomy objectives and establishes a stable and predictable financial framework for airlines to finance the innovative, far reaching and long-lasting developments that will change the face of the industry in the long term. In Europe, €820 billion of additional premium expenditures will be required in the next 26 years for the sector to decarbonise in line with the sector’s net-zero ambitions.”

The EU Taxonomy differentiates between what are classified as ‘green’ activities and those classified as ‘transitional’ activities, which the financing of aircraft falls into. Green activities are defined as economic activities that substantially contribute to one or more of the six environmental objectives defined in the EU Taxonomy regulation. For instance, says PACE, adopting technologies that reduce carbon emissions and promote climate change mitigation in aviation operations. Transitional activities are those that do not have a low-carbon alternative but are still considered to contribute to the environmental objectives of the Taxonomy. Transitional activities are associated with the climate change mitigation objective and are necessary for the transition to a low-carbon economy.

The Taxonomy applies to various aviation stakeholders, including airlines, airports, aircraft manufacturers, aircraft lessors, financial institutions and other related businesses such as suppliers, ground handling services and maintenance companies. In an article posted on its website in September, law firm Norton Rose Fulbright said an aircraft that would otherwise meet the compliance criteria would be excluded if it was to be used for private or commercial business aviation unless it had zero direct (tailpipe) CO2 emissions.

PACE’s Moss said financing and leasing aircraft under the Taxonomy is not compulsory and doubts if many deals under the rules will be done in the short term due to operational and supply issues currently affecting the market.

Disclosures by certain large EU companies on Taxonomy-eligibility will commence this year, with reporting on Taxonomy-alignment commencing in 2025 and 2026, said the NGOs. As such, they are asking the Commission for an urgent review.

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In what ICAO Council President Salvatore Sciacchitano described as the UN civil aviation agency’s most important event of the year, countries are convening this week in Dubai to agree a global framework on a cleaner energy future for aviation. The purpose of the Conference on Aviation Alternative Fuels (CAAF/3) is to steer policy direction and financing to aid the rapid shift towards new forms of sustainable energy, in particular sustainable aviation fuels, to meet ICAO’s Long Term Aspirational Goal (LTAG) of net zero carbon emissions from international aviation by 2050. Sciacchitano said it would be a massive task that required immediate collective action. SAF production remains largely confined to Europe and the USA but the collective global target will require huge support and investment for energy transition in the developing world. The week-long meeting has been marked with an Emirates A380 demonstration flight with one engine powered by 100% SAF.

“We must urgently scale up the development and deployment of sustainable, lower carbon and other clean energy aviation fuels in order to meet the sustainability expectations of both the world and the stakeholders,” said Sciacchitano in his opening address at CAAF/3. “We have a massive task ahead of us this week as we deliberate on the ICAO Global Framework for aviation’s cleaner energy transition, a key step for the sustainable development of air transport. ICAO’s main priority is the implementation and achievement of LTAG. To do this, we need to take collective action now and CAAF/3 can be instrumental in laying the building blocks in terms of policy and planning, regulatory framework adjustments, implementation support and financing.

“This is also an opportunity for States to demonstrate strong leadership in addressing international aviation emissions just before the UN’s COP28 climate change conference also taking place here in the UAE. A successful, robust and ambitious global framework can only serve to shine a bright spotlight on the shared efforts and commitment to decarbonising our sector. We have a great opportunity to show and communicate to the world that aviation is seriously and strongly committed to decarbonise by 2050.”

In a video address, UN Secretary-General Antonio Guterres said aviation was one of the most challenging sectors to decarbonise, “but with innovation and investment, it can be done.”

He added: “A net-zero aviation sector means cleaner energy sources on a global scale. It means economic policies and regulations that can support a just and equitable transition while attracting investors, and it means measures such as carbon pricing, low-carbon fuel standards and subsidies for sustainable aviation fuels. The global framework emerging from this conference is a critical step towards a clean and prosperous future for this vital sector. By moving at jet speed you can speed up the clean energy revolution our world needs.

“With the upcoming COP28, now is the time to turn ambition into concrete action to find ways to deliver on your net zero target and shape a better, cleaner future for all.”

CAAF meetings take place only on a six-year basis, the first held in Brazil in 2009, and CAAF/3 is the culmination of a series of stocktaking and pre-CAAF/3 conferences and consultations to prepare the ground for a ‘2050 ICAO Vision’ for SAF, lower carbon aviation fuels (LCAF) and other aviation cleaner energy sources in order to define a global framework in line with ICAO’s ‘No Country Left Behind’ initiative that takes into account national circumstances and capabilities. SAF, LCAF and other aviation cleaner energies are expected to make the largest contribution towards achieving the LTAG.

The 2050 Vision acknowledges that no single fuel source will be produced at a level necessary to achieve the LTAG and so the framework needs to be flexible and not exclude any particular fuel source, pathway, feedstock or technology that meets the CORSIA eligible fuels criteria, says ICAO.

Since earlier this year, a Small Group for Preparations for CAAF/3, under the Climate and Environment Committee (CEC) of ICAO’s governing Council, has been considering possible CAAF/3 outcomes, including a draft global framework. The framework is built across four interconnected building blocks that need to advance and work together: policy and planning; regulatory frameworks; implementation support; and financing.

Although there has been general convergence on the Vision, some differences remain around aviation cleaner energies and financing, which will be discussed during the conference.

A number of States want to see CAAF/3 emerge with a quantified goal in order to send a political signal of support for sustainable fuels that could unlock private sector investment around the world.

“The reason why investors need this outcome is that it is crucial to assuring the durability of their investments,” US government representative Annie Petsonk said during an opening panel session. “If they are going to make the major investments that allow SAF to be produced in refineries and to develop the required feedstocks and supply chains, they want to see governments are serious about this transition. Through informal consultations I have had already, I am very hopeful that I will be able to communicate a positive outcome to them.”

The US is also supporting the creation of the ICAO Finvest Hub, which aims to act as a facilitating platform to connect projects contributing to the decarbonisation of international aviation, including feedstock and SAF production, with potential public and private investors. A priority of the initiative would be to support developing countries and those with special needs in financing aviation decarbonisation projects. It would also offer technical assistance, capacity building and guidance on the development of legal and policy frameworks.

Industry is also represented at CAAF/3 and has a similar wish list. “There are two key outcomes we would like to see from the conference: a goal for SAF deployment that can provide investment certainty to the finance markets and influence policy actions around the world, and a supportive global framework that will ensure countries everywhere can take advantage of the opportunities to build new energy industries and secure jobs in supplying SAF,” said Haldane Dodd, Executive Director of the cross-industry Air Transport Action Group (ATAG).

ATAG says the transition to SAF is already underway, with policy measures being implemented or discussed in around 40 countries, with $45 billion in forward SAF purchase agreements in place with airlines, operators and corporate partners. Ten facilities are currently producing SAF, it says, but by 2029 over 150 projects in 35 countries are being explored that could be used for SAF production.

“The SAF scale-up has begun,” said Dodd. “Over 10 times more SAF was delivered to airlines in 2022 than in 2019. That pace of development will continue but needs to accelerate significantly to keep in line with the industry’s path to net zero.

“Three things are needed to make the aviation energy transition happen: government policy to support supply and create certainty for demand; financing of the potentially $1.5 trillion in infrastructure capital needed to supply SAF at the scale required; and a serious effort by the traditional energy sector to shift their products from fossil to sustainable fuels. We believe the CAAF/3 meeting can set the scene for these developments and help catalyse the transition in aviation. These are tough decisions and complex challenges, but necessary ones to progress as climate change makes its impacts felt.

“A global framework from CAAF/3 will help capacity building and access to finance so that countries everywhere can build SAF industries of their own. Enormous value can be created in diversifying and democratising energy supply if governments grasp the opportunities ahead of them.”

Added Laurent Donceel, Deputy Managing Director of Airlines for Europe (A4E): “The future of aviation depends on sustainable aviation fuels and it is critical the CAAF/3 meeting produces a global agreement for a net-zero aviation with realistic targets to promote the use of SAF. Global investments in SAF and boosting the energy transition in aviation will create a bounty of jobs and growth around the world.

“Europe and the USA are accelerating down the runway towards a more sustainable future so it’s critically important that the rest of the world keeps up and delivers a truly net zero aviation industry. CAAF/3 is an ideal opportunity to set this in stone.”

Environmental NGOs belonging to the International Coalition on Sustainable Aviation have called on the meeting “to adopt a global aspirational quantified objective for 2050 and an aspirational trajectory that are consistent with the Paris Agreement temperature goals, and that prioritise the environmental and social integrity of alternative fuels.”

Setting the goal, they say, requires adopting, primarily, a metric that focuses on the carbon intensity of alternative fuels on a lifecycle basis, consistent with CORSIA eligible fuels methodology.

“A successful outcome requires focusing on defining an ambitious vision that prioritises the environmental and social integrity of alternative fuels and therefore avoids trading an environmental threat for another,” said a statement presented at CAAF/3. “The focus should always be on quality rather than quantity.”

In addition to a robust sustainability standard, said the NGOs, CAAF/3 should emphasise transparency to ensure alternative fuels are accurately reported and accounted for, with the avoidance of double counting critical for integrity.

The statement notes that whereas the CAAF/2 vision focused solely on sustainable aviation fuels, the scope for CAAF/3 has been expanded to cover not only other cleaner energy sources such as cryogenic hydrogen and electricity, but also lower carbon aviation fuels (LCAF) of fossil origin.

“ICSA believes that while LCAF may have potentially lower carbon emissions on a lifecycle basis, all fuels of fossil origin must, by definition, be regarded as unsustainable. The CAAF/3 Vision should avoid the use of encompassing terms such as ‘sustainable fuels’ and instead use suitable terms such as ‘alternative fuels’.

To coincide with CAAF/3, Emirates this week has become the first airline to operate an A380 demonstration flight using 100% SAF. In a collaboration with Airbus, Engine Alliance, Pratt & Whitney, ENOC, Neste and Virent, the Emirates aircraft took off from Dubai International Airport with one of its four engines powered on 100% SAF. The flight carried four tonnes of SAF, comprised of HEFA-SPK provided by Neste and HDO-SAK (hydro deoxygenated synthetic aromatic kerosene) from Virent. ENOC helped to secure the neat SAF comprised of HEFA-SPK and blended it with SAK at its facility in the airport.

The 100% SAF was used in one Engine Alliance GP7200 engine, while conventional jet fuel was used in the other three engines. The PW980 auxiliary power unit from Pratt & Whitney Canada also ran on 100% SAF. The flight on November 22 was preceded by robust engine testing, with the objective of validating the engine’s capability to run on the specially blended 100% drop-in SAF without affecting its performance or requiring modifications. Ground engine testing took place at the Emirates Engineering Centre in Dubai.

Earlier this year, Emirates completed the first 100% SAF-powered demonstration flight in the region on a GE90-powered Boeing 777-300ER. Shell has supplied Emirates with 315,000 gallons of blended SAF for use at Dubai and the airline currently uplifts SAF in Norway and France. Emirates recently expanded its partnership with Neste for the supply of over 3 million gallons of blended SAF in 2024 and 2025 for flights departing from Amsterdam Schiphol and Singapore Changi airports.

“The growing global demand for lower-emission jet fuel alternatives is there, and the work of producers and suppliers to commercialise SAF and make it available will be critical in the coming years to help Emirates and the wider industry advance our path to lower carbon emissions,” commented Adel Al Redha, COO, Emirates Airline.

Videos of the CAAF/3 proceedings are available on ICAO TV

Top photo: ICAO Council President Salvatore Sciacchitano addresses CAAF/3

Emirates A380 100% SAF demonstration flight:

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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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To achieve the European aviation sector’s ambition of achieving net zero emissions by 2050, additional expenditures amounting to €820 billion ($900bn) are required between 2018 and 2050, finds a study commissioned by five industry associations. These additional or ‘premium’ costs, mostly to be spent on alternative fuels, are on top of business-as-usual (BAU) expenditures, such as fleet renewal, which are required for the net zero transition. BAU expenditures over the 2018-2050 period are estimated at €1,068 billion, bringing the total expenditures towards reaching net zero at just under €1.9 trillion. The report just published, ‘The price of net zero’, determines financing in-sector sustainability measures yields substantially lower costs than realising the same emission savings through out-of-sector carbon reductions. The study follows up the industry’s Destination 2050 roadmap published in 2021.

The five Destination 2050 partners – A4E (airlines), ACI Europe (airports), ASD Europe (aerospace manufacturers) CANSO (air navigation service providers) and ERA (regional airlines) – commissioned consultancies SEO Amsterdam Economics and the Royal Netherlands Aerospace Centre to calculate the expenditures necessary to achieve the targets set out in the roadmap and accelerate European aviation’s decarbonisation.

“Although challenging to do an accurate assessment of the price of reaching net zero for the European aviation sector, we have commissioned this scientific study to establish a better understanding,” said the partners. “We are firmly committed to a climate neutral European aviation in line with the EU climate goals and the Paris Agreement targets. Therefore, decarbonisation is at the heart of our business.”

Of the €1.9 trillion, fleet renewal is found by the study to be the largest expenditure (43%) of which the BAU scenario represents over 90% and premium expenditure (the additional expenditures to be made above BAU) of around 10% (€740 billion and €80 billion respectively). However, the significant investment would result in a €188 billion saving in fuel costs and a further €78 billion saving in carbon pricing.

Expenditure on alternative fuels, which includes drop-in sustainable aviation fuels, hydrogen and renewable electricity, is the second largest expenditure (40%), with premium expenditures representing nearly 59% and BAU just over 41% of the costs (€441 billion and €310 billion respectively).

Other premium expenditures are required for air traffic management (€20 billion), ground operations (€9 billion), R&D in future aircraft (€100 billion), airport infrastructure adaptation (€18 billion) and carbon pricing and economic measures (€152 billion).

The use of economic measures, including negative emission technologies, accounting for about 19% of the premium expenditure, is required to compensate for all emissions remaining after the application of the in-sector activities. Both the EU Emissions Trading System (EU ETS) and ICAO’s CORSIA scheme are essential to reach net zero, say the partners.

However, they add: “Economic measures must be effective and focused on driving the required decarbonisation processes forward through positive incentives attracting in- and out-of-sector capital. On the contrary, taxation and operational restrictions will hamper the industry’s ability to invest and innovate due to a diminished financial capacity and in turn jeopardising the global competitiveness of European aviation.”

They “strongly recommend” revenues from the EU ETS be reused within the sector to support and incentivise breakthrough technologies, infrastructure and SAF production.

The report says financing in-sector sustainability measures yields substantially lower costs than realising the same emission savings through out-of-sector carbon reductions. It compares European airline revenues of an estimated €145 billion in 2018 with combined average annual expenditures towards net zero of €59 billion.

“The aviation sector’s expenditures towards achieving net zero are substantial and are dependent on access to finance from the private and public sector. This is vital when capital reserves are insufficient to make large upfront payments for new aircraft and infrastructure,” said the partners.

“Only with the right set of incentives and policies can the required capital be made available for the sector’s decarbonisation. This means timely and effective measures bringing long-term clarity and predictability for investors. Regulatory frameworks must encourage low carbon technology deployment.”

Photo (Fraport AG): Frankfurt Airport

Christopher Surgenor

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