The European Union (EU) has offered to subsidise airline purchases of more than 200M litres of sustainable aviation fuel (SAF) to encourage carriers to swap kerosene for cleaner alternatives, according to calculations by Reuters.
Based on European Commission (EC) data, the calculations suggested that the subsidies – covering volumes equivalent to about 15% of global SAF production – could be a significant boost to airline demand for SAF, Reuters wrote on 11 June.
Global SAF output last year totalled 1.3bn litres, according to airline industry association IATA.
The EU has allocated revenue from the sale of 20M carbon emissions permits to help airlines cover the price gap between conventional kerosene and more expensive SAF on flights within Europe, according to the report.
Reuters calculations showed these subsidies would cover purchases of up to 216M litres of e-fuels – synthetic fuels produced using captured CO₂ emissions – or up to 2.6bn litres of biofuels.
The EU subsidies cover up to €6 (US$6.89)/litre for e-fuels and €0.5 (US$0.575)/litre for biofuels.
Aviation is one the hardest sectors to decarbonise, with zero-emission aircraft not expected this decade, according to the Reuters report.
Although sustainable fuels could help to reduce air travel’s carbon footprint in the near term, SAF costs three to five times more than traditional jet fuel and makes up only 0.3% of global jet fuel supply, the report said.
Against this backdrop, airlines have warned that EU targets to use more SAF were impossible to meet, according to the report.
The sector is investing only 1%-3% of revenue or budget allocation in SAF, according to a report this year by Boston Consulting Group.
The EU requires 2% of fuel made available at EU airports to be SAF in 2025, rising to 6% in 2030.
Airlines must buy permits from the EU carbon market to cover their emissions from European flights.
Until last year, the EU gave airlines most permits free of charge but was now phasing out free permits to drive faster emissions reductions, Reuters wrote.
