Sustainable aviation fuels (SAF) in Europe:

At a glance
 

• The aviation industry is one of the largest polluting sectors in the EU. Sustainable Aviation Fuels (SAF) have the potential to provide the means for the sector to decrease carbon emissions significantly as it plots a course to reach net-zero by 2050 and in line with the EU planned climate target of reducing net emissions by 90% by 2040.
• This insight analyses the current landscape on SAF. It looks at regulations which directly set targets or technical criteria for SAF. It also identifies regulation that could indirectly drive SAF deployment and adoption, as well as the actions related to SAF taken by the aviation and fuel production sectors. It concludes with an overview of the challenges to promote SAF, and the actions that the industry, regulators and standard setters can take to address them.
• Two pieces of EU legislation directly target SAF: the RefuelEU Aviation Regulation and the EU Taxonomy Regulation. The RefuelEU Aviation Regulation mandates a 2% SAF target for airport fuel suppliers in 2025 and 6% in 2030. From 2030, the mandate will gradually increase, starting with 20%, 40% in 2040, reaching 70% by 2050. The EU Taxonomy Regulation has set technical screening criteria for aviation activities to fall. By 2030, passenger transport and freight aircraft will need to operate with at least 15% of SAF. This minimum threshold will then increase at a linear rate of two percentage points per year.
• The EU Emissions Trading System (EU ETS) and the Net Zero Industry Act (NZIA) are indirectly linked to SAF. The EU ETS will reduce free carbon emission allowances to airlines, which could in turn increase SAF demand. The NZIA, which seeks to incentivise the production of net zero technologies, includes SAF as one of the technologies supported by the Act. The NZIA has been formally adopted by the EU but still requires secondary legislation to set net zero project criteria and identify components for technologies in scope. In addition to these EU initiatives, at the international level, countries such as Norway, the UK, Japan and India have made commitments to adopt SAF by 2030, which is also likely to increase demand.
• Companies are already taking action to achieve their 2030 SAF targets. For example, OneWorld alliance member airlines have pledged to use 10% of SAF by 2030. Industry groups, such as the “Clean Skies for Tomorrow Coalition”, have been launched to promote wide commercial adoption of low emission SAF by 2030. Major aircraft manufacturers have made pledges to deliver aircrafts capable of flying on 100% SAF by 2030, from the existing 50% today.
• The shorter-term challenges for companies to scale-up production and meet the 2030 SAF targets are: limited production capacity and storage; higher production costs of SAF as compared to standard jet fuel; general accounting challenges around the recognition of emissions reductions related to SAF; and competitiveness implications for airlines operating in the EU, due to a more stringent regulatory framework on SAF in the EU than in other jurisdictions.
• To address these shorter-term challenges, the practical actions that companies can take include fully understanding and assessing the costs of meeting SAF mandates, securing SAF contracts to cover the period until 2030, and investing in R&D to increase low-emission SAF supply. In addition, from a regulatory and standard setting perspective, work may be needed on guidance to align SAF reporting and ensure that there is a level playing field for the aviation and fuel production sectors between the EU and the rest of the world. These actions are necessary to help create economies of scale for SAF production, reduce risks, tackle limited SAF production and storage capacity, and provide more transparency regarding the accounting of SAF emissions.
• By 2035, SAF targets will increase threefold. Additional longer-term challenges for companies include the potential limitations to use agricultural land for feedstock to produce SAF, higher electricity demand to produce SAF, low bio-feedstock availability, and lack of technological maturity to scale-up production and provide low carbon SAF. These longer-term challenges may lead to an increased dependency on SAF imports, at a time when there will be increased competition to access limited global SAF supply.
  
  

Key contributor:

Maroussia Loots – Consultant , Sustainability & Climate – Deloitte Belgium