Achieving the EU’s 2030 Climate Goal for Aviation Will Rely Heavily on Market-Based Measures, says Eurocontrol

by Christopher Surgenor (GreenAir Online) As part of the climate neutral by 2050 binding target of the European Green Deal, the EU has set an interim goal of cutting emissions by at least 55% by 2030, based on 1990 levels, and is working on a set of proposals under the ‘Fit for 55’ package to revise and update EU legislation, and put in place new initiatives to ensure EU polices are line with the climate goals. The package has important implications for aviation, and pan-European air navigation organisation Eurocontrol has released an assessment of what it means in practical terms and the extra costs of decarbonisation measures to meet the 2030 target. In a ‘Think Paper’, its analysis shows a 55% reduction is achievable, even under a strong recovery in traffic, but is heavily reliant on market-based measures, mainly via the EU Emissions Trading System (EU ETS), which it forecasts will make an 83% contribution to the net reduction. Eurocontrol estimates that a combination of additional emissions trading costs, taxes on kerosene and extra costs from a sustainable aviation fuel mandate will result in additional cumulative costs to the aviation industry of €62 billion ($65bn) over the period 2022-2030, although positive measures could reduce this extra cost by €33 billion ($35bn).

Assessing the potential cumulative costs to the airline industry over the 2022-2030 period of the additional European decarbonisation policy action, Eurocontrol breaks them down as follows:

As well as a legally-binding mandate, voluntary arrangements and financial incentives should be encouraged for higher SAF uptake, it suggests. Additionally, there should be a push for a larger share of e-kerosene to stimulate higher investment in green hydrogen production facilities as well as facilitation of access to feedstocks and renewable energy.

Support will also be required in motivating public and private investors to fund sustainable solutions for the aviation sector through, for example, green funds, grants and state-backed loans that can be enabled by the EU Taxonomy, adds the paper.

“There is a pressing need to swiftly ramp up SAF production and usage to enable SAF to compete with conventional kerosene,” said Eamonn Brennan, Eurocontrol’s Director General. “If the sector returns to profitability, our high traffic scenario will drive increased revenues that will play a fundamental role in accelerating investment in new technology and thus driving the sustainability transformation. We need to accelerate aviation decarbonisation by prioritising actions, fostering the transition by inter alia offering financial support and encouraging alliances and balancing taxation with the need for aviation to recover.”

Meanwhile, a coalition of European aviation associations and SAF suppliers have called for a new supporting mechanism under the EU ETS whereby aircraft operators would still be granted allowances commensurate to the overall CO2 reduced by the uplifting of SAF, with a higher multiplier applied to synthetic fuels.

“Such a mechanism would not compromise the main objective to strengthen the ETS,” they said in a letter to the Commission. “The mechanism would further incentivise the deployment of sustainable renewable fuels and synthetic fuels, and would be key to bridging today’s price gap with conventional jet fuel. It would provide an additional incentive for airlines to decarbonise with the use of SAF, including above the mandated minimum blend. The mechanism would treat all operators equally and help level the playing field in global competition.” READ MORE