Aviation and Fuel Sectors Respond Favourably to Major EU Policy Initiative to Boost Sustainable Aviation Fuels

(GreenAir Online) The European Commission has received a largely enthusiastic response to its new roadmap initiative, ReFuelEU Aviation, aimed at boosting the supply and demand for sustainable aviation fuels (SAF) in the EU. The Commission acknowledges that without EU-level intervention, the demand for SAF – currently just 0.05% of total jet fuel supply – will likely reach just 2.8% by 2050. The objective, it says, is to reduce the sector’s environmental footprint in line with EU climate targets and the Paris Agreement. Policy options under consideration include a blending mandate to impose a minimum share of SAF, a revision of the multiplier under the EU’s Renewable Energy Directive, a central auctioning mechanism and a funding mechanism to encourage deployment and uptake of SAF. The Commission’s transport directorate (DG MOVE) has carried out an initial impact assessment (IIA) under the roadmap, which received over 120 responses from airline and aviation groups, oil and SAF producers, NGOs and government agencies.

Renewable and waste-derived advanced biofuels, as well as electro-fuels (e-fuels) produced using additional renewable energy, have the potential to make an important contribution to tackling aviation GHG emissions, says the Commission. However, the SAF production base in the EU is limited to a handful of producers and volumes do not exceed 100,000 tonnes. The current 0.05% use of SAF in total EU jet fuel consumption, around 57 million tonnes in 2017, is imported from or tanked in third countries, such as the United States.

With production costs at least twice as high as that of conventional jet fuel and higher than that of sustainable fuels used in other transport modes, in the absence of support, SAF are not an economically attractive substitute. The price volatility and limited availability of SAF feedstocks also contributes to market uncertainty and act as a disincentive to investment and scale-up of production. While EU policy can provide an incentive through the multiplier in the recast Renewable Energy Directive (RED II), its impact remains uncertain as Member States have until June 2021 to apply it and have a considerable degree of flexibility over implementation. The EU ETS also contains mechanisms to reward aircraft operators using SAF.

Incentives to develop food and feed crop based aviation fuels are undesirable, it says, and while waste-derived SAF can achieve emissions savings as high as 80% compared to conventional jet fuel, availability of waste-based feedstock is currently limited by suboptimal supply chains and can also be diverted to other more cost-effective usages. Electro-fuels are receiving increasing interest as they can achieve even higher emissions savings but require additional amounts of renewable electricity because of the suboptimal energy efficiency of the conversion process. In addition to the overall feedstock scarcity, there is a competing demand from the road transport sector where production costs for biodiesel and green diesel are lower.

On the technical side, the fuel approval process is a lengthy, expensive and challenging barrier to market entry of new SAF pathways, finds the Commission.

● SAF blending mandate: A minimum share of SAF that would gradually increase over time, to be supplied to airlines and/or a minimum share of SAF to be used by airlines. This could create a stable policy framework over a sufficient time horizon to provide investors with the necessary confidence to invest in SAF production and for airlines to pursue an efficient fuels policy.

● Revision of the multiplier: Currently RED II provides for a 1.2 multiplier for aviation that allows Member States to count towards their national biofuel target 20% more than the SAF volumes provided. The approach could be further specified ensuring a harmonised implementation and the multiplier could be increased.

● A central auctioning mechanism: SAF producers would be invited by a central auctioning authority to bid at the lowest price to supply a certain volume of SAF to the aviation market over a certain period. Such schemes have been used in the field of renewable electricity.

● A funding mechanism: The EU would channel funds through one or more EU financial instruments with the aim of encouraging the deployment of SAF production facilities in the EU and accompanying the gradual uptake of SAF by the aviation market at competitive prices by helping bridge the cost gap and upscale production.

● Prioritisation: With feedstock used to produce sustainable transport fuels a scarce resource, these fuels should be directed to transport modes where they are needed the most in order to decarbonise. A degree of prioritisation of feedstock for SAF production could be necessary in this context.

● Voluntary agreements: Set up a collaborative platform to facilitate purchase agreements between SAF producers and airlines. It could also issue guidance on how to efficiently conclude purchase agreements.

● Technical facilitation and support initiatives: The objective would be to accompany SAF producers along the approval process, by providing the necessary technical support. An EU coordination platform could also be envisaged to bring closer together aviation stakeholders, SAF producers and regulators with a view to communicate and engage towards the common objective of developing the SAF market.

● Monitoring: A dedicated data stream could be put in place to better monitor the production and use of SAF in the EU. Key Performance Indicators could be designed to monitor the effects of SAF policies.

Independently from the instrument used to promote SAF, the Commission says it will be essential to ensure coherence with the existing sustainability requirements, definitions and methodologies set out for renewable fuels in the recast RED, as well as the EU ETS.

The initiative has received positive backing from SAF stakeholders, including the aviation sector. READ MORE