Unlocking e-SAF’s Potential for the EU Competitiveness and Energy Independence

Atmosphere Aviation Fuel/Sustainable Aviation Fuel (SAF)BioChemicals/Renewable Chemicals BioRefineries/Renewable Fuel Production Business News/Analysis Carbon Capture/Storage/Use Carbon Capture/Storage/Use Carbon Dioxide (CO2)European Union (EU)Feedstocks Funding/Financing/Investing Green Jobs hydrogen Infrastructure Not Agriculture Opinions Policy Process R & D Focus RFNBO (Renewable Fuels of Non-Biological Origin)Sustainability

June 20, 2025

Print This Article Share it With Friends

(European Federation for Transport and Environment) The EU's Sustainable Transport Investment Plan is an opportunity to unlock the full potential of e-SAF - the greenest and most scalable sustainable aviation fuel. In doing so, it could also boost the EU’s industrial competitiveness, energy independence, and jobs.

Sustainable aviation fuels (SAFs) play a crucial role in decarbonising aviation. But not all SAFs are created equal. With a potential to slash aviation’s CO₂ emissions by more than 90%, e-kerosene (also known as e-SAF) is the only scalable and sustainable option in the long term.

Despite a strong regulatory framework under the Fit for 55 package and ReFuelEU Aviation, e-SAF projects in the EU have yet to reach Final Investment Decision (FID). This is due to high capital and operational costs, a lack of long-term offtake agreements, and insufficient revenue certainty — a market failure that existing EU mechanisms have not been able to resolve.

The Sustainable Transport Investment Plan (STIP) presents a unique and timely opportunity to correct this imbalance. By focusing its support on the most strategic SAF pathway – e-SAF – the STIP can catalyse the deployment of clean aviation fuels while boosting the EU’s industrial competitiveness, energy independence, and jobs.

To do so, the STIP should embed a comprehensive mechanism, such as a European Hydrogen Clearing House (EHCH). The EHCH would operate through double-sided auctions, matching fuel producers and buyers (e.g. airlines), while ensuring price stability and demand aggregation. This would de-risk production through long-term contracts and contract for differences for e-SAF, enabling scale-up while ensuring alignment with the EU’s competitiveness goals.

Prioritising e-SAF through the STIP is not only a climate imperative – it is a strategic investment in Europe’s position as a global leader in sustainable aviation fuels and clean energy. READ MORE

Related articles

Europe risks losing its early e-fuels lead for aviation, study warns (European Federation for Transport and Environment)
T&E analysis of the global e-SAF market (European Federation for Transport and Environment)
T&E study finds Europe’s early e-SAF lead in danger of losing its first-mover advantage (GreenAir)
40+ CEOs call on governments to fund eSAF tender (SAF Investor)
Policy shortcomings puts SAF production at risk, said IATA chief (Biofuels International)

Excerpt from European Federation for Transport and Environment: As the aviation sector gathers at the International Paris Air Show, a new T&E study highlights Europe’s potential to be an e-kerosene trailblazer – the most scalable sustainable aviation fuel (SAF) – but severe bottlenecks mean it could lose its first mover advantage.

3 million tonnesof e-kerosene could be produced in Europe if all announced projects went ahead
90%Aviation could reduce its CO₂ emissions by this amount if it used e-kerosene

Europe a leader on e-kerosene announcements, laggard on implementation

A new T&E study shows that Europe can be a leader in e-kerosene (also called e-SAF), housing more than half of the world’s announced production capacity. Around 40 large-scale projects [1] are planned in Europe, with a potential e-kerosene production capacity of close to 3 million tonnes (Mt) per year – roughly 5% of the fuel that Europe’s aviation sector needs to operate.

Europe’s early lead in the e-kerosene market has been driven by the EU’s law on sustainable aviation fuels, ReFuelEU, which set specific targets for using e-fuels in aviation. If all the announced projects were built, the EU could meet these targets – but none of the large-scale plants identified in this report are even under construction. Only four are at an advanced stage [2], and none have reached a final investment decision (FID). This slow progress is due to an array of challenges, with financing posing the biggest barrier, and traditional fuel suppliers being notably absent from the conversation.

Camile Mutrelle, Aviation Policy Officer at T&E, said “The EU’s law on sustainable aviation fuels kick-started an e-kerosene revolution in Europe – but fuel suppliers are not cashing in on this potential. Without more final investment decisions, the EU’s 2030 target and plans to prosper from green aviation will fail. To succeed, these projects need a stable legal framework, as provided by ReFuelEU, and funding through an array of public support mechanisms and private capital investments.”

...

With a potential to cut CO₂ emissions by more than 90% compared to fossil kerosene, e-kerosene is key to decarbonising aviation, an emission-intensive industry that is projected to keep on growing [3]. As representatives of the industry gather at the International Paris Air Show today, an event showcasing the growth, prowess and latest innovations in aviation, the study’s findings highlight that despite progress, the path to significantly reducing aviation emissions through truly sustainable solutions remains long and complex.

While Europe is currently the leader for e-kerosene [4], other markets are creeping up. China is the second-largest hub – around 10 large-scale projects have been announced here, representing around 20% of global capacity. The United States is also picking up the pace, with the largest e-kerosene offtake agreement to date secured by a US-based startup, and one of the world’s first FIDs for a large-scale e-kerosene plant secured in May by Infinium, another US-based startup [5].

Funding bottlenecks and oil majors are hampering progress

Despite favourable conditions, e-kerosene projects continue to face significant hurdles in Europe, including challenges related to energy costs, infrastructure, and CO₂ sourcing. Regulatory uncertainty is also in the mix, brought about by industry pressure [6] to delay ReFuelEU’s SAF targets in anticipation of the scheduled review of the legislation in 2027

Financing poses the biggest barrier, with each plant requiring €1–2 billion in capital, bringing total capital requirements to €10 - 20 billion by 2030. EU funding mechanisms for e-kerosene are not strong enough to support the level of investment needed to get these projects off the ground, and traditional fuel suppliers are notably absent from the conversation. To date, major oil companies have made negligible contributions to e-kerosene, while continuing to spend billions on fossil fuels.

“Despite their huge financial capacity, major oil companies are largely absent from the e-kerosene market,” Camile Mutrelle acknowledged. “Startups have taken the lead, but lack the internal resources to finance the capital-intensive infrastructure that is urgently needed. Getting oil majors on board and EU financing mechanisms up to scratch will give e-kerosene the lift-off it needs. The upcoming Sustainable Transport Investment Plan is a chance to set the right flight path by prioritising e-SAF, providing a comprehensive mechanism to address the challenges EU projects face.”

T&E urges EU leaders to reaffirm their commitment to the existing ReFuelEU targets, especially in the run-up to the legislation’s scheduled review, and prioritise e-kerosene in the Sustainable Transport Investment Plan (STIP). It also calls for a European market intermediary using a double-sided auction mechanism to be established to address the current issues around financing.

[1] Large-scale projects are defined as ones with a production capacity of more than 10,000 tonnes of e-kerosene a year.

[2] This means the project is either undergoing the Front-End Engineering Design (FEED) phase or pending final investment decision (FID) after completing their FEED.

[3] T&E, 2025. Down to earth: Why European aviation needs to urgently address its growth problem

[4] The top five markets in terms of announced production capacity are France (0.8 Mt), Norway (0.3 Mt), Finland (0.3 Mt), Sweden (0.3 Mt) and the Netherlands (0.3 Mt), countries which boast low-carbon grids and strong renewable energy resources. France is home to the most announced projects in Europe (11), doubling its projects and production capacity since last year.

[5] The Infinium project is set to produce up to 23,000 tonnes of e-fuels per year.

[6] Financial Times, 2025. “European airlines urge EU to pull back on climate policies” READ MORE

Excerpt from SAF Investor: More than 40 chief executive officers from the sustainable aviation fuel (SAF) value chain in Europe have called on the national governments to commit funding to a pilot e-SAF tender.

This tender would use a double-sided auction mechanism to help scale e-SAF across Europe.

Despite EU’s commitment for SAF, the senior SAF executives lamented that none of the planned e-SAF projects in Europe have reached final investment decision (FID) – even though Europe hosts around 60% of the world’s planned e-SAF capacity.

The challenges facing the e-SAF producers in the Europe are two pronged: producers need long-term offtake agreements to secure financing and de-risk investment and buyers require short-term flexibility to avoid locking into high initial prices as the market matures.

Project SkyPower says that a market intermediary using a double-sided auction could resolve both challenges. This intermediary would operate as a government-backed commodity trader – contracting long-term with producers to provide revenue certainty, while selling short-term to buyers to maintain flexibility.

Compared to traditional flat subsidies, this model ensures greater efficiency of public funding by minimising the cost gap through competitive pricing on both sides of the market.

Read more about Project Skypower’s proposals here. READ MORE