To ensure that the EU cuts its CO2 emissions by 55% in 2030 (compared with 1990 levels), the European Commission, Parliament, and Council are currently negotiating a comprehensive legislative package called “Fit-for-55”. Three pieces will impact the decarbonization of aviation in particular:
Since 2012, the EU ETS covers CO2 emissions from intra-EU flights, meaning that airlines receive or buy emission allowances for their operations. The ETS provides an incentive to aircraft operators to use SAF that complies with the sustainability criteria by attributing them zero emissions under the scheme – reducing the number of ETS allowances they need to buy overall. In December 2022, the European Parliament and Council reached an agreement for a substantial revision of the ETS. They will also need to approve the final policy, which will then be published in the EU Official Journal.
In short, the provisional agreement foresees:
- Phasing out free aviation emission allowances, gradually starting in 2024 and completely by 2026
- Reserving 20m free allowances to incentivize the uptake of SAF
- That airlines will have to disclose their non-CO2 effects on climate from 2025
- That flights traveling to or from outside of the European Economic Area (EEA) will be covered by the United Nation’s CORSIA (but flights to countries where CORSIA does not apply will also fall under the scope of the ETS from 2027)
The ReFuelEU Aviation proposal presented by the Commission in July 2021 aims to introduce a blending obligation for fuel suppliers:
- Starting in 2025, the aviation fuel made available to EU airports should contain 2% SAF, increasing to 5% by 2030, 32% by 2040 and 63% by 2050. What qualifies as SAF is a point of negotiation.
- To provide the necessary level of market certainty for synthetic aviation fuels (also referred to as eKerosene), the Commission proposes a sub-mandate for synthetic aviation fuel, starting at 0.7% in 2030, increasing to 8% in 2040 and 28% in 2050.
- The other SAF volumes will need to be produced from feedstocks listed in Parts A and B of RED II Annex IX. This means that effectively there will be two mandates: one for advanced biofuels and one for synthetic aviation fuels.
- To tackle fuel tankering practices, the draft regulation establishes the obligation for aircraft operators to ensure that the yearly quantity of aviation fuel uplifted at a given EU airport is at least 90% of the yearly aviation fuel required.
- The legislative proposal is also linked to reporting obligations for aircraft operators to the European Union Aviation Safety Agency. To avoid double-counting emission reductions, airlines may only claim the benefits of one batch of SAF once: under the EU ETS for intra-EU flights or under CORSIA for extra-EU flights.
As a part of ordinary legislative procedure, the Council of the European Union and the European Parliament assessed the proposal and suggested amendments, which were released in June and July 202241, respectively. Appendix 3 presents the different proposals for blending mandates.
There are further areas of disagreement such as transition periods or what would qualify as SAF; you can find a summary in this brief.
Once adopted, most probably in Q1 2023, the ReFuelEU Aviation regulation will be applicable throughout the EU – contrary to a Directive, it will not need to be translated into national laws.
REVISION OF RENEWABLE ENERGY DIRECTIVE (RED II)
A key element in the "Fit for 55" package is the revision of the Renewable Energy Directive (RED II), to help the EU deliver the new 55 % GHG target by increasing the share of renewable energy sources in the final energy consumption of the EU. This includes setting the rules on how renewable fuels of non-biological origin (RFNBO) – including eJet fuel – can be produced and accounted for. Adopted in 2018, the Directive had tasked the Commission to prepare two delegated acts to do so – see Appendix 4 for details.
In September 2022, the European Parliament voted its position on RED II and raised the share of RFNBOs in all fuels to 5.7% by 2030. If accepted by the Council and the Commission, this target would trump the levels proposed in the ReFuelEU Aviation text. At the same time, the European Parliament scrapped the legal basis for the first delegated act, which would have provided a clear framework by the end of 2022, directly applicable across the EU27. This could be particularly problematic for renewable hydrogen producers, who could be facing a long drawn-out process to transpose a Directive into 27 sets of national law.
Several individual European countries have not waited for lengthy EU procedures to introduce SAF obligations. Appendix 5 provides a short list of examples.