ReFuelEU SAF mandate is here to stay, pledges Commission’s aviation chief

Amid concerns by some of Europe’s biggest airlines over the EU’s sustainable aviation fuels mandate policy, the European Commission’s Director for Aviation, Filip Cornelis, has promised the mandates introduced in January “are here to stay”. His pledge follows a recent joint statement by airline members of industry group Airlines for Europe (A4E) that they were “deeply concerned” over the ReFuelEU legislation and said that urgent action was required to maintain its credibility. Two major airlines are understood to have pushed for an even tougher line on the mandates. A4E cited a Boston Consulting Group report that forecast a shortfall of up to 45% in synthetic fuels (e-SAF) and 30% in biofuel supply by 2030. While he was confident the EU’s biofuel production capacity would exceed the required level until 2034, Cornelis acknowledged there was still a “market failure” concerning e-SAF.

“We have built our SAF policy on three key principles: stability, predictability and clarity,” said Cornelis in a keynote speech at the Sustainable Aviation Futures Congress in Amsterdam. “And we have the ambition to radically change the way that energy in aviation is produced and sourced. We have laid down a roadmap for the next 25 years with ReFuelEU Aviation, creating a legal framework that is clear, simple and stable. It supports the production of SAF and e-SAF in Europe with clear and stable rules, and the regulation is in many ways a world first.

“We’ve gone very far, but we are not resting, and we’ll keep working to improve, enhance the rules. But allow me to say loud and clear that the mandates are here to stay, despite rumours that are spread sometimes. The EU is firmly committed to the direction that we have taken with an increased uptake of SAF.

“So we call on all actors to embrace those targets and to work towards the delivery of Refuel EU Aviation objectives. Kicking the can down the road will certainly not help anyone, and it would create a gap that will be more difficult to catch up later. Moreover, let’s not forget that SAF is not only about decarbonisation.

“With the right conditions, SAF has a great potential to improve Europe’s strategic autonomy, energy diversification, and to create a new source of competitiveness, jobs and high-tech innovation. We can observe that big states around the globe are very much interested in benefiting from SAF production.”

He said the Commission would strive to further simplify and digitise reporting and processes, and work would begin soon on preparing a report due in 2027 that would evaluate and assess the functioning of the regulation, drawing on ongoing implementation work.

“I would like reassure you that the Commission is not considering any measure that could undermine the credibility of our mandates or that could increase investment risk,” he told delegates. “We are convinced the current level of ambition is feasible, is realistic.”

One airline with serious concerns about the mandate is Lufthansa, which complained about the flawed design of ReFuelEU in a policy brief as long as two years ago. While the airline supported SAF, it said, the blending mandate would unilaterally impact European airlines and transfers in the EU, resulting in higher fuel costs and carbon leakage to hub airports located outside Europe.

Cornelis reported a study was ongoing on carbon leakage and that the SAF transition would be most successful if embraced collectively across all regions in the world.

“Our EU-level actions will continue therefore to go hand-in-hand with efforts at ICAO,” he said. “This is critical not just to reduce global emissions but also to ensure a level playing field for our airlines and to increase our energy resilience collectively.”

He said more targeted action was required for e-SAF production, where large capital investment was required, and acknowledged that there was still a market failure.

“We know there are about 42 e-SAF projects in the EU at this point and our focus is to have the framework in place that can bring them to reach final investment decision, because none of them has reached that stage yet.”

He said there was a first-mover disadvantage that he hoped would be addressed by the Commission’s Sustainable Transport Investment Plan (STIP), due to be presented in the third quarter of this year.

“With STIP, we want to propose a framework of ideas and measures to stimulate e-SAF production by de-risking investments and facilitating offtakes in the longer term. Looking to measures in the short and medium term, our focus is to have the right financing mechanisms in the EU, support the banking sector to go into this domain and transform today’s first-mover disadvantage into a first-mover advantage.”

European aviation industry group Destination 2050 said this month the Plan should focus on supporting the deployment of direct electrification, with a focus on charging infrastructure at airports, and indirect electrification to produce hydrogen that can be used either as a direct fuel or as feedstock for e-SAF. The group said early-stage financial support and risk-sharing mechanisms, such as the Innovation Fund and InvestEU, were essential to kickstart the SAF market.

It also called on STIP to support the implementation of a book-and-claim mechanism, although Cornelis said in his speech that “it would not seem to be justified at this point in time to put in place a full-scale, government-run book-and-claim system for SAF.”

Green group Transport & Environment said STIP should focus on e-fuels as a priority investment.

The A4E statement, posted before the speech by Cornelis, said its members remained committed to the sector reaching Net Zero by 2050, with “abundant and affordable” SAF critical in order to reach the goal.

“However, we are deeply concerned that the ReFuelEU legislation is failing to create the affordable SAF market it promised,” it added. “The European Commission and member states must now take responsibility as fuel suppliers are not delivering.

“Without urgent action in the coming months, the credibility of the mandate will be severely undermined – and a reassessment of the mandates will be needed.”

The report by Boston Consulting Group is based on a survey it undertook of 500 executives across the global aviation ecosystem, including aircraft and engine OEMs, system and component manufacturers, airlines, lessors and SAF project developers. It concluded that new fuels can play a major role in decarbonising the sector and SAF production was growing fast but progress has slowed due to economic and regulatory uncertainty, high production costs and weak demand signals, including the lack of firm long-term SAF offtake agreements.

The survey found that most respondents anticipate only being “an observer” to the SAF market in 2030, rather than “a leader”, with a lack of a clear business case to justify investments in the technology being among the biggest barriers. Aircraft OEMs and project developers were identified as investing a higher share of revenue to develop the SAF market, with airlines, airports and lessors the least likely.

“Too many players are in ‘wait and see’ mode. Only a small subset of players has shown active leadership, and this trend is unlikely to shift without significant incentives or mandates,” says the report. “The lack of bold, coordinated action risks exacerbating the current shortfall, leaving the industry reliant on reactive responses to regulatory changes.

“Our results show a stark gap between confidence levels about sustainability and preparedness to meet those goals. Among respondents, 80% of companies are confident that they can achieve their 2030 SAF objectives. Yet only 14% feel well-prepared to overcome challenges along the way. Airports and lessors are particularly lagging, with just 6% and 0% readiness respectively.

“This lack of preparedness among key stakeholders threatens to undermine the industry’s ability to close the SAF supply gap and meet decarbonisation goals.”

Despite the challenges highlighted in the survey, the report concludes the long-term momentum for structural change in the aviation industry remained strong, with key legislative frameworks finalised across Europe, North America and South Asia.

“These developments can accelerate the aviation industry’s decarbonisation journey by improving market liquidity and boosting investor confidence,” it says. “But industry stakeholders must also take action to capitalise on improving market conditions.”

To spur overall demand for SAF, aviation stakeholders should join forces to aggregate demand and set standards for trading SAF, recommends the report. “On the supply side, the industry should scale SAF projects and collaborate on innovation beyond 2030.”

Photo (Fraport): Frankfurt Airport

Christopher Surgenor

Editor

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