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European Union Aerospace and Defense Sustainable Aviation Fuel Regulation

ReFuel EU will increase demand, investment, and infrastructure for SAF while decreasing dependency on fuels with high carbon emissions. The new regulation creates an EU-wide level playing field and hopes to ensure an equal and competitive environment that benefits both businesses and the climate.

Beginning in 2025, fuel uplift at EU airports must contain at least 2% SAF. That percentage will increase gradually each year, with mandates including 6% by 2030, 20% by 2035, and eventually 70% by 2050. These requirements will apply to all flights originating in the EU, regardless of destination.

Under ReFuel EU, SAF is defined as “drop in” aviation fuels—fuels capable of directly substituting for conventional aviation fuels. This includes synthetic aviation fuels originating from a chemical process often involving green hydrogen, advanced biofuels produced from feedstock or forestry residues, and other biofuels with a high potential for sustainability, including those produced from cooking oil and some animal fats.

The EU expects the regulation will boost investment into SAF by creating long-term demand, which fuel producers gladly welcome. By steadily increasing the percentage of SAF mandated for fueling, they hope to drive the SAF production costs down, which is a necessity as the EU does not currently have the production capacity to meet the SAF required under the 2025 2% mandate.

Airlines will receive approximately two billion euros in funding from the EU carbon market to assist with the transition. Despite this, many airlines have expressed frustration that the legislation does not provide enough short-term relief from the additional cost burden.

Uplifting conventional fuel accounts for up to 25% of current aviation costs. Requiring the use of SAF, which is currently more expensive than traditional fuels, will cause the already expensive price of fueling to increase. While some airlines have already set SAF targets that exceed the EU’s requirements, others have expressed frustration that despite a level-playing field within the EU, the additional costs will raise prices for consumers, making European airlines less competitive outside of the EU.

The legislation also prevents tankering, a practice that leads to increased carbon emissions when aircraft overfill their tanks to avoid paying higher fuel costs at their destination. Aircraft departing an EU airport will only be allowed to fill up with the quantity of fuel—conventional fuel or a SAF blend—that is required for the next flight stage. This will ensure they do not employ tankering practices to avoid filling up with higher percentage SAF blends that are more expensive.

The airline industry and supply chain argue that time is needed to develop the production infrastructure to meet the SAF mandates and have stressed the need for a book and claim system to be implemented to provide marginal financial relief during the initial rollout of the regulations. The legislation calls for the Commission to produce a report by 2024 on the feasibility of book and claim.

Book and claim would allow airlines flying from an airport without access to SAF to purchase it for use by other operators elsewhere. This way, they are still paying the extra cost of the SAF without having to physically use the fuel in flights where it would be impractical. A similar system has been used in the green electricity market since the 1990s. The airline industry argues that disconnecting the purchase of SAF from its actual use will address the anticipated supply problems while helping the SAF industry grow.

The European Commission is expected to deliver a feasibility report on book-and-claim as a transition mechanism by July 2024. However, given next year’s agenda (the European Parliament elections in June, the subsequent process of appointing the new Commission, and the following summer recess) the airline industry has raised concerns that this timeline does not allow enough time for implementation of a book-and-claim system before the regulation’s requirements become binding in 2025.

The U.S. Commercial Service at the U.S. Mission to the EU continues to engage the European Commission on this issue on behalf of U.S. industry, including hosting industry roundtables with industry leaders and senior European officials. If your industry may be affected by this regulation, please contact Alina Moglan and Nathan Donohue the U.S. Commercial Service at the U.S. Mission to the EU for additional guidance and support.

Additional Resources:

RefuelEU aviation initiative: Council adopts new law to decarbonize the aviation sector