Driving Change in Aviation: Insights on the EU ETS Delegated Act and Sustainable Fuels

Aligning Aviation with Sustainability Goals

Aviation plays a crucial role in global connectivity, but it is also a significant contributor to greenhouse gas emissions. The EU Emissions Trading System (EU ETS) is a vital regulatory tool aimed at reducing aviation’s carbon footprint. A recent draft proposal by the EU aims to establish detailed rules for calculating price differences between sustainable aviation fuels (SAF) and fossil kerosene while allocating allowances for eligible SAF use.

T&E (Transport & Environment) has provided its consultation response to this draft, highlighting key areas where targeted action is essential. This article delves into these insights and explores how these measures can drive the adoption of innovative fuels like e-kerosene to achieve decarbonization goals effectively.

Scope and the Polluter Pays Principle

One of the most encouraging aspects of the proposal is its alignment with the polluter pays principle. Allowances will be allocated only to flights for which operators are required to surrender allowances under the EU ETS, except for flights to and from outermost regions. By ensuring that only those operators contributing to the ETS benefit from revenues, the system incentivizes compliance and reinforces accountability across the aviation industry.

This targeted approach not only streamlines the allocation process but also emphasizes the importance of aligning financial benefits with environmental responsibilities.

Accountability and Visibility: Building Trust Through Transparency

Transparency and accountability are at the heart of effective sustainability measures. The obligation for aircraft operators to ensure visibility of the support received under the mechanism is a positive step toward fostering passenger trust and public understanding of SAF subsidies. However, T&E points out that more clarity is needed on enforcement mechanisms.

Clear and robust enforcement is vital to ensure that operators comply with transparency requirements, providing passengers with accurate insights into the environmental initiatives supported by their travel choices.

Price Transparency: Essential for Effective Subsidies

Price transparency is another cornerstone of the draft proposal. A clear method for determining the prices of eligible fuels is critical to ensuring that subsidies are fit for purpose and fairly allocated. The delegated act proposes a robust framework for this, requiring airlines to provide clear and complete proof of fuel purchases when reporting actual prices.

This approach strengthens confidence in the system while preventing any potential misuse of subsidies. By establishing price clarity, the aviation industry can take meaningful steps toward scaling up SAF adoption.

Supporting E-Kerosene: A Call for Dedicated Measures

While the proposal includes provisions for SAF, T&E raises concerns that it may not provide sufficient support for e-kerosene—a scalable and sustainable fuel with immense potential for decarbonizing aviation. E-kerosene, produced using renewable electricity, hydrogen, and CO2, represents the future of SAF due to its minimal environmental impact and scalability.

However, the current mechanism risks primarily benefiting biofuels, such as waste-oil-based HEFA, which have scalability limitations and are less resource-intensive to adopt. To address this, T&E suggests the establishment of a dedicated “basket” of allowances for e-kerosene. This targeted support would de-risk investment, foster long-term offtake agreements, and encourage innovation.

Prioritizing First Movers: Encouraging Industry Leadership

Rewarding first movers in the e-kerosene space is essential for accelerating its adoption. Aircraft operators willing to invest in e-kerosene should be incentivized through mechanisms that recognize their commitment to sustainability. Such measures could include financial support or preferential treatment in allowance allocation.

As highlighted by T&E, prioritizing e-kerosene over less scalable biofuels offers a more sustainable, long-term approach to decarbonizing the aviation sector.

Complementing the Mechanism with Additional Support

Beyond closing the price gap between e-kerosene and fossil kerosene, complementary measures are necessary to secure the long-term viability of e-kerosene production. These include targeted investments, research funding, and collaborations between industry stakeholders to build a resilient supply chain.

The aviation sector requires significant investment to scale up e-kerosene production. By fostering partnerships and creating enabling policies, the EU can ensure that this innovative fuel becomes a cornerstone of aviation’s sustainability journey.

VURDHAAN’s Role in Supporting Aviation Sustainability

At VURDHAAN, we recognize the critical importance of SAF and innovative mechanisms like the EU ETS in achieving net-zero aviation emissions. Our SustainBuddy Aviation Module offers airlines tools to navigate regulatory requirements, explore SAF adoption pathways, and understand evolving market dynamics. By providing actionable insights and strategies, we empower the aviation sector to align with global sustainability goals.

As the industry evolves, our expertise ensures that stakeholders are equipped to adopt cutting-edge solutions like e-kerosene while meeting compliance standards effectively.

The Broader Context: Investing in a Sustainable Future

The aviation industry faces immense challenges in transitioning to sustainability. High costs, limited availability of advanced fuels, and the need for significant infrastructure investments create barriers to achieving net-zero emissions. However, these challenges also present opportunities for innovation, collaboration, and leadership.

The EU ETS draft proposal is a step in the right direction, providing a framework to incentivize SAF adoption and reduce aviation’s carbon footprint. By addressing the concerns raised by T&E—such as targeted support for e-kerosene and robust enforcement mechanisms—the EU can enhance the proposal’s impact and ensure long-term sustainability.

Conclusion: A Clear Path Toward Decarbonization

The EU ETS draft proposal represents an important milestone in aviation’s decarbonisation journey. Clear provisions for price transparency, accountability, and allowance allocation provide a robust foundation for scaling up SAF adoption.

However, targeted measures for e-kerosene are essential to realize its potential as a sustainable and scalable fuel. By addressing these gaps and fostering collaboration across the industry, the EU can drive meaningful progress toward its climate goals.

As sustainability continues to shape the future of aviation, VURDHAAN remains committed to supporting industry stakeholders in navigating this complex but vital transition. With innovative tools and expert guidance, we ensure that the path to net zero is both actionable and impactful.

Source

Scroll to Top