GBTA welcomes the political agreement on the RefuelEU Regulation and calls for additional financial incentives to further scale Sustainable Aviation Fuels (SAF) production in Europe
Bruxelles (26 April 2023) – As a supporter of the Toulouse Declaration on the sustainability and decarbonisation of aviation by 2050, the Global Business Travel Association (GBTA) welcomes the political agreement on RefuelEU as a key instrument to support the uptake of sustainable aviation fuels (SAF) in Europe.
In a report released by the GBTA Foundation earlier this week on ‘Managing Emissions from Business Travel Programs’, SAF is highlighted as the biggest opportunity to decarbonise air travel by delivering a net reduction in carbon emissions compared to fossil-based jet fuel.
This is why GBTA believes that the EU should go one step further and complement the new rules with financial support under the Net Zero Industry Act to incentivise the production of SAF and bring its price closer to conventional jet fuel.
Sending a clear demand signal to boost SAF production in Europe
Under the political agreement on RefuelEU, regulators opted for a mandate approach to build the necessary demand for SAF. Key requirements adopted in the new Regulation include:
- The gradual mandate for fuel suppliers to increase the share of SAF blends supplied to operators at EU airports. A minimum target of 2% SAF to be reached by 2025, with the proportion rising to 6% in 2030, 20% in 2035, 34% in 2040, 42% in 2045, and culminating at 70% in 2050. Moreover, specific quotas for synthetic fuels like ekerosene have been established, starting at 1.2% in 2030 and progressively reaching 35% in 2050. This will send a strong signal recognising the demand for SAF, allowing the aviation sector’s supply and demand to be sufficiently prepared for SAF uptake.
- Restrictions on fuel tankering practices, whereby an aircraft carries more fuel than necessary for its flight to reduce or avoid refuelling at the destination airport.
- New reporting requirements for airlines and airports on the total amount of aviation fuel used by each airline and raised at each airport in the Union. Fuel suppliers will be required to provide aircraft operators with free information on the properties of the SAF sold to that operator.
Financing the green transition
GBTA believes that in addition to the EU mandates, financial incentives are further needed to help scale Sustainable Aviation Fuels (SAF) production in Europe.
The EU already took a step in the right direction with the expansion of the Innovation Fund to stimulate SAF production using revenues garnered from penalties. GBTA also welcomes the innovative support scheme agreed upon in December 2022 and financed through EU ETS revenues. This new scheme represents significant progress, with the allocation of 20 million free allowances to foster SAF adoption, and a provision allowing airlines to partially offset the costs of e-fuels and advanced biofuels collectively.
To meet ambitious sustainability targets and expedite the deployment of Sustainable Aviation Fuel (SAF) production within the EU, the EU however needs to go further. A comprehensive incentive system is vital to minimise the green premium disparity between SAF and traditional jet fuels.The European Parliament anticipates an 8% rise in airfares by 2050, primarily attributed to escalating fuel costs.
In light of this, GBTA calls for the Net Zero Industry Act to extend direct support to the aviation sector. Despite SAF’s pivotal role in achieving net-zero emissions, neither the draft Regulation nor the Annex’s list of supported technologies explicitly endorses existing SAF pathways. GBTA strongly encourages the Commission to modify the Net Zero Industry Act to include tangible financial incentives for SAF. This is particularly imperative as the US actively bolsters SAF production through the Inflation Reduction Act.
Book-and-claim: helping scale up SAF deployment
ReFuelEU contains a requirement for the Commission to report by 2024 on the feasibility of a Book and Claim (B&C) system for airlines to manage the supply of SAF in a flexible way across the EU.This system should enable airlines and operators to purchase SAF certificates without being geographically connected to a SAF supply site.
GBTA believes that this is critically needed while SAF supply remains limited, to avoid generating additional emissions from bringing SAF to airports. A book and claim system will make sure that SAF certificates are accredited to purchasing companies to ensure attribution and avoid double counting.
Such a market-based mechanism would also allow suppliers, unable to carry the upfront cost of decarbonisation, to sell SAF certificates to customers that are willing and have the ability to pay for emissions reductions. The use of book and claim is a critical enabler of decarbonisation for hard-to-abate sectors and sectors with high green premiums, such as the aviation industry.
Developing a harmonised standard to measure the environmental impact of flights
GBTA will follow with interest the development of the EU label for the environmental performance of flights by 2025. Under RefuelEU, airlines will be able to market their flights with a label indicating the expected carbon footprint per passenger and the expected CO2 efficiency per kilometre. It will allow passengers to compare the environmental performance of flights operated by different companies on the same route.
Corporate travel buyers and managers have been calling for a harmonized standard to identify the sustainability performance of airlines and individual flights2, and this EU label can help address this demand. GBTA therefore supports the EU’s efforts in this field, provided that the label is developed in extensive consultation and collaboration with experts and industry stakeholders across the full value chain, and aims to become a globally recognized standard applicable in all regions worldwide.
The U.S. Inflation Reduction Act (IRA), signed into law on August 16, 2022, includes a two-year tax credit for SAF blenders; a three-year tax credit for SAF producers; and a grant program of $290 million over four years to carry out projects that produce, transport, blend, or store SAF, or develop and apply low-emission aviation technologies.
The Global Business Travel Association (GBTA) is the world’s premier business travel and meetings trade organization headquartered in the Washington, D.C. area and serving stakeholders across six continents. GBTA and its 7,600+ members represent and advocate for the $1.158 trillion global business travel and meetings industry. GBTA and the GBTA Foundation deliver world-class education, events, research, advocacy, and media to a growing global network of more than 28,000 travel professionals and 125,000 active contacts. For more information, visit gbta.org and gbtafoundation.org.
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Based on GBTA Business Travel Index™ data, July 2022