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Open Translation

AMSTERDAM: This week the European Commission unveiled a set of ‘Fit for 55’ legislative proposals to reduce European carbon emissions. Among them was the ReFuelEU Aviation Initiative: a first-ever blending obligation for sustainable aviation fuel (SAF). Tom Berg, Policy & Sustainability manager at SkyNRG, summarizes the proposal and its implications:
 
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The proposal includes a blending obligation for fuel suppliers. Starting in 2025, the aviation fuel made available to EU airports should contain 2.0 percent SAF, increasing to 5.0 percent by 2030, 32 percent by 2040 and 63 percent by 2050.

To provide the necessary level of market certainty for synthetic aviation fuels (also referred to as e-kerosene), the Commission proposes a sub-mandate for synthetic aviation fuel, starting at 0.7 percent in 2030, increasing to 8.0 percent in 2040 and 28 percent in 2050.

The other SAF volumes will need to be produced from feedstocks listed in Part A and B of RED II Annex IX. This means that effectively there will two mandates: one for advanced biofuels and one for synthetic aviation fuels. The Impact Assessment projects these SAF mandates can be mostly fulfilled with EU production, importing just 5.0 percent of aviation fuel demand.

The Commission recognizes that, in the short term, the supply of SAF from waste oils and fats, like those produced in SkyNRG’s SAF production plant DSL-01, will be essential to kick-start the SAF market. A limited (3.2 percent) shift of waste lipid feedstocks used for fuel production in the road transport sector to aviation is foreseen.

Until 2035, fuel suppliers will not be required to supply the minimum amounts of SAF to airports physically. For compliance purposes, they are allowed to take an average share of SAF supplied to all EU airports. Fuel suppliers may trade SAF certificates from overachievers to underachievers.

The rationale behind this is to ensure a level playing field across the EU aviation industry and avoid the uptake of SAF being concentrated within a handful of airlines in the EU.

Effectively, this provision means that airports will have to make the necessary infrastructural investments to make SAF available at the specified blend levels. A suggested transitional period until 2035 would give airports time to make these investments. Exemptions will apply for small airports.

To ensure that the SAF blending and uplifting obligations are met, the Commission defines criteria for non-compliance penalties. Member state authorities will propose penalties for fuel suppliers and airlines, but should adhere to these criteria:
o Fuel suppliers: At least twice the difference between the yearly average price of fossil jet fuel and SAF, times the amount of SAF required to meet the specified target. Separate penalties will apply to shortfalls in the advanced bio mandate and the synthetic fuel mandate. Based on SkyNRG analysis, non-compliance penalties in 2030 could be around €1,000 and €6,000 per tonne of fuel for the advanced bio and synthetic fuel mandates, respectively.
o Airlines: At least twice as high as the yearly average price of conventional jet fuel, multiplied by the quantity of SAF that has not been uplifted. Taking an average market price of €600 per ton of jet fuel, airlines could risk a penalty of €1,200 per ton of non-tanked SAF.
o EU member state authorities need to give notice of the installed penalties to the Commission by the end of 2023, which seems rather late to provide the necessary investment security for SAF producers. Also, paying these penalties does not exonerate fuel suppliers and airlines from meeting the obligations – the shortfall still has to be met in the subsequent reporting year.

To mitigate the effects of tinkering - the uplift of more fuel than required for a flight for economic reasons - the proposal also includes a requirement for airlines to only tank the required amount for their subsequent flight. Because the ‘fuel required’ data will likely be modeled by Eurocontrol the requirement will be that airlines uplift at least 90 percent of the aviation fuel required at the airports they depart from.

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.

The ReFuelEU Aviation Initiative is a comprehensive policy proposal containing the necessary foundations for long-term investment security in SAF. The proposed blending targets are ambitious, especially from 2030 onwards, and will require rapid investments in technologies not yet commercially ready to enable a wider sustainable feedstock pool. Gasification, alcohol-to-jet and e-fuel technologies will be needed at scale to meet the targets beyond 2030.

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