The race to Jet Zero – who will get there first?


Since legislating for net zero, both the EU and UK have been competing to go further, faster on plans to decarbonise their energy intensive industries. Indeed, last Wednesday we saw this competitiveness in action as both published their plans for decarbonisation on the same day. So now we have it – the UK’s “Transport Decarbonisation Plan” and the EU Commission’s “Green Deal”– the question is – which is more ambitious?

To look at aviation in focus (one of the most notoriously difficult industries to decarbonise), some context has to first be given. Whilst most consumers are aware of what green transport by car looks like – for example, choosing to drive a hybrid or electric vehicle – few are likely to be aware of what that pathway looks like when they book their flights, or board an aircraft on the tarmac. 

Whilst it’s well understood that we won’t be seeing long-haul electric flights in the immediate term, one pathway to securing lower carbon emissions over the next few years is that of sustainable jet fuels (also known as “SAF”). It is these fuels – capable of being made from recycled industry emissions or even household waste – that have been a core ambition in airlines’ pledges to decarbonise, although they face challenges with low supply and associated high costs of production.

So, do the UK & EU proposals on aviation have a plan to tackle this issue and accelerate the uptake, so we can all be flying on sustainable jet fuels shortly? Well, sort of. Both have chosen to adopt a “stick” approach with mandating requirements for industry to adopt sustainable fuels, although questions remain about whether this alone is enough to stimulate the significant production needed to get us all on those flights.

To look at these proposals in more detail, the European Commission outlines plans for:

  • A requirement for fuel suppliers to offer a minimum blend of sustainable jet fuels starting at:
    • 2% from 2025
    • 20% in 2035
    • and eventually; 63% in 2050
  • The removal of tax exemptions for aviation on kerosene
  • A refuelling obligation for all flights at Union airports

The UK has also committed to mandating sustainable fuels on industry but is yet to release further detail on their own requirements, saying this will be laid out for consultation “shortly”. It is worth reflecting that this delay may be somewhat purposeful on the UK’s part given any potential for market distortion should their plans see different percentages of blending requirements across the UK and EU. Indeed, any difference in their proposals is likely to face criticism on patchwork policy for what is in majority, an international industry.

Whilst the EU’s proposals do appear ambitious and leading the way in this aspect, one of the key challenges facing the wider adoption of sustainable fuels has always been the low production and high associated costs. This is seen in the fact that worldwide, the only plant continuously producing these fuels is based in the US with a few batch-based production facilities across the EU (so, still a way to go!). This has led Airlines for Europe to warn that any premature implementation of fuel requirements that’s not under mature market conditions “would lead to higher prices”.

One potential solution (which only forms one sentence in the EU’s proposals) – is that of “CfD” or “Contracts for Difference”. Widely renowned for its success in expanding the solar and wind industry to become one of the cheapest forms of low-carbon electricity generation, this policy tool uses  reverse auctioning to drive down costs, whilst giving the producer a fixed contract in time to reduce investor uncertainty. The EU in its proposal expresses its hope this funding mechanism will be explored “to facilitate the certification of innovative sustainable aviation fuels technologies”. There is also some indication the UK might explore this tool, saying they will consider whether “further innovative policy mechanisms are needed to provide greater confidence to UK SAF producers”.

Whilst the EU will likely be ahead of the UK & set the marker on what sustainable fuel obligations should look like, perhaps the most ambitious policy mechanism to support the industry achieve its decarbonisation plans would be a tool like CfD. This would not only provide investor confidence but also help spur on domestic production and plant building (also supporting wider policy priorities like the UK Government’s ambition to create “green jobs”).

So, will we all be flying on sustainable jet fuels by 2025? Well, both the UK and European Commission’s proposals have a long way to go to be finalised. But what is clear is the imminent need to upscale production & support reduced costs for SAF (especially in time to meet any mandating requirements they may choose to make). With less than four years to go, watch this space…

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