EU allocates ETS allowances worth $118 million to help airlines buy SAF

The European Commission announced Sept. 17 that it adopted a decision Sept. 12 on the allocation of EU Emissions Trading System emission allowances to airlines for the use of sustainable aviation fuel (SAF) last year.

This follows calculations by member states’ authorities for commercial airlines and marks a key step in implementing the additional support mechanism under the ETS to promote SAF uptake. 

The latest amendment to the EU ETS Directive introduced a dedicated support system to accelerate the use of SAF by granting free EU ETS allowances for the uplift of these fuels.

Starting in 2024, 20 million EU ETS allowances, worth around 1.5-billion euros (USD$1.77 billion) at an allowance price of 75 euros are set aside for this purpose. 

For the first year of application, 2024, the support amounts to about 1.3 million allowances worth approximately 100-million euros (USD$117.86 million) distributed between 53 operators.  

The support system covers all or part of the price difference between fossil kerosene and the eligible SAF used by individual commercial-aircraft operators on their flights covered by effective carbon pricing through the EU ETS.

This support comes on top of the EU ETS incentive for use of SAF as operators are not required to surrender allowances for the use of these fuels—an advantage worth around 25-million euros (USD$29.5 million) in 2024.

Taken together, the ETS incentive for use of SAF in 2024 amounts to around 125-million euros (USD$147.3 million)—that’s 100-million euros from ETS allowances and 25-million euros from ETS zero rating of sustainable fuels.

In addition, the EU ETS finances the Innovation Fund to support innovative clean-tech projects, including in the aviation sector, to further reduce its climate impact.  

By publishing ETS SAF support prices, the commission said it is ensuring a transparent support mechanism, underlining its commitment to scaling up sustainable fuels in Europe and advancing broader EU climate objectives.

Click here for a list of operators and their ETS-allowance allocations for the use of SAF.