The European Union has introduced a major subsidy initiative aimed at accelerating the aviation sector’s shift toward sustainable aviation fuels (SAF), aligning with its broader ESG and carbon neutral strategy goals. According to Reuters, the EU will subsidize airline purchases of more than 200 million litres of SAF, representing approximately 15% of global SAF production—a significant move to bridge the cost gap between conventional kerosene and greener alternatives. 

The funding comes from the sale of 20 million carbon emissions permits, part of the EU’s Emissions Trading System (ETS). The subsidies are designed to reduce financial barriers for carriers operating within Europe. The support covers up to €6 per litre for e-fuels (synthetic fuels produced using captured CO₂) and €0.50 per litre for biofuels. This equates to potential SAF purchases of up to 216 million litres of e-fuels or 2.6 billion litres of biofuels. 

Despite SAF’s environmental promise—offering net-zero or significantly lower emissions compared to fossil kerosene—its current usage accounts for only 0.3% of global jet fuel, mainly due to its 3–5x higher cost. The EU’s plan addresses this challenge by incentivizing uptake in a sector that is among the hardest to decarbonize. 

The initiative supports EU mandates requiring 2% SAF usage at EU airports by 2025, rising to 6% by 2030. Simultaneously, the EU is phasing out free carbon permits for airlines, compelling them to internalize the cost of emissions and adopt cleaner practices. 

This move reflects the EU’s continued leadership in ESG-aligned policy, reinforcing the bloc’s carbon neutral strategy through targeted aviation reform. With airlines under pressure to decarbonize and invest more in SAF, the subsidies could be a game changer in aligning air travel with sustainability benchmarks. 

Source: 

https://www.globalbankingandfinance.com/UK-EU-AVIATION-SUSTAINABLE-FUEL-16ab3bcf-94e4-4e60-a925-e802a4731d6d