Catch-up meeting
A4E
Ref. Ares(2022)2451656 - 01/04/2022
Brussels, 14/01/2022, 13.15-14.45
Memory jogger
1. Slot Relief – Summer 2022 & LH “unnecessary flights” media story
Delegated Act adopted on 17 December (now in EP/Council scrutiny for 2 months). Traffic
outlook justifies a slot use-rate of 64% + JNUS (force majeure) exception. Airlines and
airports welcomed this 64% use rate.
o Progress in booster vaccination + successful use of EU DCC
o Eurocontrol forecast predicts yearly average of 89% in 2022 [
NB. This is according to
middle scenario, excluding new variants of concern. Low scenario predicts 74% in 2022.
64% stil defensible though]
o Initially we intended to set the rate at 70% but revised downwards because long-haul
traffic recovery is lagging behind which also has an impact on intra-EU feeder traffic.
o Early January actual air traffic forecast is 77% compared to the pre-Omicron forecast of
79% for the same period. This demonstrates that the 89% forecast for the whole of 2022
is achievable.
o
Lufthansa’s “unnecessary flights” – LH failed to present any evidence! Very
harmful stunt for the whole industry to play the “green” card! Aviation as a whole
is back in the negative spotlight!
2. Fit for 55 Package
•
ETS: Gradual phase out of free allowances by the end of 2026. Application for intra-EU
flights only.
•
ReFuelEU: fuel suppliers to blend at least 2% by 2025, 5% by 2030, 20% by 2035. We
include sub-targets for e-fuels, with 0.7% by 2030 and 5% by 2035. Flanking measures:
Renewable and Low Carbon Fuels Al iance, Funding Mechanisms (R&D/Green Taxonomy).
•
ETD: Kerosene wil be gradually taxed from 2023 to 2033, SAF + e-fuels wil benefit from a
minimum zero rate for a 10-year transitional period (afterwards very low tax rate). This wil
benefit SAF uptake.
•
CORSIA: EU remains commit ed to implement CORSIA –started its offsetting phase in
January. At the same time, to reflect the EU’s climate ambition, we proposed to pay
particular attention to certain aspects of CORSIA i.e. (i) the need to avoid the risk of double
counting of emissions; (i ) the need to foster high participation by States and (i i) the need to
ensure compliance.
•
AFIR: we impose an obligation (on airport managing bodies) to ensure that stationary
aircraft are supplied with electricity at TEN-T core and comprehensive airports → 2025 – for
all gates (points connected with a passenger boarding bridge); 2030 – for outfield posts
(points not connected with a passenger boarding bridge).
Catch-up meeting
A4E
Brussels, 14/01/2022, 13.15-14.45
Defensives
Can airlines afford SAF? What is the price gap with fossil kerosene?
• It is true that SAF is more costly than fossil kerosene. Airlines wil incur a higher price.
But this is far from unsurmountable! The SAF that wil be on the market tomorrow
(HEFA) is around 4.5 times the price of fossil kerosene. Thanks to the Emissions
Trading System, the difference in what airlines pay is further narrowed. Also the Fit for
55 proposal on taxation of jet fuels provide important financial benefits to SAF compared
to kerosene.
• With the targets we proposed (2% by 2025, 5% by 2030 and 20% by 2035) the ticket
price increase wil be very moderate (the Impact Assessment estimated ~1% by 2030
and ~5% by 2040)!
• Of course, if you look at e-fuels, it’s even more expensive than fossil kerosene. But the
e-fuels industry and experts are confident that this price wil also come down over time.
Economies of scale wil play a role, as well as the expected steady rise of fossil
kerosene prices.
• IATA also confirm that SAF prices are expected to significantly decrease over time and
become price-competitive with fossil kerosene before 2050.
• To bring prices down, the key is to scale up production. Apart from the SAF blending
mandate, the Commission is also launching an industrial alliance on Renewable and
Low Carbon Fuels with a focus on SAF. The purpose of the alliance is to scale-up
production and make SAF more economically attractive.
Under ReFuelEU Aviation, what can we do to limit the impact on the competitiveness of
EU airlines?
• Under ReFuelEU Aviation, all airlines (EU and non-EU) are subject to the same
obligations, regardless of nationality or destinations. We must preserve by all means the
EU-level of ambition. Differing national obligations would be unmanageable for the
airlines and would create real distortions.
• However, it is possible that EU airlines flying long intercontinental flights may have to
bear a higher SAF cost than their direct competitors flying through non-EU hubs (e.g. via
Istanbul or Gulf States).
• We are aware of some proposals made by certain airlines to reduce the scope of the
SAF mandate to only intra-EEA flights. This is impossible for several reasons.
o It would reduce significantly the climate ambition of the measure.
o It would not decarbonise extra-EEA flights, whereas medium and long-haul flights
account for the bulk of emissions.
o It would cause distortions of competition on regional or point-to-point airlines vis-à-vis
inter-continental airlines.
• We are aware of some proposals by airlines (Lufthansa) in favour of a ticket levy for SAF
according to the passenger’s final destination, where the revenues would be earmarked
Catch-up meeting
A4E
Brussels, 14/01/2022, 13.15-14.45
for Member State-level SAF procurements. I see this as difficult to implement and
possibly quite heavy bureaucratically. I could also see quite strong opposition from non-
EU airlines, on which 1st-leg flight a ticket levy would be applied for the entire journey.
(e.g. a passenger flying from Paris to Tokyo via Istanbul would pay the SAF ticket levy
on the Paris-Istanbul flight, for an amount proportionate to the whole length of the
journey towards Tokyo).
ReFuelEU Aviation: Why has COM not proposed a book & claim system for airlines?
• We would have considered the possibility of such a system if the Regulation set
quantified SAF targets on airlines. But this is not the case. The Regulation imposes
obligations on fuel producers to ensure that the EU market is supplied with a minimum
level of SAF.
• We do not see a need for book & claim because by 2030, the Regulation requires SAF
to be supplied to all airports. If an airline wishes to use more SAF, this should be
possible by requesting their fuel supplier to do so. No need for any legal requirement or
obligation to do so.
• Indeed, the proposed Regulation set out a minimum SAF share to be supplied to the
aviation market. It is based on the principle of market freedom. Airlines wishing to use
SAF at a given airport (even if not covered in the scope) or more SAF than the minimum
share supplied at a given airport would be fully free to do so.
• In any case, the delivery of SAF to a particular airline at any given airport wil rely on
contractual arrangements made between that airline and its fuel supplier. There is no
need for a book and claim system for this purpose, as this is already how things work for
the supply of fossil kerosene.
• For smaller airports not covered under the proposed Regulation, a possibility of opt-in
would allow them to be supplied with the same minimum SAF shares as other airports.
• Besides, a book & claim system could easily lead airlines to communicate and “double
claim” SAF use. The airline that paid for the SAF and the airline that is actually using it
could both declare that they are flying “more sustainably”.
• Even with strong safeguards against such double, a book and claim system would make
it possible for an airline flying without SAF on a flight e.g. Paris-Frankfort, to claim it is
flying “more sustainably” whereas the actual physical SAF uplift took place on a flight
e.g. Singapore-Bangkok. And let’s not ignore the complexity of the matter regarding the
differences on the set of sustainability criteria and eligible feed-stocks that SAF bought in
Singapore or California and in Amsterdam or Madrid wil certainly have, which would
render any Book and Claim system almost impossible.
• What we need is airlines claiming use of SAF when and where they actually use SAF.
Not a new controversy or the aviation sector about airlines making fallacious or difficult
to understand sustainability claims.
Catch-up meeting
A4E
Brussels, 14/01/2022, 13.15-14.45
• Finally, there is no precedent of such a book and claim system whose complexity cannot
be denied. It could become very sensitive if it is not perceived by all as a perfectly fraud-
proof system. It is not clear what impact it would have on the environmental integrity of
the Regulation and on the administrative burden.
ReFuelEU Aviation: How do you avoid putting EU aviation industry at competitive
disadvantage with non-EU industry?
• It is essential that all aviation players (EU and non-EU) contribute to the SAF transition
and bear the (financial) effort of using SAF. There should be no difference of treatment
depending on the nationality of the airlines. An anti-tankering measure wil ensure that all
airlines take up SAF.
• With moderate targets at the start, the impact on ticket prices wil be minimal (around 1%
increase by 2030). We don’t see any potential for distortion with such levels.
We need to continue working at ICAO level towards establishing global SAF targets. This wil
ensure even further a level playing field.
(Tel.
) MOVE E1
(Tel.
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(Tel.
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