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Fit-for-55: Unprecedented Implications for CCU Projects

The aviation sector creates 13.9% of the emissions from transport, making it the second biggest source of transport GHG emissions after road transport. 

Over the last weeks, EU policymakers have struck several major deals in interinstitutional negotiations (known as “trilogues”), with immediate and unprecedented implications for Carbon Capture and Utilisation (#CCU) projects, including Sustainable Aviation Fuel (SAF).

Last weekend, the EU institutions agreed on new rules for ETS in aviation.

 

KEY FIGURES

· ETS-free allowances will be completely phased out for aviation: 25% in 2024, 50% in 2025 and 100% in 2026. In other words, as of 2027, airlines will need to pay their ETS fees in full.

· 5 million allowances from revenues collected will go to the Innovation Fund, which represents 450 million euros in today’s ETS prices.

· 20 million allowances (in today’s prices: about 1.8 billion euros) will be allocated to support the sector’s transition to sustainable aviation fuels between 2024 and 2030. It will in particular cover 95% of the price differential between RFNBOs (CCU fuels) and fossil equivalents.

 

The deal also provides for a new support scheme to speed up the use of sustainable aviation fuels, financed with EU ETS revenues which are estimated at €1.6 billion. It will also create a new system for airlines to monitor, report and verify non- CO₂ emissions and climate effects of aviation.

The co-legislators agreed that all fuels eligible under RefuelEU, except fuels derived from fossil fuels, will be eligible for the sustainable aviation fuels (SAF) allowances until 2030. Small islands, small airports and outermost regions will be able to cover the price differential between kerosene and eligible fuels with 100% of the SAF allowances in order to ensure the availability of the eligible fuels in these locations with specific supply constraints.

 

For all other airports, the coverage of the price differential will be modulated according to the type of fuel:

· 95% for renewable fuels of non-biological origin;

· 70% for advanced biofuels;

· 50% for other eligible fuels.

 

More Fit-for-55 legislations are expected to be adopted in the coming months to complete that regulatory framework.

This first set of agreements confirms nonetheless the place of CCU and power-to-X solutions in the EU’s energy transition strategy. Those different legislations are now being formally adopted and will be implemented in the coming months.

 

Find the full here.

Antonio

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