European airlines are concerned that Europe is losing its advantage over the United States when it comes to the production of sustainable aviation fuels (SAF) and e-fuels, which are produced from green electricity and hydrogen. The concerns were voiced by airline association Airlines 4 Europe (A4E) during its Aviation Summit in Brussels on Wednesday. A4E concerned that Europe loses out on sustainable fuels.
Since the Inflation Reduction Act (IRA) of the Biden Administration was passed, this is already resulting in energy companies postponing investments in European facilities or moving them to the US, where they can benefit from incentives. The European Commission has responded to IRA with its own Net Zero Industry Act, but A4E member airlines want Europe to move away from the current mandate policy that is part of the Fit for 55 program to incentive schemes that are working very well in the US.
“The US may be a little behind Europe when it comes to promoting SAF, but their system of incentives is starting to become very effective. They create tax advantages for users and buyers to use these fuels and increase the production volumes of these fuels in order to decarbonize our industry. That’s something we are missing in Europe, we are missing any support in this regard,” said Carsten Spohr, outgoing Chair of A4E. “Europe, through mandates, is forcing us to buy non-existing volumes of SAF at crazy prices that are five times higher than kerosene. (…) Governments, airlines, our industry but also society need to show commitment to the investments to scale up SAFs and bring down the price quickly because there is already a race going on about where these investments are going to build up volumes.”
Spohr warned that Europe could be losing its advantage. “We already lost the race on batteries, we lost the race on solar panels. We now also risk losing the race for synthetic fuels, which once again shows that Europe is not competing where it should be.” A4E voiced its concerns not just during the press conference on Wednesday, but also the previous day when Commissioner Frans Timmermans was invited to the CEO table.
“We ask the question: where are those billions of environmental taxes going? We as an industry accept to pay those taxes, but we rightfully ask the question what the hell has happened with them? Europe should at least subsidize or incentivize the rapid production of SAF,” Group CEO Michael O’Leary of Ryanair said.
Same concerns
During the Summit, A4E called on the European Union and policymakers to strengthen and secure the competitiveness of European aviation. The airlines note that essential reforms have stalled for a number of years on key topics like the airport charges directive, taxes, the reform of passenger rights under the EU261 rule, and the Single European Sky (SES).
As pointed out here by AirInsight already in 2021, the problem is that the airlines and A4E have not had any success in pushing these points, which have been on the agenda of each A4E Aviation Summit for the past seven years now. It made moderator Richard Quest of the CEO panel wonder why the lobby of A4E with the European Commission has not been effective and if it shouldn’t start getting tough and make a strong message to politicians and the public.
Carsten Spohr said: “I agree with you, but I pointed out already this morning that there is a new currency in town: CO2. Historically, we as airlines complain about money and passenger comfort, which, obviously, didn’t get very far. But now it is different. This important thing about CO2 will change the debate. But I agree we have privately to be tough with politicians for revoking ideas that are expensive.”
The problem with the reforms, notably those on air space, is that national governments are unwilling to take action and the European Commission fails to have the power to impose an EU-wide policy. Spohr agreed: “Where is their power, really? Is it just a question of willingness? The fact is that if Germany or France because of the pressure of the unions doesn’t agree to do it, any Commissioner in the world can try but will be unsuccessful. It is naïve to think that someone in Brussels wakes up in the morning and takes up the phone to call Paris or Berlin and tell them ‘the Single European Sky will happen.”
“The Commission has to drive it true, the Commission is a transnational body. The problem is we have a Commission that doesn’t want to take action,” added O’Leary. He referred to the Commission’s failure to address the problem of the closure of French air space for overflying traffic during the multiple strikes in recent weeks and days, which are set to continue in April. Ryanair has launched a petition to get the flying public behind it and force Brussels to act. “Commissioner Ursula von der Leyen was given a roadmap by Eurocontrol three months ago to prioritize overflights, but she didn’t do anything. They need to take action!”
A4E discusses its concerns and worries twice a year but has to conclude that each time little or no progress has been made. “As long as it is necessary, we will tell the Commission the same thing,” O’Leary said. Spohr added: “This conference today is more than just pressing the EU Commission. It is the reflection event of European aviation, which is one of the few industries where Europe is still trading on a par with other parts of the world.”
easyJet CEO Johan Lundgren said: “We need to be crystal sharp on the narrative and message and there is a new currency. There is something about the carbon saving and sustainability agenda that we can get some wins from. I am talking about the air space reforms. We can be better at bringing that story and also make it clear to the public and consumers. It becomes technical when you talk about the air space reform, but you have to make sure that people understand that we could reduce emissions by ten percent but can’t because we can’t fly in an optimum way.”
