EU SAF Regulation reduces arbitrage, adds complexity

The new EU rule on SAF will impact any airline operating from the region.  Starting in 2025, fuel uplift at EU airports must contain at least 2% SAF. That percentage will gradually increase each year, with mandates including 6% by 2030, 20% by 2035, and 70% by 2050. These requirements will apply to all flights originating in the EU, regardless of destination.

Reaction has been mixed. SAF producers are pleased they have a framework to plan and build, but airlines are less pleased. Airlines will receive approximately €2 billion in funding from the EU carbon market to assist with the transition. Despite this, several airlines expressed frustration that the legislation does not provide enough short-term relief from the additional cost burden.  Moreover, SAF and “green aviation” are increasingly being questioned

.  Additionally, the details of how this works in practice find growing skepticism.

For example, airlines mention the “book and claim system,” which allows airlines flying from an airport without SAF to purchase SAF for use by other operators elsewhere. This way, airlines still pay the extra cost of the SAF without physically using the fuel on flights. A similar system has been used in the green electricity market since the 1990s. The airline industry argues that disconnecting the purchase of SAF from its actual use will address the anticipated supply problems while helping the SAF industry grow.  Perhaps, but one has to be wary of the impacts of broad-brush legislation.