Staying Aloft: Support Mechanisms for ‘Sustainable Aviation Fuels’ in the United Kingdom and European Union

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The EU’s ReFuelEU Aviation and the UK’s SAF Mandate place requirements on fuel suppliers to bring alternative aviation fuels to market. In parallel, financial support for alternative fuels comes from the EU’s reimbursement scheme, which subsidises some fraction of the cost difference paid by airlines, and the UK’s guaranteed strike price (GSP), which shields SAF producers from variability in market prices.

This report examines the policy frameworks in the two regions and reviews their strengths and weaknesses. It finds that the structure and targeting of their complementary support mechanisms will deliver diverging outcomes. The EU’s reimbursement scheme will benefit airlines and reduce the costs to flyers, but will do little to motivate next-generation fuel producers. In contrast, the UK’s GSP delivers clear reassurance to fuel producers and is more likely to stimulate investment in the industry by facilitating finance availability and reducing the cost of capital.

The report presents illustrative model scenarios and concludes by distilling major challenges and recommendations for the two policy frameworks.

  • The EU’s mandate trajectory and its slightly obscure system of non-compliance penalties could be reviewed, and a joined-up approach adopted for targeting resources towards supporting investment in more sustainable alternative fuels.
  • For the UK, there are some important details to iron out about how price-setting works in the GSP; and a potentially vacillating balance of alternative fuel supply and demand from the EU may pose challenges for compliance and costs.
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Full steam ahead?

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Environmental impacts of expanding the supply of maritime biofuels for the International Maritime Organisation targets

The UN’s International Maritime Organisation (IMO) is in the process of evaluating proposals for binding targets aimed at decarbonising international shipping. Whatever the ultimate form of this regulation, there will likely be significant implications for the production of biofuels for shipping. Until now, these have played only a minor role in the maritime fuel mix, and there is a risk that the IMO will repeat the mistakes of past fuel policies in other sectors.

This report for Transport and Environment examines and models potential environmental consequences of such a shift, and concludes with policy recommendations for mitigating the worst impacts of biofuel feedstock consumption as well as for reducing future overall demand for maritime fuel.

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Fuelling nature

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How e-fuels can mitigate biodiversity risk in EU aviation and maritime policy

This report, commissioned by Opportunity Green on behalf of the Skies and Seas Hydrogen-fuels Accelerator Coalition (SASHA), explores the biodiversity risks associated with the EU’s efforts to decarbonise aviation and maritime transport. The ReFuelEU Aviation and FuelEU Maritime regulations aim to engender a rapid transition away from fossil fuels and towards alternative fuels; but this raises concerns for nature protection, potentially undermining the EU’s biodiversity commitments under the Biodiversity Strategy for 2030 and the Nature Restoration Regulation. Cerulogy’s report assesses how different fuel pathways – biofuels from crops, residues and waste oils, and synthetic e-fuels – compare in terms of pressure on land, habitats, species, and ecosystems.

Cerulogy modelled alternative fuel demand in the aviation and maritime segments to 2050. We considered four scenarios representing different dominant fuel production technologies: cellulosic residues, cellulosic crops, lipids, and electrofuels. For each scenario, we estimated feedstock and land requirements, and developed a biodiversity risk framework to evaluate land-use change, habitat degradation, species loss, pollution, and agrochemical use. To assess policy coherence, we examined trade-offs and synergies between the EU’s transport decarbonisation goals and its nature and biodiversity policy framework.

Our findings show that, while all fuel pathways carry some environmental risk, electrofuels may represent the lowest overall risk to biodiversity, largely due to their minimal land footprint and reduced pressure on ecosystems, species, and habitats. Even biofuels derived from residues and wastes may have implications for nature when scaled to meet growing fuel demand. The EU’s current approach risks locking in high-impact fuel systems unless it also addresses total energy use in aviation and shipping. Until policymakers are ready to confront demand growth in these hard-to-decarbonise sectors, support for options like electrofuels may be the clearest path for the EU to aligning its climate and biodiversity goals.

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Vertical Take-off? Cost Implications and Industrial Development Scenarios for the UK SAF Mandate

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In this paper for the International Council on Clean Transportation we consider the industrial development implications of the targets for alternative aviation fuel supply that are being introduced throught he UK’s SAF Mandate.

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Hydrogen Delivered Lifecycle Analysis Tool

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Cerulogy worked with the Clean Air Task Force to develop an online tool to allow users to explore the lifecycle emissions of conventional and renewable hydrogen production. It allows users to review the full lifecycle emissions of hydrogen while changing a number of assumptions, including the methane leakage rate for natural gas supply, the electricity source for electrolysis processes, and the modelled global warming potential of methane and of hydrogen itself.

H2 LCA calculator

 

Fuelling Development

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This report for Transport and Environment, written in partnership with David Calderbank Consulting, considers options for the development of alternative transport energy policy in the UK under the Renewable Transport Fuel Obligation (RTFO). It discusses issues including adding renewable transport fuel obligations on aviation and marine fuel use, crediting renewable electricity use by electric vehicles, and improving the investment case for advanced alternative fuel projects. It includes a detailed proposal for a novel policy system using ‘contracts for difference’ to provide minimum revenue guarantees to investors in chosen advanced alternative fuel projects, thus enhancing the effectiveness of the RTFO development fuel mandate as an investment driver.

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Beyond biomass?

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Within the European Union’s recast Renewable Energy Directive support is available not only to biofuels but also to ‘renewable fuels of non-biological origin’ (electrofuels) and to ‘recycled carbon fuels’ (fuels produced taking advantage of fossil energy in solid and gaseous waste streams).

This report for the International Council on Clean Transportation provides an introduction to the main issues in sustainability and lifecycle analysis associated with supporting these novel fuels.

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Truckin’ on

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In this report for FuelsEurope we present a proposal to use a fuel decarbonisation credit added to the heavy duty efficiency vehicle efficiency standard to accelerate deployment of advanced alternative fuels and of green hydrogen use and CCS at refineries.

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