ReFuel EU initiative set for take-off

On Wednesday 13 September 2023 the European Union Parliament adopted the ‘ReFuel EU’ initiative – formally titled ‘a regulation on ensuring a level playing field for sustainable air transport’.

On Wednesday 13 September 2023 the European Union Parliament adopted the ‘ReFuel EU’ initiative – formally titled ‘a regulation on ensuring a level playing field for sustainable air transport’. The regulation, which comes under the umbrella of the EU’s ‘Fit for 55’ package, aims to primarily address the use and production of sustainable aviation fuels (SAF) but also introduces new requirements on aircraft operators and EU airports to ensure that these are working towards emission reductions. 

Given increasing global pressure in relation to emissions reductions, the current proposed text of the regulation comes at a critical juncture, with the aim of providing the aviation industry with some clarity and much-needed consistency across the market.

Specifically, the regulation will include obligations on fuel suppliers in relation to SAF distribution and obligations on EU airports to facilitate access to SAF. This is perhaps the most well-needed regulatory intervention. Airlines are increasingly showing their willingness and eagerness to utilise SAF in flights, but the current lack of availability, uneven distribution and concerns over the true scalability of this technology remain key areas of concern.

The regulation should help alleviate at least some of these issues, although it remains to be seen how effective mandates will really be, including due to the potential adverse impacts on pricing for the industry, to the ultimate detriment of the consumer.

The regulation will also impose uptake requirements on airlines operating flights departing from EU airports, irrespective of whether they are EU carriers or not. 

Moreover, the regulation also aims to provide a definition of the term ‘SAF’ as being drop-in aviation fuels that are either synthetic aviation fuels, advanced biofuels or biofuels produced from feedstock which comply with the sustainability and greenhouse gas emissions criteria under the Renewable Energy Directive (Directive 2018/2001). This definition presents a significant step forward and requires careful consideration, as it not only delimits what can be considered ‘SAF’ but in so doing it will also have a knock-on effect on airline operations. 

In particular, whether an airline utilises SAF as defined under the regulation may impact its marketing and ‘green’ credentials, as airlines are increasingly being asked to justify and explain what steps they are taking towards emission reductions. This definition therefore comes at a crucial time, as both domestic regulators and the European Commission itself continue to put pressure on airlines to communicate honestly and effectively in relation to their emission-mitigating operations.

The draft regulation also contemplates the introduction of an environmental labelling scheme, which is expected to fall within the ambit of the European Aviation Safety Agency (EASA). The scheme, which remains voluntary for now, will enable aircraft operators to request the issuance of a ‘label’ for flights departing from EU airports. The label would certify the level of environmental performance of the flight on the basis of the expected carbon footprint per passenger and the expected CO2 efficiency per kilometre.

As consumer purchase patterns continue to be influenced by environmental considerations, there appears to be an expectation that this labelling system will both incentivise airlines to comply with the regulation and also to self-regulate the industry. 

The proposed text is now subject to final approval by the Council of the EU which is comprised of representatives of each EU Member State. It is expected that the regulation will come into force on 1 January 2024, as the EU continues to be under pressure to deliver on this initiative and take the lead in ensuring concrete action on emissions reduction.

The current proposed text is increasingly being welcomed by industry lobby groups and stakeholders as representing a solid step in the right direction, although there remain real concerns that mandates, in isolation, may be insufficient to really shift the dial and address ongoing scalability and distribution concerns associated with SAF. Whilst it therefore remains to be seen how this regulation will effectively work in practice, the current proposal provides a glimmer of hope for the longevity and sustainability of aviation in Europe.

Link to proposed text:  Texts adopted - Sustainable aviation fuels (ReFuelEU Aviation Initiative) - Wednesday, 13 September 2023 (europa.eu)