Brussels (Brussels Morning Newspaper) – The European Commission announced that it adopted a Delegated Regulation outlining the EU rules for the support system installed and funded by the EU Emissions Trading System (EU ETS). The regulation aimed to increase the use of sustainable aviation fuels.
The EU ETS Directive primarily provides a support mechanism in design and related policies rather than a specific mechanism. The 2023 version of the EU ETS Directive has a specific support mechanism for the usage of eligible aviation fuels. It places aside 20 million EU ETSwers (estimated at around €1.6 billion) from January 1, 2024, to offset part or all of the price difference between fossil kerosene and alternative aviation fuels.
According to the statement, to implement the EU ETS support mechanism, the Commission assumed the Delegated Regulation to specify the rules for the yearly calculation of the cost difference between eligible aviation fuels and fossil kerosene, including incentives from the price of carbon and from harmonised minimum levels of taxation, as well as the regulations for administering the resulting allowances.
Moreover, the statement said,
“The next steps are for the airlines to report the use of these fuels during 2024, which should take place by 31 March 2025, and for the Commission to publish the fuel price differences by 31 May 2025. This will be based on a technical report to be published by the European Union Safety Agency. Finally, by 31 August, the Commission will adopt a Decision indicating the allocation of allowances per commercial airline that applied for this support mechanism.”
How does the EU ETS support sustainable aviation fuels?
The EU ETS is an integral part of the EU’s climate policy, aimed at lowering greenhouse gas emissions from specific sectors by establishing a carbon allowances market. The EU ETS operates on a “cap-and-trade” principle, whereby the EU sets a cap on total emissions allowed from covered sectors.
The cap diminishes by an annual aggregate amount in a manner that reflects the climate targets that the EU is undertaking. Each tonne of CO2 equivalent that companies emit will have to be covered either by purchasing it or receiving it.
