European airlines pull the emergency brake on targets around SAF

Europe’s major airlines think that Europe’s ReFuel legislation is not going to succeed in creating the affordable market for sustainable aviation fuel (SAF) that is promised. They said this at a press conference in Brussels.

They fear there will not be enough production. The Boston Consulting Group (BCG) report, released on Thursday, predicts a shortfall of up to 45% in eSAF and 30% in SAF supply by 2030.

Ramp up production or postpone quotas

The European Union wants an increasing share of aviation fuel from non-fossil sources. Consequently, since the beginning of this year, at least 2% SAF must be mixed among traditional kerosene. That percentage should increase to 6% by 2030 and 70% by 2050.

But already “we don’t have enough SAF, and the SAF we have is very expensive,” three to five times more expensive than kerosene, complained Luis Gallego, top executive of airline group IAG (British Airways, Iberia…) on behalf of Airlines for Europe (A4E), which represents 17 European airlines groups, including the Lufthansa Group, Air France-KLM, Ryanair, and TUI.

“Unless there are immediate measures” to increase production, “the only solution is to postpone the 2030 target,” Gallego said. Last year, IATA, the International Airline Association, also noted that it was skeptical about flying on 5% SAF by 2030.

0,3% of global jet fuel

A4E referred during a press conference to a study by the Boston Consulting Group (BCG) that should show, among other things, that by 2030, some 30% too little SAF will be produced to meet the European standard. BCG recently surveyed over 500 executives at approximately 200 companies across the global aviation ecosystem.

The report shows that the production of SAFs has grown rapidly. Over the past three years, supply has increased by 1.150% worldwide but progress has slowed because of economic uncertainty and the capital-intensive nature of production facilities.

Last year, for example, SAF represented just 0.3% of global jet fuel production. New production capacity is slowing due primarily to economic uncertainty and higher energy and operating costs that squeezed company margins.

Lack of clear business case

About two-thirds of the respondents say they are interested in SAFs but are waiting for the market to take off. Consequently, about half of commercial aviation players now allocate more than 4% of their revenue or budget allocations to SAF investments.

In contrast, airlines and airports have invested just 1% to 3%, often prioritizing aircraft fleet renewal over riskier SAF projects.

The biggest barrier to investment is the lack of a clear business case for expanding the use of SAF. However, 80% of companies are confident they can achieve their 2030 SAF objectives.

Yet only 14% feel well-prepared to overcome challenges along the way. Airports and lessors are particularly lagging, with just 6% and 0% readiness, respectively.

More cooperation

Still, the BCG report does not see everything negative about meeting the 2030 SAF goals. For example, it calls on the airline industry to work more closely together and submit collective applications for SAF.

This will not only give them more favorable SAF purchase conditions but will also boost investor confidence, which will then cause production capacity to increase.

It also points out that breakthrough innovations, such as advanced carbon capture technologies or methanol-to-jet pathways to produce more costly e-SAF, made from a thermochemical process involving carbon and hydrogen, are potentially more transformative and hold the potential to push the cost of SAF closer to that of fossil fuels, which, unlike road and rail fuels, are exempt from VAT in aviation.