Airlines: Plan To Phase Out EU Fossil Fuel Subsidies Would Backfire

An idea in the EU to phase out subsidies for fossil fuels could backfire on the aviation industry, considering that there are no readily available alternatives to jet fuel at scale, executives at airlines have told the Financial Times.

The EU is currently debating its common stance for the COP28 climate summit in Dubai next month, and some wealthy EU nations, including the Netherlands, are proposing an end date to fossil fuel subsidies for 2025. The plan, however, is meeting resistance among other EU member states with large fossil fuel industries such as Poland. Those countries do not want a specific date for the phase-out of fossil fuel subsidies in the EU.

Airline executives, including the top managers of Lufthansa and Ryanair, have criticized the plan to set a date for the end of fossil fuel subsidies.  

“Until you have some affordable alternative that you can offer to voters and to consumers across Europe, it’s all just pie in the sky,” Michael O'Leary, chief executive of Ryanair, has said at a briefing - as carried by FT.

Last month, Willie Walsh, Director General at the International Air Transport Association (IATA), said that the airline industry would be ready to embrace the fact that sustainable aviation fuel (SAF) would always be more expensive than oil-based jet fuel.

SAF is likely to always be more expensive than kerosene even when SAF supply grows in scale from the current very low volumes, the industry association’s head said.

“I believe the industry is ready to embrace that,” Walsh said in comments carried by Reuters.

Despite numerous pledges from airlines and government support for SAF production, the alternative of the petroleum-based jet fuel faces challenges in supply, costs, and feedstock, analysts say.

Earlier this year, Boeing Company’s president and chief executive officer David Calhoun said that SAF could never achieve price parity with jet fuel to be able to compete with conventional fuels and help decarbonize the aviation sector.

By Tsvetana Paraskova for Oilprice.com

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