RFNBOs in the Spotlight: How RefuelEU Aviation is shaping sustainable aviation fuels
The RefuelEU Aviation initiative, beginning in 2025, represents a significant step for the EU towards reducing the carbon footprint of the aviation industry, while ensuring a level playing field for sustainable aviation fuels (SAF). The new regulation mandates a blending target of SAF into the aviation fuel mix for EU flights, starting in 2025, and sets a specific minimum target for synthetic aviation fuels, or e-fuels, beginning in 2030. It is designed to stimulate demand for both biogenic SAF and e-fuels, which, in turn, is expected to boost the demand for renewable fuels of non-biological origin (RFNBOs) across the European Union.
The initiative, adopted by the Commission in October last year, sets forth a mandate for all aviation fuel suppliers to EU airports. It enforces a blending obligation that requires at least 2% SAF to be mixed with fossil fuel kerosene. This ratio is scheduled to increase progressively, aiming for a 70% SAF blend by 2050. The legislation will apply to all flights departing from EU territories, irrespective of their final destinations.
Under this initiative, the EU significantly emphasises the importance of synthetic aviation fuels, or e-fuels, as the cornerstone for achieving scalability and sustainability in aviation fuel technology. The mandate additionally specifies minimum quotas for these synthetic fuels, starting at 1.2% by 2030 and escalating to 35% by 2050.
The legislation categorises SAF into three types:
- Synthetic aviation fuels, defined as renewable fuels of non-biological origin (RFNBOs), including renewable hydrogen, as per Article 2 second paragraph point (36) of Directive (EU) 2018/2001, which also meet specified lifecycle emissions savings criteria
- Aviation biofuels, encompassing certified biofuels
- Recycled carbon aviation fuels
These specified fuels must adhere to the Renewable Energy Directive (RED)’s sustainability and emissions criteria. Notably, the legislation caps the use of SAF derived from food and feed crop biofuels at 70%, promoting a broader spectrum of innovative and environmentally friendly fuel sources.
Market analysis
The blending obligation towards e-fuels, particularly viewed through the lens of Power-to-Liquid (PtL) technologies, will significantly amplify demand and foster a market for RFNBOs within Europe. With the European Union Aviation Safety Agency (EASA) projecting that the EU will require about 46 million tonnes of aviation fuels by 2030, the set blending target of 1.2% translates to a need for approximately 552 000 tonnes of e-fuels. Given that it takes roughly 0.67 kg of RFNBOs to produce 1 kg of PtL, this demand equates to a need for around 369 000 tonnes of RFNBOs by 2030. This requirement showcases the direct impact of policy decisions on market demand for renewable hydrogen and similar technologies.
The EASA’s forecast for 2050 anticipates demand for aviation fuels at around 45 million tonnes, implying that demand for e-fuels could reach 15.75 million tonnes if the 35% blending target is to be fulfilled. This ambitious target would necessitate almost 11 million tonnes of RFNBOs, highlighting a need for the significant scaling up of RFNBO production that must occur within the next few decades.
The inclusion of commercial aviation into the EU emissions trading system (EU ETS) serves as an additional catalyst for increasing SAF demand. The ETS is designed to incentivise the decarbonisation of the aviation sector by placing obligations on aviation fuel suppliers to reduce emissions. When combined with the RefuelEU Aviation initiative, a significant push towards SAF adoption is expected, with e-fuels becoming increasingly prevalent in the coming years.
On the supply side, the introduction of the RefuelEU Aviation and ETS is anticipated to trigger investments in SAF and PtL production within the EU. The establishment of a long-term, predictable legal framework is crucial for enhancing the investment climate, facilitating access to financing, and building confidence among investors and project developers in the sustainable aviation fuel sector.
The production cost associated with PtL is influenced by several factors, including technology maturity, feedstock costs (both RFNBOs and CO2), energy prices, production scale, and process efficiencies. However, a long-term decrease in PtL production costs is anticipated, driven by economies of scale and technological advancements. Economic incentives, such as those provided by market-based measures like the ETS and potential tax credits, are expected to play a critical role in narrowing the price gap between PtL and conventional fossil-based jet fuels.