Abstract:

The aviation industry has looked toward alternative aviation fuels, (i.e., sustainable aviation fuels [SAFs]), as a primary in-sector strategy for achieving decarbonization. Proposed revisions to the ETD and ETS could be leveraged to raise the cost of fossil jet fuel and generate revenue to reinvest in SAF production and technology development. To move beyond HEFA fuels and meaningfully introduce lower-carbon advanced and synthetic fuels into the market, the EU could use EUAA auction revenue to scale up the SAF sector and a portion of ETD and EUA revenue to better align the regulation with long-term climate goals.