Blogpost | A Welcome Step for Transport Decarbonization, but Europe Must Go Further to Unlock Transformative Clean Aviation and Maritime Technologies
Written by Patrick Cummins Tripodi (patrick.cummins@fcarchitects.org) and Marlène Simeon (marlene.simeon@fcarchitects.org)
- The European Commission’s Sustainable Transport Investment Plan (STIP) is still insufficient as a roadmap for the decarbonization of aviation and shipping. The EU’s framework of pricing signals remains in large part incomplete which fails to incentivize decarbonization. To support more transformative innovation, a more comprehensive framework is required.
- This comprehensive framework should include a system-level approach to allocate scarce resources efficiently; regulatory certainty; strong carbon and non-CO2 pricing signals; and an expansion of EU funding toward early-stage, high-risk tech, including alternative aircraft designs, electric and hybrid planes, and non-CO₂ mitigation.
A more comprehensive policy approach to decarbonizing aviation and shipping is required
FCA welcomes the STIP and many of the measures contained within the report. It comes at a crucial time for the decarbonization of the aviation and shipping sectors as the implementation phases of ReFuelEU and FuelEU Maritime begin. While we recognize many of the problems identified in the STIP concerning the market challenges that are delaying the development of sustainable aviation and maritime fuels, we believe a more comprehensive policy approach is needed to help innovation in, and deployment of, sustainable technologies. It should be one that addresses both fuels and the broader technological system required for long term competitiveness.
To begin with, the framework that is intended to steer the sector towards more sustainable activity through pricing signals remains in large part incomplete. While free allowances under the ETS are being phased out and replaced with SAF allowances, there are two major omissions from the framework intended to drive decarbonization in aviation.
Neither flights departing to non-European Economic Area (EEA) destinations, nor the non-CO2 impacts of aviation are currently priced under the ETS. In 2023, non-EEA flights represented 15.2% of all flights from Europe but accounted for 54.3% of the sector’s emissions, while the non-CO2 effects represent up to 60% of aviation’s global warming impact. This means the vast majority of aviation’s global warming impact is exempt from carbon pricing. In advance of the revision to the ETS due in 2026, we believe it is crucial to include both activities within the scope of the directive. Having established a monitoring and reporting for the non-CO2 effects, it should now be possible to implement a price on this warming effect, a critical step for innovation in operational, routing and propulsion solutions beyond fuels.
In addition to the ETS, the tax framework for aviation and maritime fuels similarly fails to incentivize decarbonization, given that mandatory exemptions are in place for both fuels. While negotiations on the revision of the energy taxation directive are ongoing, we reiterate the importance of instituting a fairer energy tax framework that reflects environmental performance. Similarly to a full-scope ETS, this would help incentivize decarbonization and generate revenues for member states that could be reinvested to support innovation in both sectors.
The EU must reckon with the trade-offs associated with decarbonizing hard-to-abate sectors
We believe that two vital assessments are required. Firstly, a comprehensive assessment of EU bioenergy needs across the different sectors is crucial, considering the potential production on EU soil between now and 2050, and where imports may be needed. Secondly, a thorough feasibility analysis of the EU’s renewable electricity generation capacity up to 2050 is required, including an assessment of where to prioritize its usage. When the resources required for the transition are in short supply and expensive, a system-level assessment of resource allocation will help ensure that public and private investment flow towards the technologies with the highest potential for decarbonization per euro invested. These analyses should shine a light on some of the difficult trade-offs that must be made between self-sufficiency, competitiveness, decarbonization, and low cost in the transition to net-zero emissions. While such trade-offs will involve difficult decisions, it is worth bearing in mind that in 2023 the EU imported almost all of its fossil fuels such as oil and petroleum products (97.3 %) as well as gas (91.1 %). In light of this, the EU is highly likely to improve its energy independence in the aviation and maritime under most decarbonization scenarios.
A crucial aspect that must support any decarbonization pathway for hard-to-abate sectors is regulatory certainty. Ongoing doubts about whether the targets enshrined in Green Deal legislation will be changed so soon after their coming-into-force undermines investment in, and the uptake of, clean technologies. The expected revision to the regulation on CO2 standards for passenger cars and vans to permit the use of e-fuels is one example that would represent an inefficient and costly use of precious resources that would be best reserved for hard-to-abate sectors. This further reinforces the need for a system-level assessment of resource allocation.
Invest in early-stage innovation
FCA recently identified a gap in EU funding policy when it comes to hard-to-abate sectors such as shipping and aviation, with only 4% of funding awarded under the Innovation Fund directly relating to transport, and very little dedicated support for aviation and shipping awarded under the European Innovation Council. We welcome the fact that there is an increased focus on transport, particularly aviation and maritime, in the Innovation Fund’s most recent announcement of successful projects. This is a positive development, but more funding is needed for early-stage innovation, including in research and development in promising decarbonization options that go beyond fuels, such as non-CO2 effects, and electric and hybrid-aircraft. A funding approach that targets early-stage innovation and a wider portfolio of technologies should be replicated in European Innovation Council funding calls and the Multiannual Financial Framework.
Conclusions
We welcome the Sustainable Transport Investment Plan (STIP) and the measures it has outlined. However, a number of interlocking elements are needed if the EU is to truly decarbonize hard-to-abate sectors such as aviation and maritime transport. Firstly, regulatory certainty regarding decarbonization targets must be ensured to foster a stable investment climate. Secondly, a thorough system-level analysis of the EU’s energy needs can help direct funding to where it is needed most. Thirdly, a pricing framework that fully internalizes the environmental costs will help accelerate decarbonization and provide the funding necessary to invest in early-stage cleantech and a wider portfolio of decarbonization technologies. Taken together, these elements will help the EU meets its decarbonization targets, improve competitiveness and energy security, and create employment.