Current issues

Environment

Current situation

The aviation sector is responsible for approximately 2% of global CO2 emissions and the growth of the emissions by this sector is closely related to global economic growth. It goes without saying that ambitious plans to reduce greenhouse gas emissions will, directly and indirectly, affect the functioning of European societies, which in turn will affect all sectors of the EU economy.

On 14 July 2022, as part of the Fit for 55 package of legislative proposals, the European Commission presented proposals for amending existing legislation and 4 new proposals, three of which will be processed in accordance with the ordinary legislative procedure, while the Energy Taxation Directive will be subject to a special legislative procedure requiring unanimity in the Council, taking into account the opinion of the European Parliament.

As part of the ongoing consultation, AIRE assesses the impact of the package on the aviation sector in its Sustainability Task Force.

AIRE Position

AIRE believes that the policy impact assessment in general should reflect not only the technical capabilities of individual Member States but also their actual position in achieving the goals imposed by Fit for 55. In the social aspect, the proposed regulations may affect a significant number of jobs in the EU aviation sector (air carriers, airports, air navigation service providers).

In summary, the implementation of the entire package in the form proposed by the European Commission will limit the mobility of European Union societies and increase financial exclusion compared to the residents of non-EU countries.
The negative consequences of limiting mobility will also be felt by other sectors related to transport, such as, for example, tourism.

The two primary documents which have a significant impact on the future functioning of aviation are:

1. Regulation on ensuring a level playing field for sustainable air transport (RefuelEU Aviation)
2. Energy Taxation Directive (Revision)

1. Regulation on ensuring a level playing field for sustainable air transport (RefuelEU Aviation) – see the legislative file

AIRE finds that the ReFuelEU Aviation targets should be adapted to the market condition. The proposed provisions do not consider different economic circumstances, the current state of development of alternative fuels infrastructure and the demand for alternative fuels, which differ in individual Member States.
The indicated implementation period for changes in the production requirement of 2% Sustainable Alternative Fuels (SAF) from 2025 by aviation fuel manufacturers is too short. It is impossible to reach 5% in the complex manufacturing process of SAF by 2030, in particular by aviation fuel manufacturers, who have not yet taken any action to ensure that this product is available on the market.

AIRE believes this period should be extended as follows:

• 2% from 2030
• 5% from 2035

For synthetic fuels, the Member States should have full freedom, not the obligation, concerning their production and use. AIRE proposes that the rate of 0.7% to be applied in 2030 is not obligatory but optional. If the above level is impossible to achieve due to technical and operations reasons, it is advisable to transfer the requirement to the production of other SAF fuels, e.g. biofuels (see: Paragraph 3 in Article 4).

AIRE also proposes to expand the list of raw materials from which SAF can be produced during the transitional period and allow the Member States to use biofuels used in road transport, such as vegetable or rapeseed oils, for the production of SAF.

Thus, AIRE suggests that the definition of Sustainable Aviation Fuels (SAF) be replaced by “drop-in” fuels, synthetic aviation biofuels as defined in Article 2, 2nd para, and Point 34 be replaced with Point 40 of Directive (EU) 2018/2001 respectively.

Additionally, it should be emphasized that the minimum SAF share of 2% at the initial stage, should be set for the entire EU, without the possibility for the individual Member States to apply higher rates at the national level. In AIRE’s opinion, more ambitious policies implemented by selected countries may lead to a reduction in the availability of raw materials used in the production of SAF and hamper implementation of the ReFuel EU regulations.

To sum up, the gradual increase in the use of SAF in the fuel mix is related to the increase in the operating costs of air carriers, which significantly reduces the competitiveness of European aviation and the tourism industry. Without parallel investment, as well as research and development, these regulations may harm the reconstruction of aviation in Europe after the pandemic, and also contribute to the development of transfer ports outside the territory of the European Union, in locations where the provisions of the regulation will not apply. The implementation of ReFuel EU will also force changes at airports like the implementation of additional infrastructure solutions, which will undoubtedly require financial outlays. It is expected that a significant part of these costs will be passed on to air carriers.

The potential increase in flight ticket prices caused by the increase in the cost of aviation fuel may cause an uncontrolled decline in interest in flying, consequently, a reduction in the number of passengers served at European airports.

2. Energy Taxation Directive (Revision) – see the legislative file

The widening of the tax gap between fossil fuels and low or zero carbon fuels should be closely related to the real possibilities of switching to alternatives. Currently, there is insufficient availability of SAF, especially synthetic fuels. AIRE rejects the proposal for aviation fuel tax and the ticket tax proposal in its entirety. AIRE believes that it would not only undermine the competitiveness of European carriers on the global market, but more importantly, it would slow down the development of the aviation sector in the EU.

In the light of “Fit for 55”: ReFuel EU and EU ETS do not need to implement additional measures in the form of aviation fuel tax. The document does not specify how the funds would be allocated by the Member States to the environmental objectives indicated.

The increase in fuel costs on the part of the air carrier resulting from fuel taxation will have a significant impact on the increase in air ticket prices. Consequently, this phenomenon will contribute to reduction of the demand for air travels among passengers, which may have a negative impact on the functioning and development of the tourism sector and, in particular, European air carriers.

AIRE also draws its attention to the fact that the planned amendments to the directive appear to be questionable from the standpoint of international law. Art. 24 of the Convention on International Civil Aviation 1944 – The Chicago Convention – provides for exemption from customs duties, inspection costs and other similar fees and state or local charges, among others, fuel. Moreover, ICAO Policy on Taxation of International Air Transport was adopted on the basis of the above principle. Exemptions from fuel charges were also provided for under bilateral air agreements. AIRE fears that the planned amendments to the Directive may undermine these obligations and aggravate the already unfavourable competitive situation of EU carriers vis-à-vis third-country carriers.