Germany, Austria, and Luxembourg aim to jointly accelerate the market ramp-up of renewable electricity-based sustainable aviation fuel (eSAF) in Europe. To this end, the three countries are introducing a dual-auction mechanism. This process brings producers and buyers together. Government subsidies will fill any price gaps between the two sides. Germany is providing up to two billion euros for this purpose, while Austria and Luxembourg will each contribute up to 60 million euros.

 

Federal Minister of Transport Steffen Bilger, Germany:

Europe needs not only ambitious goals for eSAF, but also investment in industrial production. Germany, Austria, and Luxembourg are therefore jointly demonstrating how European cooperation works in practice. We are pooling our funding, thereby creating better conditions for investment decisions in a future technology. For me, eSAF is not just a matter of climate policy, but also an industrial policy opportunity. If we invest now, added value, expertise, and jobs can be created in Europe. At the same time, we are strengthening our independence in energy and supply chains. We want to enable innovation and thus make aviation more climate-friendly step by step.

 

Mobility Minister Peter Hanke, Austria :

With their joint eSAF funding, Germany, Austria, and Luxembourg are sending a strong signal for the development of a European market for renewable kerosene. We are creating long-term prospects for producers, supporting transparent price signals, and contributing to the availability of eSAF in Austria. At the same time, we are strengthening our resilience and reducing our dependence on imports from non-European regions. Crucially, the market ramp-up of eSAF will create the conditions for aviation to meet its European requirements while simultaneously achieving measurable CO₂ savings. This is an important step towards a sustainable future for air transport in Europe.

 

Minister for the Economy, SMEs, Energy and Tourism Lex Delles, Luxembourg:

Together with Germany and Austria, we are embarking as pioneers on a path where we will not only protect the climate, but also promote industrial value creation in Europe and our independence from fossil energy imports.

 

Minister for Mobility and Public Works Yuriko Backes, Luxembourg:

Luxembourg stands firmly alongside Austria and Germany in advancing climate-friendly aviation. By joining the eSAF Early Movers Coalition, we support the expansion of eSAF production, reduce dependence on fossil fuels, and accelerate its market launch across the EU. Luxembourg is taking an active role in building a safe, sustainable, and competitive aviation sector by promoting new production capacities and ensuring that some of this production is available to our domestic market. With this clear vision for the future, we are creating the conditions today for sustainable mobility of tomorrow, which meets both market demands and our population's expectations for effective climate protection.

 

With this joint funding program, the three founding members of the eSAF Early Movers' Coalition are taking the next step towards the development and production of sustainable aviation fuels. The funded eSAF quantities will be placed on the market in Germany, Austria, and Luxembourg according to the respective share of funding provided.

 

The industrial production of eSAF requires substantial investment. At the same time, a structural problem currently exists: producers need long-term offtake agreements to secure investment decisions. Buyers, on the other hand, typically conclude contracts for aviation fuels for significantly shorter periods. This temporal and economic gap has so far hampered the construction of new production facilities. This is precisely where the dual-auction mechanism comes in. In a competitive process, offers from eSAF producers are determined on the one hand, and the demand from buyers on the other. An intermediary uses government subsidies to offset the difference between supply and demand prices. In this way, long-term production prospects can be combined with competitive offtake conditions.

 

The aim is to enable investment decisions for new eSAF production facilities while simultaneously developing a competitive market for the purchase of the fuel.

 

The funding program is subject to approval under state aid law by the European Commission][p

 

Market consultation confirms market interest

The Federal Ministry of Transport has successfully concluded the market consultation on the planned German funding mechanism. This consultation was part of the state aid procedure required under state aid law and served to gather feedback from industry and academia on the specific design of the funding instrument.

 

The results confirm the broad market interest in an accelerated ramp-up of eSAF production in Europe. At the same time, the feedback underscores the importance of suitable support instruments to overcome existing investment barriers.

 

Source:  FCW Team