British Airways parent IAG CEO Luis Gallego has warned that planned green charges on airlines would "kill European aviation" and do little for the environment. Carriers warn new quotas for green fuels, import charges and adding aviation to the EU emissions trading scheme will cost the industry billions of pounds. UK ministers are preparing to water down green fuel rules due next year, which the industry says would cost carriers a combined £2 billion by 2030.
Under proposed rules, the amount of "sustainable aviation fuel" (SAF) airlines must use is set to increase next year, but oil companies producing SAF are not making enough to meet raised targets. "We have mandates for things that do not exist," Gallego told the FT. "All the European airlines will have a major cost disadvantage to global competitors and this is going to have consequences." Sean Doyle, the boss of BA, said the industry faced "higher costs in terms of both the fuel bill and sustainability, and that ultimately affects consumers." UK ministers have held a consultation on SAF plans, with one official saying a "common-sense approach" will help keep costs down and make holidays cheaper for families. British airlines have warned of a widening gap with European rivals, whose SAF requirements do not increase from current levels until 2030. At present, 3.7 per cent of UK airlines' fuel mix must be SAF, rising next year and then to 10 per cent by the end of the decade.
EU carrier targets will increase from 2 to 6 per cent by decade-end. Tim Alderslade, chief executive of lobby group Airlines UK, said: "Travellers shouldn't pay more for fuel that doesn't exist in the quantities the mandate demands." As part of the consultation, ministers are weighing rules that would force UK airlines to buy second- and third-generation SAF, made from non-food waste or electricity, which is even more expensive than standard SAF. EU airlines are not required to use this type until 2030.
Fuel experts warn there is not enough supply of SAF even for lower EU targets. Argus Biofuels reports developers and lenders expected Europe to have 40,000-80,000 tonnes of annual synthetic aviation fuel capacity by 2030, compared to roughly 640,000 tonnes required annually under the EU mandate starting 2030.
Source: Financial Times Companies · Summarized by HeadlinesBriefing