EU Considers 20 Year Delay on Aviation Fuel Tax Over SAF Supply Issues --[Reported by Umva mag]

The European Union is considering a 20-year delay in imposing taxes on polluting aviation fuels, a move aimed at breaking the deadlock in long-standing tax reform negotiations, according to a draft document seen by Reuters.

The proposed delay is part of the ongoing challenges in balancing environmental targets with the realities of fuel supply and costs in the aviation sector.

In 2021, the European Commission proposed overhauling energy tax rules to promote climate-friendly policies, including introducing taxes on jet fuel for flights within the 27-member bloc, which are currently exempt from EU-wide levies.

However, after years of discussions, member states remain divided. The latest draft suggests pushing back the implementation of a minimum tax on aviation and maritime fuels until at least 2048.

“Since there is currently insufficient sustainable alternative fuel (SAF) available, taxing aviation fuels would lead to higher ticket prices without encouraging a switch to SAF,” Reuters quotes the diocument.

Small aircraft and private boats would be taxed earlier, but large commercial jets and ships would remain exempt under the compromise.

The proposal to delay taxes comes as the EU continues to face challenges in ramping up SAF production. Despite mandates requiring an increasing share of SAF in the aviation fuel mix, the current supply remains limited, and prices are prohibitively high.

Biofuel-based SAF is estimated to be three to five times more expensive than traditional jet fuel, making it difficult for airlines to make the switch.

Airlines are eager to adopt SAF, which is seen as critical to decarbonising the aviation sector. The International Air Transport Association (IATA) estimates that SAF could account for up to 65 percent of the carbon reductions needed for the industry to achieve net-zero emissions by 2050.

The EU plans to introduce a SAF quota starting at two percent of total fuel use in 2025, rising to 70 pecent by 2050, in a bid to encourage production and adoption despite the current challenges.

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