The European Shipowners Association (ECSA) and Airlines 4 Europe (A4E) have called on the EU to channel emissions trading system (ETS) revenues into sustainable fuels and technologies.
Shipping and aviation already contribute over €11bn ($12.57bn) to EU ETS revenues annually.
“As a priority, this money must be channelled into de-risking investment in sustainable fuels that are today on average four times more expensive for shipping and three to six times more expensive for aviation than conventional fuels,” it said in a joint statement.
“Bridging the price gap between sustainable and conventional fuels is key to increasing their availability on the market. The European Commission should require EU Member States to earmark at least part of their ETS revenues for the uptake and availability of sustainable fuels for shipping and aviation, and to incentivise them to top up any existing EU mechanisms with national ETS revenues.”
European shipowners are leading global investments in sustainable fuel-powered vessels, with 44% of the global orderbook, but Europe’s fuel availability is not keeping pace.
Asia leads with 74% of fuel production projects, while Europe accounts for just 10%.
Less than 5% of European sustainable fuel production is currently intended for maritime use, according to Sotiris Raptis, Secretary General of the ECSA.
He said revenues should be used at EU and national level to bridge the price gap and support sustainable fuel availability and clean tech projects, which is key for the energy transition of the sector and continent’s energy security.
European airlines contributed €2.3bn ($2.6bn) to EU ETS in 2024 alone – a figure set to exceed €5bn ($5.7bn) annually by 2030. Yet the revenues are not being recycled back into the fuels and technologies airlines need to decarbonise.
The EU does not channel all ETS revenues into sustainable fuels because member states retain the authority to spend these funds, and many prioritise general budget needs over sector-specific green investment.
While the EU requires member states to spend their ETS revenues on climate-related activities, they are not legally mandated to earmark them specifically for sustainable fuels.
In the aviation sector, the 20 million sustainable aviation fuel (SAF) allowances on the table fall short of 2030 demand, and without clarity on post-2030 availability, the investment case simply does not stack up.
The UK government has launched a consultation to stress test its own SAF mandate, asking the industry whether enough e-fuels, including hydrogen-derived power-to-liquids will be available to meet future requirements.
Yet there are signs green hydrogen-based SAF offtake deals are ramping up ahead of incoming mandates.
“Airlines – and ultimately passengers – are paying into a system that is not working for them – or for the climate. Investing ETS revenues in fuel availability and offtakes is essential for decarbonising shipping and aviation and Europe’s energy security,” said Ourania Georgoutsakou, Managing Director of A4E.
The Middle East-induced energy crisis and push to protect European industrial competitiveness have led some nations to push for a suspension of the ETS, arguing that high carbon costs are driving businesses out of Europe.
