Committee on Transport and Tourism Ordinary meeting HEARING Public hearing on Book and claim of sustainable aviation fuels
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TRAN European Parliament
Follow its sittingsSpeaker 3
However, and of course, when you legislate and when people put in place regulations, you typically have in mind that yellow line. And that difference between the blue and the yellow line is what constitutes the basis for the penalties on the refuel EU, which would be double that gap. Interestingly, what airlines are seeing at airports from their fuel suppliers is closer to the penalty price. So the blue, sorry, the black and red line on top. So when you have a look at this and see, okay.
One x is a difference between CAF and SAF price, but airlines are paying two x. And, again, converging to the penalty price. Right? So this speaks to a lack of competition. The reason why airlines are paying this is because suppliers at airports can charge this, and they have no incentive whatsoever to charge less than that.
So there is convergence at many airports. You will see places in Europe. Europe is not the same everywhere, where you have more competition. So Spain, for instance, is a more competitive place, and it has to do with different things. I'll be happy to address them afterwards in questions, but I don't think we have time for that.
So I'll just move on to the next slide. So, on the right, you see problems. We have no competition in the physical fuel supply at airports. So airlines have to buy SAF from the suppliers that are at the airports. And these suppliers, of course, can charge whatever they want for that fuel within boundaries.
Right? What we are saying is you could address this in two ways. You could have more competition in the physical supply at airports, but that's a lengthy process. This requires lots of changes in regulation, both at European level and locally. As I said before, you have different countries in Europe which have more competition, and others which have less competition.
That takes time. That is the bread and butter of what my team does globally, and this is not an issue that's unique to Europe. We have this everywhere in the world. But for SAF in particular, you could decouple the environmental attributes. You have certificates that prove that the SAF reduced emissions somewhere, and you could trade those.
And that's what book and claim is. And we could use this, and we should use it to enable competition at least to some degree. Now there have been questions as to, okay, how do we do this without having double counting, for instance? We need a piece of infrastructure supporting this. And you have legislation saying you should use the union database for biofuels to do that, the UDB.
This should have been delivered 2 years ago, and it's still in the works. So I think not a change in regulation, but we need people to start working on that. The next slide. So I mentioned book and claim. Where is this being used today?
In Corsia, the UN scheme for emissions from aviation. In The UK, so I'm not sure I should say this here, but if there's one good thing about Brexit, it is that they did correct this problem and they have book and claim in effect in The UK today. In voluntary markets, you have guidance from ISCC, RSB. Bear in mind that ISCC and RSB are the ones who certify SAF for use on the refuel and Eoets. And in the EU, for the market of electricity, you have book and claim because you have guarantees of origin.
So when you plug things and you check in your bill that you want to pay more for green electricity, you're not getting green electrons at your outlet. Right? You are paying for someone to produce that, and then there's a certificate supporting it. That's what you're paying for. It's the same as we want to have for SAF.
The next slide is my last. So what do we need from you? And I think the order of importance is really from three to one, but this is really from the order of what can happen first. UDB, it exists in the legislation. It just needs to be implemented.
And airlines should have full access to it, and so everyone has transparency of what's being claimed and what's happening with the fuel molecules. The EU ETS, airlines do not have flexibility to make their claims, and suppliers have more flexibility. So one, when you review the EU ETS regulation, it would be great if you can also extend that flexibility to airlines to claim based on purchase records. And the last one is refueling you. We need a market for those certificates that people can trade, and that includes suppliers and airlines, because that would at least create a minimum degree of competition.
I think that was my last slide. Can we go? Yeah. So thank you very much, and I hand over to, well, the chair.
Speaker 5
Thank you very much, Mr. Sheraw, for your intervention. Now, madam Pashke, for seven minutes, please. Thank you very much.
Bettina Pashke
Yeah. Dear honorable chair, dear honorable members of the parliament, thank you for the invitation to speak about a very technical topic, book and claim. My name is Bettina Pashkar. I'm working for DHL and involved in accounting, staff accounting, and also involved.
on booking.
Bettina Pashke
Train transactions. And today, I would like to share some practical experience from an airline operator, and I hope the industry is already aligned on book and claim that is needed. And I hope after my presentation, you will also be agreeing that Europe needs a credible book and claim system which helps lower cost. If we move exactly to the slide, so just a little bit of background of the DHL Group. So sustainability is part of our core business.
We have 83,000,000 revenue per year last year. We have 580,000 people working for mainly shipping parcel and mail either in local countries or across the globe, and we are headquartered in Germany. We are already reducing today a significant amount of emissions from our footprint, roughly 5%, so or 2,100,000 tons. And after our reduction, we have a footprint of 32,33,000,000 tons CO2 well to be in. So we are electrifying where we can, we are using a lot of sustainable fuels.
We are also offering for our customers low emission transport services. Demand is already there. And what we can say see already, we use already 10% in our aviation operation, sustainable aviation fuel. If we move to the next slide, please, I would like to share the airports where we operate, where we uplift SAF. You see, we started very slow in 2020 with one airport in the US, but we extended now to 16 airports globally and in three regions.
So we are also heavily investing in the US. As we know, the incentives are still in place despite all the noise. So incentives, the fuel is much cheaper still in the US. And I have to emphasize, this is not fuel which is not aligned to the EU yet. It's the same fuel.
Our policy, our fuel policy is aligned to EU ed. So when we buy sustainable aviation fuel outside Europe, it aligns with the EU ed, with the renewable energy directive. Yeah. We are also including more European airports. The situation, of course, price situation in Europe is a little bit different than in many parts, especially across the Atlantic.
I want to mention that, of course, many of those uplifts outside Europe and within Europe are voluntary. So what I mean with voluntary is, they take place outside of the EU mandate. The majority of our uplift is voluntary because we are offering our customer low emission transport services. And, yeah, if you move now to the next slide, I would like to also emphasize the message Daniel just gave on the SAF price here from a practical experience. So what you see here is basically compare real prices out of 25 from our SAF mandate.
We have an own obligation as an airline. And, on the one hand, you see the staff who were required to buy under the refuel mandates was through fuel suppliers. And on the other side, you see staff that DHL source directly, in case we are recognized as a fuel supplier in Brussels and Leipzig. And the result is very clear. So reemphasizing that, our price for own sourcing is 31% cheaper than what we are charged by fuel suppliers.
And the behavior, and as you see on the right-hand side of the slide, the behavior per supplier is different. So I don't want to dash now here all fuel suppliers, because we see here different examples. We can see, for instance, that supplier three and six cost similar to our own supplies, so this is a fair pricing, while supplier one, two, and five charge much higher prices and a higher premium. And this is, in the end, the same fuel. We don't speak of different fuels.
This is the same in your red fuel. And the difference comes basically from the market structure. There is no competition. And we believe that by introducing, for instance, a trade war compliance tickets or certificate system would change that. So, Daniel already mentioned, in the UK exactly this way, the UK staff mandate is implemented.
We know the system already also from the Netherlands and Germany for the road fuel market. So it would not be a new policy instrument. It's an existing policy instrument which works already in other sectors or in other geographies. And that means my message I would like to leave with you as policymaker in a EU-wide booking claim system with tradable certificates would help reduce costs and increase competition amongst suppliers. So if we move to the next slide, what does belong to a credible book and claim system?
Book and claim does not mean we lower the ambition. Yeah? This means that real uplifts take place. So you're not necessarily lowering the ambition, but when you define the key boundaries of the system. So what I mean by that, it's not only the fuel does not need to be produced.
It needs to be put in the system. It means it needs to be delivered to an EU airport, for instance. It needs to be certified. It needs to be aligned with the renewable energy directive. And, yeah, and then I think also mentioned already the time of when the key boundaries in terms of linked to a specific time period, sustainability must be backed up independently by a certification and transparent life cycle emission calculation.
These are all counted and very important. And, of course, all attributes need to be issued and transferred to retired in a controlled digital way. So we should not allow any bilateral tracking amongst partners, and everything should be fully audit trail. Yeah. And then, of course, the system must prevent double issuance, double use, double claiming, which can be ensured by using already the system, the UDB.
So, and finally, authorities and third party must be able to audit both the system and the claims. That means independent verification and registry operations, underlying data, and claims are used in emission reporting. And also, this is already in place, for instance, for the EUTS. To sum it up, so the seats for booking claim are already set, and that's why we can move to the next slides, please. We would like to ask for the following points.
So please use the UDB, the union database, enable this also for airlines. Claims should be allowed, also on a con purchase-based basis, and especially also the SAF allowances should be extended so to allow long term offtakes. And then, fourth, book and claim is not only important for aviation, but also for other sectors. Thank you very much.
Speaker 7
Thank you, Missus Paschke. Mister Westermeyer, please, for 7 minutes. Thank you.
Florian Wassermeier
Madam chair, honorable members of the parliament, ladies and gentlemen, thank you very much for the invitation to present the airport perspective on booking a claim of sustainable aviation fuels. I'm here as a representative of Munich Airport. Munich Airport is a big hub in Central Europe with a strong economic position, and we have our own net zero strategy, which has a direct link to the European client goals. I would like to highlight today why airport support booking claim, which key design principles or characteristics are needed, and which core challenges we have to deal with. So, book and claim for us in the airport perspective, it's not a workaround.
It's a clear instrument to scale up production. It pushes investments by creating liquidity and certainty demand. Therefore, investment risks decrease and new capacities can be implemented. And this results in a direct reduction of CO2. This means, the reason is CO2 reduction occurs in the production of SAF and not in the use in the airplane.
That means if you scale up SAF production and SAF usage in the industry, it directly, immediately reduces CO2. And last, not least, preserving connectivity. Europe is, especially on regional and remote areas, very depending on the connectivity. Therefore, it allows to decouple the climate obligations from the regional infrastructure. So, airports, which are more remote, can also exist in the future in a network in the European aviation industry while we support the climate obligations.
Next slide, please. From our point of view, three characteristics or the main characteristics are necessary for the functionality of booking claim. First, the proof of sustainability. The definition of the green property is a must. So there are, this is not technical details, but there must be no ambiguous what feedstocks, what sources of product, and what greenhouse gas life cycles are in the staff.
So this is, like I said, not technical details. It is crucial for the acceptance and the trust in a booking claim system. The fungibility and the robust register are the second topic. The certificates have to be tradable with minimum friction, and they have to be interoperable through borders. So not country-wise, so within the existing area.
And they have to be managed in a secure and transparent manner. Transparency here for us, it's the key. The third point is more or less a sum up of what my both colleagues next to me already mentioned. The self-reporting has not to be a stand-alone product. It has to be directly linked with existing EU legislative like the EU ETS, the regional EU, and for sure, the voluntary reporting frameworks like the greenhouse gas protocol.
Next slide, please. Why do airports support the book and claim approach? We also see some challenges we have to deal with. The first is the double counting. If the certificates are not retired correctly, they can be claimed multiple times or if they are used in a fragment framework.
This undermines the trust in the whole system. So double counting has to be avoided altogether. Also, if booking claim is not designed correctly, it can lead to disincentives. What do I mean? The booking claim approach should support the physical self deployment, and this can stagnate and add challenges, challenging airports like locations which are not directly linked to existing fuel systems.
So virtual allocation and physical uptake must be encouraged at the same time and not separate. And last not least, a clear statement: yes, not to race to the bottom. If all topics are located at the costs, we will see a run to the cheapest SAF products in the market, and not to the more sustainable ones, which is originally the initiative why we support book and claim. So from the airport perspective, the conclusion is clear. Book and claim must complement the physical SAF uptake, and not replace it.
So, next slide, please. Honorable members of the parliament, for us, booking claim is a powerful instrument to accelerate the SAF upscaling. Here, we are aligned from Munich Airport with the ACI, the Airports Council International, and all the other airports here in Central Europe and in Europe especially. So for us, it has to be clearly framed, technically robust, and covenant with full transparency. Otherwise, it won't work.
European airports stand ready to shape such a system responsibly, and we work together with all the partners in the supply chain like suppliers, like the airlines, like the users of staff and all the distribution channels. And, yeah, at the end, I would like to thank all the people working at the airports doing the sustainable topics and pushing staff to the next level. Thank you very much for your attention. I'm looking forward to the dialogue. Thank you.
Elissavet Vozemberg-Vrionidi
Thank you very much, Mr. Westermayer. Now, colleagues, we will open our first question-and-answer session. I will give the floor one by one to our coordinators and who else wants to take the floor. And, please, I ask you to respect the two times of speaking. We begin with Mr. Gizige.
Speaker 9
Yes. Thank you, chair. And mister Cheru, miss Paschke, mister Wastermeyer, thank you for your good presentations and your strong message. I think the advantages are obvious of a functioning buck and claim system. We would have more competition, and we would reduce prices.
That is, of course, something we should work on. Mr. Scherot, you pointed to the necessity to reform EU ETS and refuel EU aviation to have a proper functioning of the book and claim system. My simple question is because on this part of the table and on the other, on the industry, there is a lot of support for the system, but still, the commission is quite hesitant. What is your perception?
What are the main arguments of the commission not coming up with a proper proposal? And to Miss Paschke, first of all, congratulations. Amazing numbers. 10% already today. It's really impressive.
That could not, that does not count for all airlines. So that is really the status quo, is already good, but it's not satisfying. So my question would be if you have a guess in 2030 with a functioning book and claim system, where could you land in 2030 with or without a functioning system? What is the effect if we do something right in the direction of having a functioning book and claim system? Thank you very much.
Thank you.
Johan Danielsson
It would perhaps have been more fun if we could do it this way, as you suggested. But, sorry. Thank you, Cher. Thank you to all the speakers for being here. A few questions.
I mean, you make a quite clear case, especially from the side of the airlines, why you need a booking claim also to put the cost down to increase competition. But also, we need to increase production. And firstly, perhaps on the scope of a booking claim, how would you view the scope of a booking claim system? Should it be produced, an uptake at the EU airport also support an EU self-production capacity? Also, all of you touched upon what needed to be done to avoid the risk of double counting, and so on.
But what would you say is the one risk that will be the hardest to avoid when introducing a booking claim that we really need to keep an eye on? And connecting also to the production, because as I see this in your presentation, it will solve parts of the problems, but we also need to increase the ease of production, especially in Europe. And the commission and the commissioner in the STIP, they introduced this concept of double-sided auctioning. Do you think this is something that is also needed in addition to the booking claim to make sure also that you have some predictability for the producers? It would be interesting to have the airline's perspective on that as well.
Thank you.
Kosma Złotowski
Ladies and gentlemen, I'm sitting here and I'm just listening to you, and I don't understand anything. We produce sustainable fuel, SAF, with the same chemical composition of conventional fuels. And then we burn them, and we get the same result. Yet SAF is sustainable, and other fuels are not. SAF fuels cost 300 to 400% more than CAF. So we needed to figure out a system which would support the burning of the more expensive fuel and make it less expensive.
Speaker 13
Well, this cannot be done. We cannot square the circle, not even with certificates. And this is a road to nowhere. This is a path that leads us to catastrophe.
Speaker 21
Thank you, chair. And thank you to the panelists for their presentations. You know, I'm pushing since a long time for a book and claim system already in the first regional aviation regulation. And I'm obviously in favor of extending the scope of, or the amount as well of, SAF allowances to push market uptake. But I have three technical questions for you.
Speaker 19
So first, DHL, Frapaschke, you were talking about uptake of SAF inside Europe and outside Europe as well. So my question to you, should we design an intra-EU book and claim system? Or should we include extra EU players with the problem that it is obvious that we might have issues in certifying a proper CEF? Second question, and this is a bit in the direction of colleague Danielson as well. At the moment, we're discussing CEF scarcity, as well in the future.
Speaker 20
So what would be, from your point of view, the effect of a book and claim system in the moment of scarcity of the CEF? We all agree that we want to push for investments so that the scarcity will not happen. But what would be the effect of book and claim in the moment of the year,
then second year, 20. Half.
Speaker 18
A strong quarter of RAD compliant sustainable aviation fuels. What's your position on this?
Thank you.
Kai Tegethoff
Yes. Thank you all for the presentation. Booking claims sometimes presented.
as a
Kai Tegethoff
Key tool to help aviation comply with refuel EU aviation staff requirements. But if the system is too global in scope, it may raise concerns around fuel quality, traceability, and fraud risk. How can we ensure robust guarantees on certificates of origin, on traceability, and fuel quality, especially also given past allegations of palm oil being used or disguised as used cooking oil. How does geopolitical instability also affect the reliability, availability, and the price of biofuels produced in third countries, including through higher transport costs? And would it make sense to limit booking claim to a European geographical scope to reduce fraud risks, improve traceability, and limit the climate footprint linked to transporting fuels to specific hubs?
And on synthetic aviation fuels, refuel EU aviation only introduce a synthetic aviation fuel sub target from 2030, while the ETS directive already provides free allowances to cover up to 95% of the price gap with conventional kerosene. However, these three allowances currently expire in 2030. So should this 95% support be used more actively now to help build synthetic fuel production capacity in Europe before 2030? Also, given oil price volatility and recent concerns over kerosene shortages, is this not an additional reason to accelerate synthetic fuel production? Thank you.
Speaker 29
Yeah. Thank you, madam chair, and thank you to all the panelists for their presentations. My first question goes out to Mister Chero. And you mentioned Spain does have a different pricing policy than the ports in the Netherlands and Belgium. You wanted to elaborate on this in the question session.
Speaker 24
Maybe you can enlighten us there. Also, I'm very glad that you mentioned the example of the UK where you can buy, trade, and claim fuel tickets for SAF. One of the advantages of the Brexit, and the other one being they can import e-fuels from the U. S. As far as I know.
Speaker 23
So this is also very good for the pricing of SAF. You also mentioned voluntary markets, but I didn't quite get the importance of the voluntary markets where you can deal differently with the tickets. And maybe you can elaborate on that. And a question to all of the panelists would be very simple. I mean, the EU is not currently and in the near future not able to produce enough SAF for their demand.
Speaker 25
So, the easy way would be to import. This raises different questions, geopolitical questions, and so on. So, what is your perspective on building up or constructing an infrastructure inside the EU to meet the demand? This would be the general question to all of you. Thank you very much.
Speaker 5
Thank you very much. Is there any colleague who wants to take the floor? Yes. You have the floor, sir.
Speaker 28
Aviation companies in Europe pay around €200 of tax per metric ton of kerosene. I would like to ask about the difference in competitiveness between EU companies and companies in the rest of the world, taking into account this added fee that puts added pressure on EU companies? Thank you.
Thank you. Mister Gasar?
Benoit Cassart
Well, my question was very similar. The issue of competition, obviously, we want to move towards more environmentally friendly fuels. But if there isn't a global system, would there not be a possibility that companies outside of the EU can just avoid the system by making sure that any connections are in countries that aren't covered by this? So it's a question of ensuring that European companies can remain competitive in all of this.
Speaker 5
Thank you very much. Any other colleague? Okay. Now I will give the floor to our special guests one by one for four minutes, please. The 1st floor is for you, mister Charola.
Danielle Sheron
Thank you very much. I wish I were taking notes. I'll start with an example. So before Refuel EU kicked in, we were talking to different airlines, and one of them told us we're doing everything to be ready for Refuel EU. So we have contacted fuel suppliers, and we are taking, signing off the offtake agreements with them so we can have the SAF when refuel kicks in.
Speaker 3
To which I responded, that's useless. Because if you do that, then you need to ensure that producer will sell their SAF to your supplier at the airport, and then you will have to buy it from them. Right? So this addresses the first issue of, okay, how does this help having more SAF production in the future? Like that, if you enable that, and this is particularly important for ESAP.
Right? If airlines can sign those offtake contracts now, they can ensure that they can claim the benefits without having an intermediary, then they know what they're paying and they know that they can use what they're paying for. For this, you would need a registry, the UDB. There are others too, and I think there was a question as to how we can ensure that this is robust. There are other registries.
IATA has a registry. We have one. What we need to have is interoperability between registries. So that's, I think, point one. Booking claim can indeed help with future production by enabling certainty that airlines will be able to claim the staff that they're paying for, and they know how much they will be paying for because there's no one coming in between.
This is a direct relationship between the airline and the producer. There was also a mention of STIP. Would STIP help? Yes. But if you have STIP without booking a claim, you would have these auctions at every single airport.
So there's actually no competition. You would just be a price taker, even if you aggregate all demand. If you have a Central Pan EU market, then you have competition, and this helps steep. Right? There was a question as well, do we have a global booking claim?
Well, I would certainly want to have a global booking claim system, but I'm aware of the barriers in Europe. Right? And what we are advocating for today is an EU booking claim system. Right? So the fuel will physically have to be used here.
One thing we didn't say is all booking claim systems, all of our guidance requires the SAF to be physically used somewhere. And then, only then you can start the claiming process. And that somewhere will have to be the European Union because I know this is what Europe wants, and that's what we need. There was a question about, okay, what is the commission doing on this? Well, I think it depends.
I think we do see a bit of fragmentation in the commission. We'd work with them, like, very collaboratively, I would say, particularly with DG Move. DG Klima has a bit of a diverging view. The UDB, for instance, is with DG Ener, and I think we could use a bit more support there and more speedier process. I think that's what I want to say.
Now there was also a question about book and claim. Is it only you who works for ESAP? No. We think it could be used for all of the different pathways. I see no difference.
The certificates that tell you that the SAF is actually sustainable are gonna be the same for one pathway like ESF or another like HEFA, for instance. Right? Another thing I think is important to mention is Europe is an import market of energy. Right? So conventional aviation fuel is being imported in a significant quantity here because Europe has closed refineries for the last few years.
For SAF, it's the same. Most of the SAF used in Europe today is being imported. We would love to see more production here. And then there was a comment saying, well, this is basically a vicious circle. Right?
Because you don't have enough SAF. It's too expensive. So how can we square this circle? It's complicated, but incentives, for instance, which were mentioned in one of the questions, are important. The 20,000,000 allowances are about a fraction of what airlines are paying in terms of allowances under EU ETS.
We need more of those beyond 2030. We need more to, you know, enable airlines to pay for the SAF and also to increment production. In the US, you don't have mandates, but you do have incentives, and they're doing quite well in terms of software use. So it does work. Right?
So we can find ways to square this circle. And the last thing, I think, was to mention a global system for this. So can airlines just escape and not do that? Well, en route departing Europe, all of the airlines are subject to the same regulations. But we do have one global regulation, which is COSSEA, and I think we should do as much as we can to support that.
I see a bit of a push against CORSE in Europe. We should support that. CORSEA also has soft use as contemplated in its design. So thank you very much.
Bettina Pashke
Yes. So I would like to start with a question from Mister Gieseger. So what if there would be no booking claim for us as an airline? I mean, very bluntly speaking, I repeat the message since five years, that without booking claim, our company would not be able to reach the necessary fuel uplift or sustainable aviation fuel uplift in aviation to achieve a science based target. 30%, we set for 2030.
This would only be achievable with a booking claim. This is, of course, voluntary. Monday, it is only 6% in Europe, and we have a global operation, so the majority would be voluntary. So without book and claim, no science-based targets. Then there was a question about the scope of the book and claim.
I mean, yes, we are here for a European book and claim system. Definitely not a fragmented in-country book and claim system within Europe. So, I mean, the entire sustainable aviation fuel, which is at the moment uplifted in Europe, is anyway going through Rotterdam, so to the northern airports, and then shipped around Europe to the different country airports, what the legislation at the moment requires. We could just do much simpler and basically allow an uplift at one European airport. Super simple.
This does not change anything from a decarbonization perspective. It decarbonized Europe. It is yes. It might be different with country legislation, but I think for that, we will find or you will find a good solution to overcome the issue here. So, a European book-and-claim system.
Then there was a question on risks. I mean, the risk you have at the moment already. So how you, already the fuel now for EUET is, needs to be certified. It needs to be brought to an airport. This does not change with the booking claim.
These are the same requirements. You just give more flexibility to fuel suppliers, to allocate to uplift or to deliver to any airport in Europe, not to a specific one. That's the change. You require to any airport in Europe, not to a specific airport. That's the only single change.
And the UDP allows you then basically to track the fuel in the UDP and to allocate this then to airlines accordingly. There was a question on, yeah. I mean, I mentioned I checked the topic already on the feedstock. This is already ensured today by the system with certification and requirements. This would not change with book and claim.
Yeah. Maybe just to remember what book and claim is, it decouples the environmental benefit from the physical flow. The entire certification auditing remains the same. So I don't think that the risk increases. And, yeah, I think there was a topic on price pressure.
Of course, for us as a European company, or as a global operating company, we go, of course, to also uplift fuel at markets where prices are low, where incentives are there. There is a lot of very simple incentive system in the US where the incentives go to the fuel supplier. In Europe, it is a little bit different, but there are also incentives we would sometimes wish a little bit simpler, and not only afterwards, with the year delay in terms of capital cost. But it is utmost important that the staff allowances get expended, that we get security. Even the staff allowances are valid until 2030.
We know the SAF allowances will expire with the current uplift demand in 2028. So it's urgently needed that the SAF allowances are expended and give security to the market. And I think here, I stop. Thank you.
Florian Wassermeier
Thank you very much. Most of the questions are already answered. Maybe I can show you another point of view from the airport's perspective. Normally, like Daniel said, the contracts exist between the customers and the suppliers. The airports in between are the owners of the infrastructure.
That means we have the view on the types of the fuel, the different feedstocks, the different origins, and the supply streams, which means are they coming by rolling stock, by pipeline, or by ship. So, this allows us to get a detail about the supply streams of conventional kerosene. And the good thing is sustainable aviation fuels are drop-in solutions. That means they can replace kerosene immediately. So, compared to hydrogen or other technical solutions, no secondary infrastructure is needed.
No investments are needed. So what does the booking claim approach now do? If you have this system in a robust way, the customers can choose the sustainable aviation fuels, and the suppliers have the chance to choose the right supply streams to the airports. This means if you think about new capacity in for as a supplier, you look at the streams to the airports and to the customers behind them at the airports, and you find the best way to support the airports with the different types of staff, different types of feedstock, different types of material, different types of region. And this is the key.
And there was a question about the price. Yeah. That's the question about how we solve the chicken-egg problem. If we increase capacity and increase different types of SAF in the European market, we normally see a decrease in the price. And this is the first step of how we can solve the problem.
So the question from the airport perspective is how we can do the first step to bring more staff to different airports in Europe and not to special ones or to the first ones. So how we can really bring more to the airports. Yes. And one other point was about the different types of ZAF, like the power to liquid, the ESF or the biomass products depends on the region and on the source of feedstock, yes, to in sun rich regions or hydrogen powered regions. You have other strategic regarding regions where biomass feedstocks are available in big masses.
So this is also a strategic topic we have to think about. And yes, all other questions are already answered.
Thank you.
Speaker 5
So I would like to thank you, dear speakers, dear distinguished guests, for having accepted our invitation and for your presentations, and the answers to the issues that have been raised. Thank you very much.
Speaker 5
Our second panel has four speakers, three distinguished ladies, and the gentleman on the right. So Missus, Lion Liu. Leo. And missus Pammio and mister madam Mitrell and mister Burke. So, again, I repeat, I will give the floor one by one to our speakers for seven minutes for their first presentation, and then we will follow as before the speaking with the colleagues, and you will have four at the end to reply and answer, and, yes, the questions.
Elissavet Vozemberg-Vrionidi
So Missus Liu, the first. Liu. Liu means lion. I've heard, I'm aware now.
It does.
I like that.
Aurelia Liu
Thank you so much, Madam Chair. Distinguished members of the committee on transport and tourism, it's an honor to appear before you today. Good morning, everyone. My name is Aurelia Liu. I am the EU policy director at the Sasha Coalition, and I'm going to speak to you today about what a booking claim mechanism, if opted, should look like, namely one that derisks the production of European e-kerosene or what is widely called ESAP.
Next slide, please. So let me first tell you who I represent. We are the SASHA coalition. It's a three-year-old coalition of companies that are front runners in the decarbonization of shipping and maritime through e-fuels, battery electric, and fuel cell technologies. Among our members are fuel producers, aircraft lessors, aircraft developers, ship designers, and more.
We seek to break the perceived industry monopoly narrative around decarbonization by pushing for an ambitious emissions trading system, or ETS, and other regulations like ReFuel EU Aviation and Fuel EU Maritime to decarbonize both shipping and aviation. Next slide, please. On the subject at hand today, I wanted to bring us back to the basics. What is book and claim? But more importantly still, what is its purpose?
To take a recent example from history, which was already mentioned earlier, on the electricity market, there is a booking claim system called guarantees of origin. This allows, for instance, an Irish consumer on a relatively carbon-intensive electrical grid to buy electricity locally, but pay a premium to be able to claim their electricity as renewable. That premium then goes to a producer of renewable electricity, for instance, in another country like Sweden or Norway, with high quantities of renewable electricity. The system was set up as a chain of custody principle to ensure a transparent market. What was missed and is still missing is a means to ensure that the revenues that these guarantees of origin generate result in more renewables.
Instead, it has mostly resulted in enriching Norway for its existing hydropower instead of being funneled towards a much-needed ramp up of renewables. The purpose of this system is therefore essential, and the purpose of a book and claim system in aviation cannot be to simply alleviate the administrative burdens of airlines and allow for added European dependence on imported fuels. What the system must do and what we, companies working in decarbonizing aviation, are calling for is to favor the most sustainable type of fuel, and for the sake of European competitiveness and energy sovereignty, to be challenging channeling money towards European projects. Concretely, this means that three pillars need to be adhered to. First, a booking claim mechanism will be available to e-kerosene only as the most sustainable alternative fuel, one that can be produced locally, and one that needs the most support right now to scale and become competitive.
Second, it should operate only within Europe, by that I mean the European Economic Area, to ensure money isn't funneled out of the continent and Europe is given a fair chance at becoming more autonomous on energy. And third, and this can only be acceptable as a temporary measure, the goal cannot be to create an artificial market. Instead, it needs to temporarily alleviate dependence on the currently monopolized sub-supply chain infrastructures. Next slide, please. I'll go through these next slides quickly, but in essence, without booking a claim, you have to get your fuel molecule, your physical fuel, to your buyer or off taker.
That buyer might be significantly further away than an existing hub nearby. This creates added administrative and transport costs to your operations, and potentially limits your off-taker options where transport infrastructure is currently lacking. Next slide, please. With booking claim, the molecule is separated from its green claim. So you could sell the actual molecule at fossil fuel market price to an airport nearby, while an offtaker further away buys the green claim.
The ESOP producer thereby widens its offtake market compared to without the mechanism. Next slide, please. So why does this make sense? This map clearly shows the discrepancy between where production is likely to happen and where it is needed, but insufficient production is planned. As an example, a producer in Iceland with booking claim can find off takers in Greece or Italy or elsewhere, while keeping the physical molecules in Iceland.
This, while airlines in Greece or Italy can still comply with the ESF mandate. Next slide, please. So based on the speakers you've heard so far, you're being asked to come up with a broad booking claim system, albeit we mentioned within Europe, but the preference seems to be a global one. A booking claim system that supports an industry and fuels in a way that benefits basically neither Europe nor the climate, and instead mostly the corporate benefits of airlines that are already enjoying wide privileges like VAT exemption, like no taxes on kerosene, or the exemption of international flights from the ETS. That's a stacked set of privileges that no other industry in Europe has.
Instead, a booking claim system should also benefit us, the companies that have skin in the game for the decarbonization of European aviation. In conclusion, the SASHA coalition asks you to keep in mind what this mechanism should do and who it should benefit. If you keep it exclusively for kerosene within the European economic area and ensure it is limited in time, you are contributing to the market ramp up of the only current solution to decarbonize long haul aviation and also the only solution to wean us off of our dependence on fossil kerosene and all the problems that that entails. Next slide. Thank you.
I look forward to your questions.
Alessandra Famio
Thank you. Thank you for inviting us here. I'll proceed in Italian, to represent who we are here today.
I represent the PACTA Foundation. This is an experimental foundation at the Italian level to represent the whole of the air transport sector on an enlarged basis, not just airports, air companies and producers of airplanes, but also other companies that can help to contribute towards decarbonization, and the acronym refers to decarbonization of the air transport sector. So we wanted to bring together often opposing interests of those involved in the sector, representing different organizations, airports, ITA Airways, any other organizations. And we represent Air Nil via Bassa Foundation, Bologna Airport, Swissport, a whole range of them. I'm supposed to refer to all of them.
Alessandra Famio
That's why this is an experiment at the Italian level to try to show that when we're talking about decarbonization, we have to try to adopt a position that has as much shared support as possible that will push the Italian aviation sector towards decarbonization. A lot's already been said about book and claim, but before I go on to that, I would just like to make a brief reference to the current historical situation. If you look at the current geopolitical situation, you can see that we do have a particularly vulnerable moment that is causing problems for logistical hubs. So we have to create capillary networks for distribution of biofuel and to distribute those across national, member state networks to ensure that they get to all airports or at least, the vast majority of airports. In order to do that, we would like to express before members of the European Parliament the need to make progress on ETS.
We know that the allowances have been free and they've greatly helped to close the gap between biofuels and traditional fuels. And we know that will continue to be the case up to 2029 when the SAF mandate will increase from 2% to 6%, and that's when the ETS allowances will disappear. And so at this particular historical junction, we need to make sure that we are making the necessary efforts to adopt biofuel, although feedstocks may differ. But this is necessary to ensure that our path towards decarbonization won't come to an end at this historical point, and that's regardless of where the SAFs are physically provided. We also see the need to encourage biorefineries at EU level or at least to convert current biorefineries, and that has to be done at EU level because that will ensure that they can become more independent in terms of fuel and also to work with incentives not just to use biofuels but to actually produce biofuels.
So in the long to medium term, can help the sector at national and both European levels to be more self-sufficient and to be able to meet the needs of the SAF mandate. The 2% to 6% and then later 20%, when we're making these steps, we want to draw your attention to the fact that they could perhaps be revised to ensure a more gradual increase. I know that's not really what we're talking about in today's hearing, but I think it was important to share this view with you. Now moving on to book and claim, which is the reason why we're here today. The aviation sector covers a number of different positions, but there is one certainty that all parties agree on, and that's that SAF use has to be supported through book and claim, which will allow proper organisation for the sector but also to ensure that airlines can benefit from scalability in SAF distribution, and that will ensure better competitiveness at European level.
But when I say we need support, that's because we believe individual airports and member states have to be able to provide SAFFS. We know there's an impact on CO2, we see that at the macro level, but it also has an impact on other pollutants. So we need to ensure that when we're talking to local populations around airports, we have to ensure that there's a narrative that says that the whole of the aviation sector is making an effort to use substances that do not pollute so much, and so they'll be able to make a bigger contribution, and we have to work with national governments in making progress here. As the previous speakers have said, we're all very much aware of the need for buck and claim, but this should be done in a way that provides support to the sector and isn't just applied in a blanket manner, because that's the only way that we can ensure benefits for individual communities and countries. I'm not going to go into detail on the book and claim that should be adopted by the EU.
Of course, we need to have a robust register. We need to be able to avoid double counting. If we're to have a European register, not just global, then we need to avoid the possibility of greenwashing. I think I can leave it at that, and thank you very much.
Aurélie Meuthuiel
Thank you, Madam Chair, honorable members of the transport committee. I would like to start my contribution by thanking you for inviting me to present a civil society perspective on what is admittedly a quite technical topic. My message today is one of cautious support. Booking claim can be a useful tool, but it won't solve all the structural issues that are currently preventing ESAP projects from taking off. Let's start with a little problem assessment.
Speaker 40
What challenges exactly are we trying to solve? We have over 40 large-scale ESAP projects in the pipeline in Europe, so there's no shortage of projects. These are the clean, scalable fuels that we need to decarbonize aviation in the long term, which is why I insist so much on them. Yet today, none of these have reached a final investment decision. Why?
Aurélie Meuthuiel
Because they don't find buyers. And why is that? Because we are stuck in a first-mover trap. Airlines are afraid of the high price of ESAP and reluctant to sign long term offtake agreements that producers need to get bank loans. And even if you have the contracts in place, you cannot automatically get your fuel into the airports because as many airports hubs, the physical pipes and the fuel farms are controlled by a few incumbent fuel suppliers that keep the market closed and, as was presented earlier by other speakers, also surcharge airlines for SAF.
Speaker 39
Next slide, please. So this is where the booking claim hope comes in. I won't detail this too much. It's been said. The idea is to decouple the physical fuel molecule from its environmental attributes.
Aurélie Meuthuiel
For a fuel supplier, it means that they can comply with mandates without delivering SAF to every single union airport, and can exchange credits with each other. For an airline, it means that they can claim the carbon savings under the ETS regardless of where the fuel was actually poured. And for an ESF startup developing an ESF project, the hope is that it can suddenly reach a pool of buyers across the whole continent. And so, by removing the physical hurdle of transporting the fuel to an airport to all airports, we hope to unlock some sales. Now, however, and this is a big however.
If we do this, we have to do it with integrity. We cannot allow a wild west of credit pay of paper credits. So we're proposing four strict boundaries that are quite aligned with the boundaries proposed earlier by Aurelia. First, we should keep it in Europe. So the system must be limited to staff produced and delivered within the European Economic Area.
This will ensure that we can audit it via the union database, and also, frankly, it's just a way to protect our EU staff industry. Proportionality. Airlines should only be able to claim credits in proportion to their EEA operations, so that they don't claim benefits for routes that aren't even carbon priced. Frankly, that's a problem.
That would be solved if.
Aurélie Meuthuiel
we just an extension of the scope of the ETS. But, otherwise, we need to keep applying this proportionality principle. Focus the system on ESAP or, at the very least, exclude HEFA from the system, because mature biofuels like HEFA made from waste, oils, and fats already have a physical supply chain developing. So why bothering that? They don't need an extra administrative leg up.
Four, grandfathering. This shouldn't be a permanent crutch. We recommend limiting booking claim to contracts signed by 2028, for example, or to plants running by 2000 or starting operations by 2032. This is a way to reward first movers while still ensuring that we eventually move back toward physical local fuel availability for the sake of local air quality.
Next slide, again. Thank you. Perfect. No. Sorry.
Aurélie Meuthuiel
So booking claim is not going to be the game-changer. And here, I'm gonna have to dampen the expectations. Sorry about that. Regarding transport costs, it may save a few €100 in transport costs, but the price premium of ESAP is measured in thousands of euros. It also doesn't solve the first-mover risk and the differences in contract length expectations between producers and off-takers.
It doesn't fully solve the infrastructure problem that I talked about earlier because, eventually, the fuel producers, the ESAP producers and SAF producers in general, they still have to find a physical entry point for their fuel. It doesn't fully stop the surcharging practices of big fuel suppliers because as long as fuel suppliers are the obligated parties under Refuel EU, they can still bake noncompliance costs, the penalties, into contracts as hidden fees. And let's not forget about the regulatory headache. This will require changes across Refuel EU, the ETS, and the red if we wanna make use of the full potential of booking claim. So that's quite a heavy lift.
To wrap up, I would say, despite everything that I just said, let's adopt booking claim, yes, but let's treat it as a temporary bridge with strict borders. While we do that, we must, of course, protect the core staff mandates. But if you want to know what would be a real game changer for the sector, I believe that you should go for double sided auctions as the commission clearly stated that it would be working toward as part of the sustainable transport investment plan. I think we need to make that a reality, because we need a market intermediary that can centralize procurement risk and bridge the cost gap between supply and demand. My final words, book and claim is only a tool in the toolbox, and it's time that we use the whole set.
Thank you very much, and I look forward to your questions.
Speaker 5
Thank you very much. And mister Burke, last but not least, seven minutes, please, sir. Thank you.
Oskar Meijerink
Yes. Thank you, madam chair. Thank you, honorable members of the European Parliament. Thanks so much for the invitation to share a concern I've had for a long time, and with me many other SAF producers. The concern comes from the perspective of Sky Energy, a developer of SAF production capacity.
And the concern today is the dominant position of aviation fuel suppliers at European airports, and how it's starting to threaten the scale-up of SAF and with it our energy security. A lot has been said already today, so let me maybe summarize some of the points we heard. And let me be clear from the start on what this is not about. This is not about logistics, not about costs, or the emissions from transporting stuff. Those are not the real issues today.
It's also not scarcity or certification. In fact, we're actually in an overcapacity situation today relative to the mandate for 2025 and 2030. And I believe some of my colleagues from Nesta and NE are in the room today and that they could, with their capacity, supply the European mandate alone. This is today about market power, and we see that it distorts the market we're trying to build together. Under refuel, you, together with the commission and the council, made a deliberate and important choice.
You did not mandate the airlines. You mandated fuel suppliers to deliver SAF at every Union airport. On paper, that creates certainty, but in reality, it also creates leverage. Because you're mandating the supply of a scarce product in a system where fuel suppliers already hold strong and often very dominant local positions. And at the same time, airlines have lost their outside option through anti-tankering rules, which are therefore a good reason.
So what happens next? Airlines cannot walk away. The suppliers must comply. And what happens next is that the market clears at whatever price is imposed. Unfortunately, the first year of the mandate has already unveiled those consequences, as also stressed by the previous speakers from IATA.
Airlines have very limited marketing power. The pricing is opaque, and costs are passed through via staff surcharges, and there's very little transparency in what is actually being paid for. That's not what we call a competitive market. It's a mandated market with constrained access and concentrated power. At the core of this is one design choice.
We require SAF to be physically supplied at each airport. That makes a lot of sense, and it's in the interest of spreading the environmental and energy security benefits across the entire Union. But implemented as it stands today, it creates inefficiencies, barriers to entry, and even artificial scarcity in certain locations. And the flexibility mechanism that was meant to address this is actually limited and uncertain in how it can be used exactly. So what we are left with is a system that is rigid, fragmented, and vulnerable.
Meanwhile, the airlines are paying the price and, ultimately, so are the passengers, which is you and me. Worse even is that they do not even consistently receive the transparency, traceability, or control over the sustainability value that they're actually paying for. They pay the premium, but they don't fully receive the benefits. Now, ideally, we would fix that structurally. We would open access to the infrastructure.
We would mandate transparency. We would create a truly competitive market. But if we're honest, that's going to take years and maybe even a decade, and we just don't have that time. If we slow down now, we will not be ready for the staff demand that is coming after 2030. So what we need is a pragmatic solution, and that solution already exists: a booking claim system.
Booking claim, it's not some kind of theoretical system. At Sky Energy, we've been working with booking claim for years in the voluntary market. We already enable airlines and corporates to purchase SAF and claim the associated emission reductions, even when the fuel is not physically delivered at their airport. It's traceable, it's audited, and it works. And it's been working since we started doing it in 2010, and it has professionalized over time, with the emergence of registries.
It allows companies to access SAF regardless of location, support new production, and contribute to real emissions reductions. In other words, we already have a model that separates physical delivery from market access. So what we're proposing is to simply extend what already works in the voluntary market to the regulatory market as well, but limiting to supply in the EU for all SAF to improve competition on all SAF. And don't get me wrong. It's not that it will be easy, but the basic architecture is already there in the form of the union database.
We just need to accelerate its implementation. The benefits of implementing such a system are clear. It allows airlines to source SAF from all across Europe. It restores competition between suppliers and reduces dependence on local monopolies, and it allows SAF to flow to where it is most efficient. In short, it brings back the much-needed market logic into the system.
Let me make that concrete from a producer's perspective. Today, SAF producers can only reach airlines through local fuel suppliers. So access to the market is not just determined by who produces SAF, but by who controls the airport. With booking claim, that can all change. Producers can contract directly with airlines across Europe, while fuel suppliers continue to deliver the fuel physically.
And to be clear on the role of fuel suppliers, we would not remove their role at all. We would just be removing their exclusive control over the market on SAF's environmental benefits. And what's good to highlight is that booking claim will not eliminate SAF surcharges, which is what we see today. Fuel suppliers are simply mandated to blend SAF, and they will pass on the costs. That's not the issue today.
The issue is how those costs are set. Today, they're set in a constrained and opaque market, and booking claim would not reduce the cost or remove the cost, but it forces those costs into competition. It makes pricing visible, comparable, and contestable. Because right now, we're not just paying for staff. We're paying for the structure of the market delivering it, and that's something we owe to ourselves to fix.
There's one more issue we need to address. Even if we introduce a booking claim system today, it will not work fully unless we fix the interaction with the EU ETS. Today, airlines can only claim SAF emission reductions under ETS based on physical uplift at the airport. That creates a fundamental misalignment with Refuel EU because it means that even today, when an airline is paying SAF surcharges, and in the case of a booking claim system in the future potentially, if SAF is purchased elsewhere in the system, the airline cannot claim the benefit. In other words, we will be creating a system where market access will be expanding, but the incentives are still linked to physical location.
If we want submarkets to scale efficiently, the systems just need to work together, not against each other. Concretely, the ETS should allow for the claiming of environmental records on the basis of purchase records, more like our neighbors do in the UK. And, of course, booking claim also is not perfect. It raises a lot of questions about settlements, who can sell to whom, interaction with the physical supply, and potential concentration risks. But those challenges are manageable, and we can find answers to them.
And those answers will be far easier to solve than reforming the deeply embedded structure of the fuel supply at European airports, which we should aim for eventually. Don't get me wrong, but that will just take a lot of time. So the choice in front of us today is quite simple. Do we want to continue with a system that concentrates power, obscures pricing, and slows down scale, or do we introduce a mechanism that increases transparency, restores competition, and accelerates deployment? To me, this is not just about SAF and the significant climate and environmental impacts it reduces.
It's also very much about energy security today. What we see today with SAF will repeat itself in the future for advanced fuels and ESAP. And if we don't fix it now, we will lock in the same constraints for the next generation, and not be able to diversify our fuel mix. Europe has created a significant demand signal for Refuel EU. For Sky Energy, it led to the first financials to our first final investment decision on our SAP plant in the Netherlands, and others went before us.
But demand alone is not enough. If there's no real competition, we're not building a market. We're just introducing more bottlenecks, and bottlenecks lead to delay, and delay leads to continued dependence on fossil fuels. So I would suggest today, in the spirit of Accelerate EU, let's accelerate access to airports, competition, and the scale we need to improve European energy security. Thank you.
Speaker 5
Thank you very much. Now we open our discussion. One by one, I remind you of my request for respecting the two minutes. And we begin with Mr. Danielson, please.
Johan Danielsson
Thank you. Shared, thank you to the speakers as well. I'm glad that there at least there seems to be an agreement in both panels that we really need to stick to our targets because I think that one also problem, not just in this sector, but in other sectors, is that also investors are starting to contemplating about EU really being serious, with their climate policies and wealth. So I think that's important across sectors. Let's there were some alignment among the speakers about what is needed, but perhaps if I could ask for the SASHA coalition, what would you think is necessary except the booking claim?
We heard from T and E about double-sided auctioning. Is this something that you would also favor? To Mr. Berg and Sky Energy, if we introduce a booking claim system, will the problem to find a physical point of entry go away, so to say? Because if you still have fuel suppliers that apply the surcharges at the airport where you physically need to actually sell the currency in or the ISAF, will that problem still be there?
Or do you think it's fixable? Also, from you and the other speaker that didn't clearly say that we should limit this to ISAF, would you agree? Or would you say that it should be open to other sustainable aviation fuels as well? And to Sasha and T and E that proposed a limitation to ESF, is there, from your perspective, any short-term problems with limiting the booking claim to ESF? Thank you.
Speaker 19
Yes. Thank you, chair, and thanks from my side to the speakers as well. I have questions for Aurelia first. So you know that we don't agree on limiting it to ISAF. We discussed this previously.
Speaker 21
Because the advantage of not being necessarily physically present goes for ESOP and goes for BioSaf the same way. So what is your argument of limiting it to ECEF but having a competitive advantage towards Biocef? This would be interested in this. And interestingly, you said you wanted a booking claim system inside the European Economic Area, but refuel aviation is limited to the European Union. EES is a European economic area.
So if you could elaborate a little bit about the distinction and what the difference would make for you to put in the basket Norway and Iceland, basically, or not. And then to Mr. Berg, thank you for your presentation as well. Fully agree with you. And I think that tackling fuel suppliers is not only in a virtual way via booking claim system, but in a physical way on airport grounds is a task that we should not shy away from.
Speaker 19
Do you think air services regulations of 10/2008 could be a good tool to open the market a bit, to oblige airports to open to other fuel suppliers.
Thank you very much. Mister Takeitov, please.
Kai Tegethoff
Yes. Thank you also to you for your presentations. Meeting the refuel EU targets after 2030 would require a major increase in SAF production, especially for synthetic fuels. Meaning that production capacity needs to start developing actually already now, ideally also through more decentralized networks that then can be scaled up over time. In this regard, are we planning ahead enough for the requirements of the next decade, particularly also in terms of e-kerosene production?
And maybe what could be done more in terms of incentives for investment in their mass production in the different member states. And, additionally, could synergies or, for example, joint ventures with airports be established in order to optimize logistics and lower related transportation costs? And do you maybe already have any existing examples in this regard? Thank you.
Speaker 46
Thank you, and thanks for the clear explanation given by the panel. The, as we are discussing, these kinds of system as book and claim. But we see in the regulations that we're working on, the Refuel EU, the Renewable Energy Directive of Red, as you already mentioned, and the EU ETS. I mean, these are three frameworks, three reporting systems. So what, and maybe that's a question for Mr.
Berg and Madame Leo, but maybe others of the panel. What would be, from your practical experience, one of the biggest regulatory traps for us as lawmakers that we should fix if we would be introducing the book and claim compared to the three regulations that are there? And maybe from the panel as well, do you see any opportunity where we could go for a system that would, in the end, also be internationally accepted? I know it's difficult, but I just came from last week from the IMO, the maritime organization, and we see gradually some small steps towards an international framework. So maybe a response to that.
Thank you.
Speaker 5
Thank you very much. Does any other colleague want to take the floor? Yes, Missus Costanzo. Thank you. Thank you also for your input.
Speaker 48
I have a short question. In the past, especially if wrongly declared biofuel imports from China have entered the EU, what measures are needed to prevent fraud if a book and claim system is introduced? I know I'm always quick, but okay. It's a simple question. Any other colleague?
Yes, please.
Speaker 49
I'll speak in Italian for madam Famio. Thank you to all of the speakers for their presentations. In light of the framework that you set out and particularly the current geopolitical framework with instability in The Middle East and global issues with fuels, then it's clear that sustainable fuels are important not just for reducing emissions, also are important in terms of strategic independence for the EU. Yet at the moment, the sector is still very dependent. It's still developing, and it's not uniformly distributed.
So my question is as follows. How can we ensure that, possibly, any possible flexibility mechanisms to move from physical use of fuels and to ensure that we're not undermining the physical and infrastructure needed at European level? And secondly, do you think that given that there isn't a stable and predictable framework beyond 2030, there's a risk of loss of competitiveness for the European sector in comparison with international players? Thank you.
Speaker 5
Thank you very much. Now I'll give the floor one by one to our speakers to answer the questions and their remarks. We start with Missus Leo. Thank you. For four minutes, please.
Aurelia Liu
Oh, gosh. Four minutes. Alright. Thank you for your questions. MEP, Danielson, aside from booking claim, what are the main tools to be used to ramp up ESAP?
We mentioned the double-sided auctioning system before. The Sasha coalition is absolutely in favor of that, and we've also pushed for this. It answers to a need on the contract length difference. It brings a market intermediary into the picture, and it's gonna be absolutely essential to get to a ramp-up. Another one, and this has been mentioned on multiple occasions. Here are the SAF allowances.
They currently end in 2030, but not just that. They're not only tar, they're currently only being used for BioSAF because there's no SAF on the market. So what we wanna make sure is that after 2030, there are still SAF allowances available, but that there is a clear ring-fencing for ESSAF so that we don't see a full cannibalization, let's say, of BioSAF, of these allowances by BioSAF. And, when you spend money from the ETS, that means that you need to generate money from the ETS. So one of our very clear asks is to extend the ETS to international aviation that will, you know, generate revenues that can be recycled back into the decarbonization of the sector.
MEP Uchin, you asked why ESAF rather than BioSAF or why we think there should be an exclusive approach towards e-kerosene. In terms of sustainability, the biofuels simply don't bring the same kind of advantages, be it because of indirect or direct land use change, because of biodiversity aspects, but not just that. BioSaf has been proven to be extremely fraud-sensitive. There is a problem with chain or transparency of the supply chains. And more than that, we are also fully import-dependent on Europe to attain the BioSAF targets that are set out.
If we want to comply by the red standards of what constitutes a renewable BIOSAP, we're not gonna be able to have the necessary biomass in Europe for this. So it keeps us dependent on foreign imports, and I think that's one of the key things that ESAP brings to the table. It's that energy sovereignty aspect. You also asked why EEA and not the EU. I mean, you gave the answer yourself already, in a way.
Norway and Iceland are very energy rich, renewable energy rich, and so I think they're a key part of making sure that we actually get those targets. They're already part of the ETS in terms of the CEF allowances. That means also including them into that, so I think it just makes sense to include them. You saw the map that I presented earlier. If you take Norway and Iceland out, those are the ones that are at the biggest levels of production versus what their actual needs are.
So I think it is just a common sense approach there. Let me have a look. MEPW. The biggest regulatory traps to fix, if we introduce Bokkenkrem, I guess, you know, that's where our three asks are. So e kerosene, EEA, but also the time limitation.
So this was, you know, mentioned before. This is also about breaking a current monopoly inside of the aviation fuel suppliers and making sure that this is time limited, gives the necessary time to create a larger client base, but it also gives a clear boundary that infrastructure needs to be built. And I think that answers also a different question that was asked before, is, you know, ensuring that the infrastructure is still being built and that we don't have an artificial market on our hands, on the long term. And I see I am four seconds away from 4 minutes, so I'm gonna yield the floor.
Thank you. Missus Plagio?
Alessandra Famio
Well, very briefly, some thoughts.
We need to find a way that takes into account the need to ensure the competitiveness that we've heard so much about and to avoid SAF doesn't mean higher prices, but also that this scalability doesn't lead to competition distortion over the long term within the EU. So that means that we have to ensure that there are production incentives to ensure supply within the fuel supply chain within the individual EU states so that any flexibility mechanisms work in support of the sector. And that ensures that when there are more stringent requirements under a refuel EU, that they can do so and that they have that they are set up properly so that they can also respond to extra EU competitive competition. And on extra EU competition, beyond the book and claim solution, we also have to ensure that competition here is fair as well. So the possible or the future book and claim register will make sure that the fuel supplied is sustainable, is genuinely green, and that any non-EU countries that might look for ways around it aren't allowed to compete on a level playing field.
And then when it comes to fuels, at this particular point in history, we need to have proper funding for the ETS. We know that this will ensure that national networks and therefore European networks will have biorefineries production plants for SAF, which will allow the gradual, capillary distribution of fuels, and that will help competition. Thank you.
Much. Madame Mottrell ?
Speaker 40
A lot of questions have been addressed. I've selected three that I believe have not been addressed yet. So there was a question about whether there would be a shorter problem in restricting and booking a claim to ESF. I'm not fully sure I got the question, but I would say that if the issue is that there's no ESAP yet available and so on, I think we can design the temporal boundaries of the booking claim scheme in a smart way to ensure that
It much matches the pace of deployment of ESAP. You so need to.
Think about when you start your grandfathering clause and so on. That can be adjusted. I think there are smart ways to do this. Regarding the there was a question about whether we are planning enough for the next decade, whether we're planning enough for the considerable production increase that will be required for the next decade. I think that depends very much on how much money, how much funding we put into the possible, upcoming markets intermediary that will be set up at EU level because this market intermediary will need to be capitalized to function.
At the moment, you may be well aware that all eyes are on member states funding pilot auctions as a first step, but this the idea is that these pilot auctions only serve as a blueprint, towards the wider EU market's intermediary. And then the funding will need to shift from member state level, from national level to EU level. So that's why the current negotiations under the MFF are absolutely crucial. At T and E, we are calling to redirect to earmark at least 25% of aviation ETS revenues towards the market's intermediary. Finally, there was a question about how to prevent fraud through booking claim.
So as I was, as it was mentioned earlier, booking claim is not the way to address feeds fraud on feedstock. If anything, it makes it potentially even harder to track the physical supply chain, and I think this is the key point that I wanna make: booking claim on creates also additional fraud risks like double counting and so on. So if we do it, we need to do it very carefully. We need to design it very carefully through the UDB and make sure that we can not only audit the full virtual supply chain, but still keep track of the physical supply chain, still know where the fuel will actually be burnt, in which airports the fuel will be shipped. I think this is very important.
Aurélie Meuthuiel
And so there will be a lot of operational details that will still need to be figured out. And that's it for me. Thank.
Oskar Meijerink
Couple more points and answers from my side, specifically MEP Danielson and MEP Gambino, who I think just left. But the question on airport access and how it would basically change the fundamentals of the market, I think what's really good to understand is that introducing a booking claim system would do nothing with the physical supply. That would stay exactly the same. So, also, when it comes to supply of SAF and monitoring that under the renewable energy directive, that whole system of physical supply stays the same. The diff the difference is that you add an additional commercial layer on top of it, which means that airlines have additional options to contract for the environmental benefits, and it increases the level of competition, the level of transparency that is needed to lower that cost component, which is currently still too opaque.
In terms of limiting the booking claim system to ESAP, we would think that is a very unwise choice because what we see today is that the SAF market is not transparent and not working in the way it should as a whole, not just for ESAP. Right? And we have an opportunity here with the booking claim system to address that and not only apply that to ESAP, but also to all the other staff. Next to that, I think applying it just to ESAP would be unnecessarily complex in terms of the monitoring and the execution of the system. In terms of the question of MEP Uchin, on the airport service regulation, I think that's a very interesting proposal.
I think addressing this issue of airport access under the airport service regulation would address it partly. We it would mean that we would converge as a union a bit more into the direction of the model that Spain is currently using, but we think it should happen in parallel to the introduction of a booking claim system because changing the airport service regulation is gonna cost a lot of time, and we don't have that time. So we can do these things in parallel to each other. Then there was a question on accelerating investments in ESAP and what the commission and countries can do. I think the key topic for ESAP today is that there is an immense level of revenue risk, price risk, as well as project delivery risk.
And I think SIP is already doing a lot of great things when it comes to reducing the revenue and price risk with the development of a double-sided auction system, now in the early movers coalition at the member state level from 2028 onwards, hopefully also at the European level. So that is really tackling the price risks that airlines are facing and also the revenue risk that lenders are experiencing when financing SAF facilities. Now I think a very much overlooked risk is the project delivery risk. So how do you actually build, own, and operate such a refinery? And a lot of these projects are developed by relatively young companies that do not have that operational experience yet.
So how do you mitigate that risk? And that I think where there's a huge role for state aid, guarantees at the national level, mechanisms where the EAP and InvestEU can work together to derisk those type of investment to really leverage that private capital back into the market. I think that's very much underutilized. Then a question from MEP Baleaux on the biggest regulatory traps. I think with the red, I don't really see an issue because the physical supply of aviation fuel would actually stay the same and of the sustainable aviation fuel.
The biggest issue of misalignment here is with the EU ETS where we would have to make sure that airlines can actually claim the environmental benefits and also the CEF allowances associated with the SAP that they pay for. And I think the EU ETS is currently under revision. It's open for revision and consultation, so I think now is the right time to make sure that we align those directives. And then finally, an issue on or a question on the certification of SAF. I think there is a very rigid certification system currently in place.
There's an opportunity to improve it under the current implementing act, that is being revised. I think there's some improvements that can be made around physical proof and in person checks, but these should be sufficient to limit the level of fraud. The most important thing causing fraud is the fact that the feedstocks are becoming more valuable, and that increases the chances or the likelihood that there is fraud. So if we can do something about keeping the costs of those feedstocks lower and diversifying our fuel mix, I think that's also where we have an opportunity to lower the chances of people actually wanting to commit fraud, is when we keep the cost of the feedstock low. I think that covers all the answers to the questions.
Thank you.
Speaker 5
Thank you very much, Mr. Berg. Now, dear colleagues, we have concluded our public hearing. We want to thank all our speakers from the first and the second panel for their very interesting presentations and very important insights that will help us to understand the challenges that the EU is facing towards the uplift of sustainable aviation fuels. Thank you very much, all. We thank you.
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