EU's 'green' fuel mandate costly and not helping environment, IATA says

By Jun Yuan Yong

SINGAPORE (Reuters) -The International Air Transport Association on Wednesday stepped up criticism of the European Union's sustainable aviation fuel mandate as a costly initiative that is not helping the environment as regional supplies there remain low.

"The idea that you're buying sustainable fuel and then transporting it to use in Europe isn't the right way to do it, because you're clearly increasing the carbon footprint of that fuel as a result of the transportation costs," IATA's director-general Willie Walsh said at a media roundtable in Singapore.

IATA estimated in June that production of SAF, which is considered a low-carbon replacement for traditional jet fuel, is expected to reach 2 million metric tons, or 0.7% of airlines' fuel consumption, in 2025.

"Mandating the use of a product that isn't available doesn't lead to any environmental benefit," Walsh said, adding that fuel companies that have an obligation to produce SAF are also increasing the cost of traditional jet fuel.

By IATA's assessment, he said "the cost that they're charging is way in excess of the actual cost of the limited supplies of sustainable fuel."

"The EU in effect has facilitated monopoly suppliers to increase prices with no environmental benefit," said Walsh, adding that the region needs to re-evaluate its SAF targets.

Under the ReFuelEU Aviation requirement, airlines need to have a 6% SAF blend in their jet fuel usage by 2030. The EU is offering some subsidies for SAF purchases by airlines, Reuters reported in June.

On the supply front, at least five SAF projects in Asia, outside of China, have started up or are earmarked to start production this year, targeting exports regionally and to Europe. Singapore is among key exporters of the green fuel to the EU.

Walsh also questioned the use of palm oil as a means to produce sustainable fuel.

"I think that you could argue there is sustainable palm oil and there is palm oil that wouldn't be considered sustainable, and I think in some parts of the world there it's too black and white," Walsh said.

We need to have a much more "nuanced approach" to the usage of palm oil as a feedstock and "much more detailed assessment of the sustainability of the feedstock", he added.

(Reporting by Jun Yuan Yong; writing by Trixie Yap; Editing by Muralikumar Anantharaman and Sonali Paul)