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Mandatory use of sustainable aviation fuels and a high CO2 price will create clarity about the demand for such fuels.

This is the main conclusion of the study Internalising the climate costs of European aviation conducted by the independent Dutch research and consultancy firm CE Delft. This study calculates the overall cost of this transition through to 2050, the most likely fuel mix, and the CO2 price required to kick-start the transition.

A higher CO2 price will prompt swift investments and a scaling-up of production, pushing down the price of sustainable aviation fuels. This also holds true for a transition to biofuels (based on used cooking oil and forestry residues) up to 2032, followed by a switch to e-fuels (based on renewable energy, hydrogen, and carbon).

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    e-Fuels

    This will then require a CO2 price of € 200/t in 2025. That will increase to € 252-321/t in 2032, depending on whether the e-fuels are produced in the Middle East and imported (€ 252), or produced in the EU itself (€ 321). After this, the CO2 price could drop to respectively € 60/t (for import from the Middle East, or € 240/t (for production in the EU) in 2050.

    The study suggests two routes that could lead to attaining those CO2 prices:

    1. Via an increase in the EU ETS price, with all emission rights being auctioned or sold (not distributed for free). The system should also be applicable to international flights to countries outside the EU. This is currently not possible yet within the EU ETS system.
    2. Via a kerosene tax, with a bilateral agreement between countries in the EU. For now, international airlines from outside the EU should be legally exempt. Yet in the longer term, it would also be desirable for the tax to be applicable to international flights that land outside the EU, as well as to the international airlines concerned.

    Rising ticket prices

    As a result of the high CO2 price, ticket prices will rise by 8-34%: in 2025, a one-way ticket to Lisbon would become € 33 more expensive; in 2032, this would amount to an increase of € 42-53. Due to these higher prices, the future demand for airline tickets in Europe will decrease by 6-25%(depending on, among other things, the year, price trajectory, and where e-fuels are produced).

    Without these measures, CO2 emissions from European aviation will increase by 28 percent in 2050 compared to 2019. This is mainly because the aviation sector is still expecting continued growth. The question, therefore, is whether both the EU’s climate goals and the growth ambitions of the aviation sector are feasible at the same time. Either on one of them or both of them may need to be downgraded.

    The study – download it here in full – was carried out by Max van Geuns under the supervision of Dr. Søren Bøye Olsen of Copenhagen University and Dr. Jasper Faber, Aviation team leader at CE Del

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