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EUROCONTROL’s 'Objective Skygreen' 2022–2030 report

EUROCONTROL’s 'Objective Skygreen' 2022–2030 report

1 June 2022: EURCONTROL has published its published its 'Objective Skygreen' 2022-2030 report on the economics of aviation decarbonisation towards the 2030 Green Deal milestone. It assesses what the decarbonisation would mean for aviation in practical terms, looking at the various solutions: new technologies, implementation of the Single European Sky as well as other operational improvements, increased production and uptake of SAF – and the cost of meeting a 55 per cent emissions reduction target by 2030. The analysis is based on three traffic scenarios developed in EUROCONTROL.

The report states that merely reducing flying is not the solution and that decarbonising is possible but this requires investments.

The key findings of the report are the following:

  1. A 55 per cent CO2 emissions reduction target by 2030 is achievable in ALL scenarios, but this relies heavily on market-based measures
  2. The High scenario with the most traffic is counterintuitively the most efficient to reach net zero emissions by 2050 at lower cost, as higher revenues will drive increased investment in new technology.
  3. Policy-driven decarbonisation measures will add €54.8-€62.0 billion in additional costs across the EUROCONTROL Network Manager area over the period 2022-2030 if all industry-driven actions are excluded, such as ATM optimisation (including SES), fleet update/renewal, and increased SAF usage…
  4. …but applying industry-driven measures can drastically reduce the cost of decarbonisation measures by €32.9-€45.7 billion over the same period.
  5. The most important industry-driven measure is increasing SAF usage; for this to become a reality, the ReFuelEU Aviation initiative is essential in enabling a swift ramp up of SAF production and usage.
  6. For the period 2022-2030, the extra cost of a 5 per cent SAF blending share compared to 100 per cent kerosene is estimated to be €10 billion in the base scenario, reaching €2.1 billion in 2030.
  7. Industry-driven measures can deliver 13.4-24.1 per cent of the net emissions savings, depending on the pace of decarbonisation.
  8. To reduce CO2 emissions quicker, airlines should accelerate the pace of fleet renewal by 3-7 years to ensure they operate the most efficient new technology.
  9. We need to accelerate aviation decarbonisation by prioritising actions, fostering the transition (e.g. by offering financial support and encouraging alliances), and balancing taxation with the need for aviation to recover.

Policy initiatives

SAF

For the period 2022-2030, the report estimates the following extra costs of SAF blending compared to 100% kerosene:

  • Base scenario: €10 billion by 2030, with €2.1 billion in 2030 alone, based on 5 per cent uptake
  • High scenario: €12.1 billion by 2030, based on 10 per cent uptake
  • Low scenario: €4.3 billion by 2030, based on 4 per cent uptake

The SAF production pathways have different impacts on costs, which vary from €1000/tonne and €4500/tonne. The extra costs for increasing the share of SAF are relatively low compared to the EU ETS and taxation costs. Therefore, the ReFuel EU Aviation initiative brings net emissions savings at an affordable price.

The report finds that the higher the share of SAF, the greater the potential emission reduction. In fact, by 2030:

  • 10% SAF uptake (high scenario) will lead to 8.8 per cent of emission reductions.
  • 5% of uptake (base scenario) will lead to 4.6 per cent of emission reductions.
  • 4% of uptake (low scenario) will lead to 3.9 per cent of emission reductions.

The extra costs for increasing the uptake or share of SAF are low compared to the costs of the EU ETS or the ETD.

Kerosene taxes

Between 2024 and 2030, the ETD will increase significantly the airlines’ costs between 28.85-30.90 billion EUR based on the scenario.

EU ETS

The phase-out of free allowances for aviation will result of an increase of circa 116 million allowances to be auctioned. Based on the scenario and considering a carbon price of €200/tonne, the complete phase out of free allowances will lead to an increase of costs between €23.2-24.1bn between 2024 and 2030.

Extra costs of policy measures over 2022-2030 without SES implementation, ATM optimisation and fleet upgrade

Without the implementation of the SES, ATM optimisation measures not new aircraft technology, the extra cost of the policy measure mentioned above between 2024 and 2030 is of:

  • High and base scenarios: €62bn
  • Low scenario: €55bn 

Of these, the additional costs in 2030 alone are of €14bn (for the high and base scenario) and of €12bn (low scenario).

To put these figures in perspective, this would mean that the extra costs per flight in the NM area would amount between €1,003 and €1,160 (high and base scenario), whilst the extra cost per flight intra-EEA between €1,809 and €2,139 (high and low scenario).

Industry-driven responses

The report then identifies industry driven solutions to achieve 55 per cent emissions reductions by 2030.

Modernising airline fleets will cut fuel consumption

  • One of the options is to invest in more efficient aircraft.
  • Operational fleet efficiencies are mainly achieved through fleet renewal, assuming developments in 2022-2030 will be mainly powered by conventional gas turbines.
  • Bringing fleet renewal forward by 3-7 years will bring to even more efficiencies and rapid decarbonisation, providing additional annual fuel and CO2 emissions savings of 1.7 per cent to 5.3 per cent over 2028-2030.

Operational improvements will optimise flight efficiency

  • This includes enabling the flying of more fuel efficient trajectories, introducing specific operational measures that reduce fuel consumption and minimising fuel burn in aircraft operations.
  • SES provides the necessary policy and regulatory framework to enable airspace modernisation.

Finally, industry-driven solutions also include increased use of SAF beyond the mandate.

These solutions could represent 13.4-24.1 per cent of net emissions savings and also a reduction in costs thanks, for example, to the smaller volume of fuel used, leading to decrease of fuel tax and lower ETS/CORSIA allowances needed and less SAF needed.

This would result in a €32.9bn cost reduction in the base scenario and a €45.7bn cost reduction in the high scenario.

However, even if the costs can be reduced, the airlines will face the additional costs and, particularly given COVID-19, it is likely that the ticket prices will see an increase, resulting in €894–€1345 per flight intra-EEA.

Conclusions

It is clear that the base scenario is the most expensive for the industry, whilst the high scenario results in increased investments that will allow to reduce emissions from the sector.

The report then proposes potential options to accelerate aviation decarbonisation. These include:

  • Prioritise actions which result in the highest reductions in net CO2, like introducing disruptive technologies, accelerated fleet renewal, higher uptake of SAF.
  • Foster the transitions through financial support and alliances.
  • Balance taxation with the need for aviation to recover.

You can find the full report here for more details.