The European Commission has allocated around €430 million in EU Emissions Trading System (EU ETS) support to airlines for their use of sustainable aviation fuel (SAF) in 2025, marking a substantial increase in financial support for aviation fuel switching.
The Commission adopted the allocation decision on September 8, 2026, covering approximately 5.2 million EU ETS allowances distributed among 130 commercial aircraft operators. The support is based on calculations submitted by Member State authorities.
The latest allocation is part of an EU ETS mechanism designed to help airlines cover some or all of the additional cost of eligible SAF compared with conventional fossil-based jet fuel.
SAF support exceeds €400 million
The 2025 allocation is worth approximately €430 million, more than four times the previous year’s €100 million in EU ETS allowances for SAF uptake, according to the European Commission.
The support is additional to an estimated €135 million benefit from the EU ETS zero-rating of SAF consumed on flights subject to the system’s surrendering obligations.
Taken together, the Commission estimates that the EU ETS incentive associated with SAF use in 2025 amounts to approximately €565 million.
The mechanism is intended to reduce the cost gap between eligible SAF and fossil kerosene and encourage airlines to increase their use of renewable and lower-carbon aviation fuels.
Airlines claimed more than 530,000 tonnes of SAF
The total volume of SAF claimed by airlines for 2025 exceeded 530,000 tonnes, comprising biofuels and advanced biofuels, according to the Commission.
The fuels were associated with approximately 1.7 million tonnes of CO₂ abatement.
The EU’s aviation ETS support mechanism applies to eligible fuels used on flights covered by the effective carbon-pricing requirements. The level of support varies according to fuel type and airport category. The Commission’s aviation guidance states that support can cover up to 100% of the price difference at small islands, small airports and outermost regions, while different rates apply at other airports.
For other eligible airports, the Commission currently identifies support levels of 95% for renewable fuels of non-biological origin, 70% for advanced biofuels and 50% for other eligible non-fossil fuels covered by ReFuelEU Aviation.
EU ETS mechanism designed to close SAF price gap
The dedicated SAF support system was introduced through the EU ETS Directive in 2023.
Under the mechanism, free EU ETS allowances are allocated to support the uptake of eligible alternative aviation fuels. The Commission says 20 million allowances have been reserved for this purpose from 2024, with a stated value of approximately €1.6 billion based on an allowance price of €80.
The mechanism is designed to cover all or part of the price difference between fossil kerosene and eligible SAF used by commercial aircraft operators on flights subject to the EU ETS.
Airlines also benefit from an additional ETS incentive because they do not have to surrender allowances for emissions associated with the use of eligible SAF under the applicable rules.
The EU ETS also channels funding into the Innovation Fund, which can support technologies aimed at reducing aviation’s climate impact, including aviation electrification and other clean technologies.
Commission proposes further aviation support
The SAF support mechanism could expand further if the European Commission’s July 2026 EU ETS review proposal is adopted.
The Commission has proposed reserving an additional 110 million allowances from the wider application of the ETS to aviation emissions. The additional mechanism is expected by the Commission to provide around €15 billion in support and would also cover electrification and measures addressing aviation’s non-CO₂ climate impacts.
The proposal forms part of a broader targeted revision of the EU ETS presented by the Commission on July 17, 2026, aimed at strengthening the carbon market and supporting Europe’s climate and industrial objectives.
The additional 110 million allowances are therefore a Commission proposal rather than an already implemented allocation.
Transparency requirements for airline support
The Commission has published the support prices associated with the mechanism as part of its transparency requirements.
Under Article 8 of Regulation (EU) 2025/723, airlines are expected to provide visibility to the support they receive from the EU ETS.
The latest allocation adds another financial layer to Europe’s SAF policy framework, alongside the EU’s broader regulatory measures intended to increase renewable aviation fuel use.
Bioenergy Business Analysis
The €430 million allocation shows the growing financial role of the EU ETS in supporting SAF deployment. The 2025 support is substantially larger than the previous year’s allocation, while the reported volume of more than 530,000 tonnes of claimed SAF indicates that eligible renewable fuels are becoming a more significant component of aviation’s decarbonisation framework.
The mechanism also illustrates the importance of addressing the cost differential between SAF and fossil kerosene. By allocating allowances to cover part or all of that difference, the EU is using its carbon market to create a direct economic incentive for eligible fuel uptake.
For SAF producers, the expansion of ETS-backed support could improve the commercial environment for additional production capacity, although the actual impact will depend on fuel eligibility, feedstock availability, production costs, airline demand and the future price of EU ETS allowances.
The proposed additional 110 million allowances would represent a much larger pool of support if approved. However, that figure remains part of the Commission’s July 2026 proposal and should not be treated as committed funding at this stage.
The combination of SAF support, ReFuelEU Aviation requirements and the wider EU ETS framework is creating an increasingly structured policy environment for aviation fuel decarbonisation. The key question for the market will be how effectively this policy support translates into additional SAF production and sustained airline procurement.
Read also: Neste, United Airlines extend SAF supply deal at Chicago and Amsterdam
