Airline passengers could face costs of nearly £2.2bn annually due to the EU and UK’s net zero targets, according to a warning from an industry leader. Willie Walsh, CEO of the International Air Transport Association (IATA), highlighted that the rising cost of sustainable aviation fuel (SAF), coupled with weak demand, could lead to increased ticket prices for passengers. Mr Walsh, former chief executive of British Airways, labelled the net zero regulations causing these additional costs as “the EU’s great green scam”.
He criticised Brussels for its persistent proposals to escalate measures that have proven entirely ineffective. The IATA estimates that by 2025, SAF purchases will cost an extra £885 million compared to traditional jet fuel. Producers such as Shell and Total are also expected to charge airlines £1.2 billion in “compliance fees” or fines for failing to supply carriers with at least 2% SAF.
This is the minimum requirement set by both Britain and Brussels following the introduction of a mandate this year.
Speaking at an industry event in New Delhi, Mr Walsh said: “The EU mandate has done nothing to stimulate additional production and a lot to enable fuel suppliers to increase their charges and therefore increase costs to airlines.
“The SAF has not been available but the fuel suppliers don’t care. They will be subject to fines but they are just passing on the cost to the airlines. It is an outrage that suppliers are charging airlines compliance fees that value SAF at double.
“Despite its market premium over conventional jet fuel, this equates to a windfall of over £738 million. People will say these mandates are positive because they stimulate production. We don’t see any evidence of that. Consumers at the end of the day are paying more.”
Mr Walsh didn’t go as far as to say that achieving net zero emissions by 2050 is impossible. However, he cautioned that without a significant increase in SAF production, the pressure on airlines would intensify as the UK and EU demand ever-increasing quantities.
The IATA estimates that sustainable fuel will need to account for two thirds of the carbon reduction required to achieve the mid-century net zero target.
While SAF production is expected to double to two million tonnes this year, it would only represent 0.7% of airline fuel needs.
Mr Walsh highlighted that the situation is being worsened by potential removal of US tax credits for SAF, a production crisis at Boeing and Airbus affecting deliveries of more efficient planes, and recent abandonment of hydrogen plane projects.
He continued: “And companies we need to be major SAF producers such as BP and Shell have cut back or delayed investment plans. This is not where we should be in 2025.
“We have a quarter of a century to get to net zero with a £3.4 trillion price tag staring us in the face. There is no time to delay and no tolerance for government green-washing.”
