CARTAGENA, Spain/LEEDS, England – Energy giant Repsol has bought into Europe’s drive for green jet fuel, but believes the 200 million euro ($217 million) plant it is building in southeast Spain faces a bumpier ride than if it was on the other side of the Atlantic.
Repsol says the plant, which transforms used cooking oil into so-called sustainable aviation fuel (SAF), has attracted plenty of customers. But it is concerned Europe’s investment environment will complicate the industry’s efforts to take off.
“(In Europe) there is a legal instability and a regulatory machinery that is very complex and very discouraging towards seeking new solutions,” said Oliver Fernandez, Repsol’s director for air fuel in Madrid.
“We see the US is very in favor of helping companies with financing and focusing on helping them to develop new things.”
Repsol’s worries echo those of Europe’s aviation sector, much of which is tasked with boosting SAF use to 10 percent of all jet fuel by 2030, despite it currently costing up to five times as much.
As one of the only ways to decarbonize aviation, investors and regulators are pushing airlines to up SAF usage. Doing so could also determine whether airlines can ever be considered sustainable under the European Union’s green finance rules, impacting their cost of raising money.
As it stands, SAF makes up less than 1 percent of jet fuel in use. Airlines, which operate on razor thin margins and are heavily indebted as they recover from the pandemic, say more needs to be done to boost production and lower the cost.
While US firms are benefiting from tax incentives to boost production, Europe has focused on mandating change rather than incentivizing it, said Laurent Donceel, acting managing director of lobbying group Airlines for Europe.
“It seems the EU is more focused on window dressing and letting the United States eat it for breakfast,” after the EU published its Net Zero Industry Act in mid March.
“Europe needs to step up and throw its weight behind a domestic SAF industry to ensure it does not fall behind.”
Supporters of Europe’s approach argue that the profitable energy industry should be able to ensure supply, adding that the harmonized US tax system is better designed to benefit from incentives, such as those in the Inflation Reduction Act, than Europe’s patchwork of national systems.
Producers say they are struggling to front the investment costs needed to scale up. Repsol has only created enough SAF so far to power test flights for IAG-owned carrier Iberia.
