Mechanism to cover costs for sustainable aviation fuel

The deal reached by the Ministers for the Environment on five laws from the “Fit for 55” package includes a mechanism which will cover 100% of additional costs incurred by airlines because of the need use sustainable fuel, Transport Minister Yiannis Karousos explained in a written statement from Luxembourg.

Karousos accompanied Environment Minister Kostas Kadis in the EU’s Council of Environment Ministers which took place on Tuesday.

Karousos said that after an initiative by Cyprus, the proposed directive on extending the Emissions Trading System to aviation within the EU now includes an SAF Allowance Mechanism.

The Cypriot Minister explained that this mechanism will help mitigate the increase in the cost of fuel that will take place when sustainable aviation fuel is first used.

According to Karousos, this will work through assigning 20 million free emission allocations in order to cover about 70% of the increase in cost that will come from using sustainable fuel, compared to using regular fuel. Through this mechanism, Karousos said, the European aviation sector including Cyprus will gain an additional 1.1 billion euros in earnings.

The deal also contains a specific reference to “islands states with a size smaller than 10,000 km² for which the difference in cost will be covered 100%,” according to Karousos. The total funding will reach about 500 million euros, he added.

Karousos pointed out that the main aim of the Cypriot side was to ensure that the country would not be negatively affected, and added that Cyprus insisted that a study be carried out on the impact of the directive on the competitiveness of the its economy and connectivity.

Finally, Karousos said that there is every reason to be proud of the fact that Cyprus made proposals that were adopted at EU level.