Eight member states of the European Union have joined forces to launch a joint political and financial initiative aimed at supporting the industrial development of synthetic aviation fuel, or e-kerosene. With an initial budget of €500mn ($543mn), the “eSAF Early Movers’ Coalition” is planning its first double-sided auctions by 2026 to trigger investment decisions in a sector still hampered by high costs and long-term demand uncertainty.
A model inspired by H2Global to secure revenue
The mechanism is based on Germany’s H2Global model: a public intermediary signs long-term contracts with producers at a fixed price, then resells the volumes to end users at a lower market price. The price gap is covered by public funds from the EU Emissions Trading System (ETS), the Innovation Fund and the European Hydrogen Bank. This structure aims to reduce market risk and improve bankability for e-kerosene production projects in Europe.
The coalition includes Germany, France, the Netherlands, Spain, Austria, Finland, Luxembourg and Portugal – countries hosting most of the industrial hydrogen and synthetic fuel hubs. These states also handle a significant share of intra-European and long-haul air traffic through major international airports.
Target: meet the 2030 e-fuel sub-quota set by ReFuelEU
The ReFuelEU Aviation regulation sets a rising mandate for sustainable aviation fuels: 2 % in 2025, 6 % in 2030, and up to 70 % by 2050. A specific sub-quota requires that 1.2 % of fuels come from e-fuels by 2030. This sub-quota is considered politically sensitive and emblematic of the EU’s strategy to support synthetic fuels alongside bio-based SAF.
The coalition aims to accelerate development of Renewable Fuels of Non-Biological Origin (RFNBO), which currently cost three to six times more than conventional Jet A1 fuel. None of the 40+ announced projects have reached final investment decision status so far.
Strategic window for industry players and airlines
Developers of Power-to-Liquid (PtL) technologies, electrolyser suppliers, CO₂ capture providers and port operators are expected to benefit directly from this mechanism. Integrated energy companies such as TotalEnergies, Shell, bp and Neste investing in SAF are also likely to position their PtL projects in coalition countries to maximise access to public funding.
For European airlines including Lufthansa Group, Air France-KLM, International Airlines Group (IAG) and Finnair, which are subject to mandatory SAF incorporation, the scheme offers an opportunity to manage fuel cost volatility. The mechanism also foresees a 90 % refuelling obligation within EU airports to prevent regulatory bypass.
Fragmentation risks and internal geopolitical balances
Non-signatory EU countries, particularly in Central and Eastern Europe, may view the coalition as an exclusive group concentrating ETS-derived public funds in wealthier and more industrialised member states. This could trigger political friction in future budgetary or regulatory negotiations.
Additionally, if the auction design does not prioritise domestic production, the scheme could open the door to imported e-SAF volumes from third countries. This would raise tensions between climate volume targets and EU industrial strategy objectives.
