Market Consultation of the Federal Ministry of Transport (BMV) on the German e-SAF Funding Scheme
Federation of German Industries / Bundesverband der Deutschen Industrie e. V. (BDI)
Date: 30.06.2026
Preliminary remark
The statement is directly based on the structure and questions set out in the questionnaire issued by the Federal Ministry of Transport (BMV).
3.1. State aid and possible market distortion
Do you have any concerns regarding the relevance of the eSAF support scheme for the decarbonisation of the EU aviation sector?
Sustainable aviation fuels (SAF) are currently the only option available for the widespread decarbonisation of aviation. However, the availability of SAF, particularly regarding renewable fuels of non-biological origin (RFNBO), is currently limited, and the costs are significantly higher than those of conventional kerosene. Investment decisions are currently stalled because projects rely on long‑term offtake agreements at fixed prices that obligated buyers cannot absorb – particularly for first‑of‑a‑kind plants. Contracts exceeding ten years would require commitments well beyond standard jet fuel market practice, which is typically based on short‑term arrangements of around one year. At the same time, such long-term agreements would lock operators into a structural cost disadvantage, as future projects especially outside the EU are expected to deliver significantly cheaper fuel within a few years. Therefore, the BDI strongly supports the introductionof astate-subsidised double-sidedauctionmechanism(DSA)for electricity-based sustainable aviation fuels (eSAF), as the introduction of a market intermediary could provide a cost-efficient way of promoting the uptake of renewable fuels, reduce the gap between production costs and off‑takers’ willingness and ability to pay and lead to first final investment decisions (FIDs) for eSAF-projects These can facilitate learning effects and accelerate cost reductions through economies of scale, thereby also reducing the first mover disadvantage.
However, the proposed funding scheme alone will not deliver sufficient volumes to meet the eSAFsub-mandate of the ReFuelEU Aviation (RFEUA) and allow the eSAF market to operate on a commercial basis To achieve the ramp-up of renewable fuels necessary to meet the climate targets, the European regulatory framework needs an update. The EU must develop a comprehensive strategy for the cross-sectoral roll-out of renewable fuels which provides sufficient impetus for investments in the ramp-up of renewable fuels, especially in RFNBOs and advanced biofuels derived from innovative processing methods and untapped biomass potential.
Furthermore, the federal government should advocate for the necessary adjustments to European climate regulation in aviation. These include the renewal of the FEETS funding programme and a competition-neutral design of the RFEUA in order to mitigate competitive distortions.
The following measures can contribute to a successful and more costeffective roll-out of renewable fuels and should be considered in the upcoming revisions of the Renewable Energy Directive (RED) and RFEUA.
▪ Enable competitively neutral compliance with RFEUA quota obligations: The current design of RFEUA and its quota obligations for SAF unilaterally increases the cost of flights via European hubs, thereby creating incentives to circumvent costly European climate protection instruments. On long-haul routes, EU airlines must bear the additional costs of SAFfor the entire journey, whereas for airlines with hubs outside the EU these costs arise only on part of the route. The result is a distortion of competition at the detriment of European airlines and airports, as well as Europe’s connectivity which constrains the airlines’ willingness and ability to pay the premium of SAF. The EU must urgently introduce instruments to correct these distortions of competition, at the latest by using the review process laid down in the RFEUA. The introduction of a European, destination- and passenger-based earmarked SAF levy represents one way of offsetting distortions of competition at the expense of European airlines, reducing carbon leakage and ensuring the ramp-up of SAF. Alternative instruments for establishing fair international competitive conditions, such as a SAF Rebalancing Charge, should also be examined. This charge would be applied to non-EU airlines for flight segments not subject to the SAF quota on routes via nonEuropean hubs. Similar approaches must be developed for air cargo. The functionality and practicality of the instruments must be ensured. A level playing field is the prerequisite for airlines to participate in the SAF market long term.
▪ Implement a more pragmatic regulatory approach: The EU quota obligations for bio- and electricity-based SAF under the RFEUA enhance investment and planning security for producers but will not ensure a comprehensive and cost-effective ramp-up on their own. In addition to long-term investment security and the removal of investment barriers, a more pragmatic regulatory approach that allows the use of all permissible feedstock potentials and production processes is urgently needed. This also applies to the caps for eligible biofuels and the definitions of permissible feedstocks for biofuels, which are currently being developed by the European Commission in guidance on Annex IX of RED III in consultation with the Member States. To develop an international market for RFNBO, trade barriers must be removed, including through more practical definitions for low-carbon and renewable hydrogen, as well as CO2 sources for RFNBO which allow the ramp of a renewable fuel economy. The review of the criteria scheduled for 2028 should therefore be brought forward. This will also benefit producers within the EU.
▪ Enable effective implementation of the RFEUA: Targeted adjustments to the current regulatory framework are necessary, particularly regarding the obligation to compensate shortfalls in subsequent periods and the fines to ensure an effective and harmonised ramp-up across Europe. Currently, the fine design does not provide a clear or predictable buy‑out benchmark, while the obligation to compensate shortfalls in subsequent periods introduces significant and uncapped compliance uncertainty. This results in structural supply risks, with the potential to cause broader market disruption. Establishing a transparent and proportionate buy‑out mechanism is therefore essential to ensure market stability and enable support schemes to operate effectively. In addition, national implementation must avoid distortions of competition. In Germany, the penalty level significantly exceeds the indicative EU reference level and, to date, appears unmatched across other Member States. Such disproportionate national implementation risks undermining the level playing field within the internal market. In a context of limited SAF availability and increasing quotas, elevated penalty levels are likely to act as an implicit price signal and thereby distort market outcomes and traffic flows within Europe. A cost‑reflective and harmonised fine design is therefore critical.
▪ Create an international SAF market: International sustainability and quality criteria, an international certificate trading system , and international guidelines for crediting sustainable fuels in the carbon footprints of users and their customers must be established and enforced in order to develop an international market for SAF.
▪ Ensure investment security for early adopters through grandfathering provisions: Regular monitoring and the fine-tuning of regulations by national and European policymakers are key priorities for the business community. At the same time, short-term changes to the regulatory and political framework pose a high risk of malinvestment in projects with typical investment horizons of 15–20 years. In a stilldeveloping market for hydrogen technologies and carbon-neutral fuels, investors in pilot plants should be granted grandfathering guarantees covering the required operational period of 15–20 years.
▪ Secure funding for the first industrial-scale production facilities: PtX dual auctions, modelled on the H2Global approach, must be implemented, expanded, secured with long-term funding and designed in a more pragmatic manner to provide incentives for the construction of the first production facilities. To this end, revenue from aviation and maritime transport within the European Emissions Trading Scheme (EU ETS 1) should be utilised.
▪ Ensure the long-term, consistent and harmonised continuation of RED III: The targets of RED III currently apply until 2030. New facilities for the production of carbon-neutral fuels require a robust regulatory framework that extends well beyond 2030. The review of RED III in 2027 should therefore be used to ensure its long-term, consistent and harmonised continuation. In doing so, consistency must be ensured with the European Union Emissions Trading System (EU ETS) as well as the RFEUA and FuelEU Maritime regulations, which already define a pathway for carbon-neutral fuels in aviation and maritime transport by 2050.
▪ Make more SAF allowances available: The allowances currently allocated under the ETS to offset the additional costs of using sustainable aviation fuels (SAF allowances or FEETS) will not come close to covering these additional costs and are expected to be exhausted by 2028 at the latest. The EU should therefore aim to implement the extension of the programme already provided for in the EU ETS Directive, as well as remove the quantitative cap and the time limit on SAF allowances. Currently, the allocation rules favour some airlines more than others.
Do you have any concerns regarding the necessity of state aid to support the market ramp up of eSAF in the EU?
The EU quota obligations for bio- and electricity-based SAF under the RFEUA enhance investment and planning security for producers but will not ensure a comprehensive and cost-effective ramp-up on their own. eSAF remains significantly more expensive than fossil kerosene. Consequently, the RFEUA's mandates unilaterally increase the cost of flights via European hubs. European airlines cannot absorb these additional costs given the intense level of international competition in which they operate. This creates a significant and persistent price gap between production costs and off-takers' willingness and ability to pay, leading to investment uncertainty and preventing bankable business cases for eSAF projects.
Without additional support, there is a real risk that supply will fall short of regulatory targets. Against this background, temporary and targeted state aid is necessary and justified in order to bridge the initial cost gap, reduce investmentrisk,and enablefirst-of-a-kindprojects.Creating aneconomically self-sustaining market for SAF in the long term requires a competitionneutral of the RFEUA SAF quotas which enables European airlines and airports to compete on a level playing field with non-European competitors. Such an approach would integrate non-EU airlines into the financing of the SAF ramp-up and prevent EU airlines from shouldering the financial burden alone.
Do you have any concerns that the eSAF funding scheme could have significant market distorting effects within the EU?
Given the market's current state and the small number of projects in the near term, the planned support scheme is unlikely to cause significant market distortions. On the contrary, the introduction of a state-subsidised dual auction mechanism for eSAF could catalyse market development, foster
competition and accelerate cost reductions through economies of scale and create learning effects. Over time, this should enable eSAF to transition towards commercial viability without subsidies. However, it remains unclear whether other Member States will adopt similar mechanisms and how they would react to an absence of (commercially self-sustaining) eSAF FIDs in the early 2030s. Furthermore, EU eSAF plants may not be able to compete in terms of cost with imported products.
3.2. Auction design, timing and eligibility
Do you have any concerns regarding the envisaged general auction design of the eSAF funding scheme, including the aid allocation process?
The BDI supports the introduction of DSA foreSAFprojects. However, DSA will only be effective if roles, risks, and interfaces between producers and off‑takers are clearly defined. The design must ensure a clear allocation of responsibilities for transport, blending, certification, and risk transfer, alongside robust mechanisms to address under‑delivery.
Do you have any concerns regarding the eligibility criteria at large? What should the eligibility criteria look like?
Award decisions should not be based on price alone but also consider deliverability, technology risk, feedstock security, execution capability, and other qualitative criteria, with priority given to projects that demonstrate a credible path to FID and timely delivery. The framework should avoid unnecessary supply chain restrictions and clearly define permissible inputs to reduce uncertainty. A grandfathering clause is needed to protect projects against evolving sustainability criteria. Finally, participation in sales auctions should be limited to RFEUA obligated parties (defined in the RFEUA list of fuel suppliers) which are able to demonstrate blending and logistics capabilities. The interaction with other support schemes and the treatment of volumes supported through the Fuels Eligible for ETS scheme (FEETS) should be clarified upfront. This also applies to liability in relation to transport services.
Do you have any concerns about the application of resilience criteria?
Resilience criteria can add value if they are objective, measurable, and focused on supply chain diversification, technological robustness, and contingency planning. However, they should avoid duplicating existing EU requirements and must not impose disproportionate administrative burdens. Also, eligibility and resilience criteria that are too strict might lead to higher prices and competitive disadvantages for European operators. The legislator must therefore ensure that the way in which the resilience criteria are formulated does not lead to competitive and cost disadvantages and hinder a technology-neutral roll-out of renewable fuels.
Do you believe that the eligibility criteria allow for wide participation while ensuring project realisation?
Prequalification criteria can ensure a sufficient level of ambition and enhance project reliability. Final contract awards should be granted only to projects that can credibly deliver the contracted volumes and demonstrate compliance with these requirements in practice. The design of the eligibility criteria must ensure a cost-efficient and technology-neutral roll-out of renewable fuels which makes sure that European operators do not encounter new competitive disadvantages through higher costs.
Doyouhave anyconcerns regarding the definitionof the Point of Sale?
The Point of Sale should be non‑discriminatory, operationally practical, and compatible with existing aviation fuel logistics and certification systems. Given Germany’s multiple terminals and dynamic market conditions, successful bidders should retain full flexibility in selecting the most appropriate delivery location, with the Point of Sale defined at national level only and without further geographic constraints. Responsibilities for transport, blending, stock management, and chain‑of‑custody around the Point of Sale and how broad, non‑discriminatory access for obligated suppliers is ensured must be clearly defined contractually from the outset.
Do you have any concerns regarding the envisaged timing of the eSAF scheme (auction period, contract duration, delivery start)?
The current timeline appears highly ambitious, particularly if the objective is to deliver meaningful eSAF volumes by 2030, while the proposed ten‑year contract duration does not fully align with typical investment horizons of 15–20 years. First‑of‑a‑kind projects require sufficient time for FID, construction, commissioning, and ramp‑up, which should be adequately reflected in the contract design. The scheme should therefore explicitly account for delayed start‑up and non‑linear production ramp‑up in the initial years of operation.
From the producer perspective, what is a reasonable period between HPA signing and first eSAF delivery?
The current timeline appears highly ambitious, particularly if the objective is to deliver meaningful eSAF volumes by 2030 First‑of‑a‑kind projects require sufficient time for FID, construction, commissioning, and ramp‑up, which should be adequately reflected in the contract design. The scheme should therefore explicitly account for delayed start‑up and non‑linear production ramp‑up in the initial years of operation.
From an off-taker’s perspective, does the proposed eSAF scheme timeframe match your expected supply needs?
The current timeline appears highly ambitious, particularly if the objective is to deliver meaningful eSAF volumes by 2030. First‑of‑a‑kind projects require sufficient time for FID, construction, commissioning, and ramp‑up, which should be adequately reflected in the contract design. The scheme should therefore explicitly account for delayed start‑up and non‑linear production ramp‑up in the initial years of operation.
What should be the batch size for eSAF sales, meaning how many tons of e-SAF should be auctioned in one HSA?
Batch sizes should remain flexible, particularly during the ramp‑up phases when actual output may deviate from nameplate capacity. At the same time, batch design should consider the diverse profiles of off‑takers, ensuring that both large and smaller fuel suppliers can participate effectively.
How long should the duration of one HSA be? (For example, if one batch is 5000 t eSAF, in a three-year contract the off-taker would receive 5000 t per year for three years).
In the early market ramp‑up, shorter HSA durations aligned with standard jet fuel market practices appear more workable. This approach better reflects evolving market conditions, regulatory developments, and initial production volatility. In addition, an explicit opt‑out clause in case of regulatory changes should be included to limit risk exposure for market participants.
Should there be a floor price for the HSA auctions? If so, what should the floor price ideally be?
A floor price can enhance investment viability and should be set in relation to the closest alternative compliance option to provide a credible benchmark.
3.3 Eligible product and geographic limitation
The public policy objective of the scheme is to contribute to the achievement of the EU's climate targets specifically by incentivising a renewable product and, thus, to contribute both to the EU climate and renewable energy targets.
Therefore, even if the sub-quota for eSAF under the ReFuelEU Aviation Regulation can be met not only by RFNBO eSAF, but also by synthetic low-carbon eSAF, only RFNBO eSAF projects will be eligible under the scheme. Only in this way does the scheme specifically incentivise the generation of a renewable (RFNBO) eSAF. Do you have any concerns about this approach?
The focus on RFNBO eSAF is understandable given the objective the legislator is pursuing through the support scheme However, other fuels recognised under the RFEUA remain just as important for achieving the decarbonisation of aviation. To ensure investment security, a grandfathering clause is needed to protect projects against evolving sustainability criteria.
Do you see any risks or opportunities associated with limiting the scheme to EEA produced eSAF, and how might non-EEA imports interact with the market?
The focus on the EEA can support European industrial development, build expertise at various points along the value chain and strengthen supply security in the early market ramp-up. In the long term, ensuring a resilient and cost‑effective supply of renewable molecules will require not only leveraging Europe’s domestic potential but also tapping into resources from other world regions which may become more price-competitive in future. Therefore, the scheme should be robust enough to address the impact of future import competition on supported assets. Furthermore, the decarbonisation of aviation will rely heavily on the potentials of Bio-SAF, which are currently significantly cheaper than eSAF.
3.4 Incentive effect and emission savings
Do you have comments on the incentive effect, necessity or proportionality of the eSAF funding scheme?
Aid should remain gap‑based, targeted, and proportionate, ensuring that no support is granted where market revenues already cover costs. At the same time, temporary support for early eSAF projects is justified given their contribution to climate, industrial, and security‑of‑supply objectives in an immature market. All public funding elements should be fully transparent to prevent overcompensation.
Do you have comments on the main assumptions informing the quantification used to demonstrate the incentive effect, necessity and proportionality as in Table 1 and 2?
The main assumptions and calculation methodology should be transparent, consistent, and defined upfront. Any interaction with EU ETS/FEETS or other support mechanisms must be clearly reflected in the assessment. Where different approaches to quantify avoided emissions exist (for eSAF GHG emissions can be calculated either following the fossil fuel comparator of the RED or the zero rating laid out in the MRV for EU ETS), the chosen methodology should be explicitly stated and applied consistently.
Do you expect eSAF production and consumption could reach cost-covering levels without state support in the near future? If so, when?
In the near term, this is not feasible for first‑of‑a‑kind projects. Future cost competitiveness will depend on renewable power costs, CO₂ availability and costs, technological learning, and regulatory stability. At the same time, mechanisms ensuring a level playing field for European airports and airlines must be implemented to ensure the international competitiveness of the EU.
The effectiveness of the eSAF funding scheme will be evaluated, among others, based on the greenhouse gas emissions avoided. This reduction will be estimated based on a mass balance system in accordance with Article 30 of the Renewable Energy Directive and Article 19 of the Implementing Regulation 2022/996 of 14.06. 2022. Do you have any concerns regarding this approach?
There is no fundamental concern, provided the approach is aligned with existing EU sustainability frameworks and relies on clear rules for chain‑of‑custody, auditing, and fraud prevention. It should avoid duplicate reporting requirements and be harmonised as far as possible with RED, the Union Database, and national implementation systems. Overall, consistent alignment across EU and national frameworks is essential to ensure both credibility and practical implementation.
Issues to be clarified (question not covered in consultation)?
▪ Confirmation that auctioned e-SAF counts toward RFEUA minimum shares
▪ Is supported SAF eligible for EU ETS zero rating / FEETS?
▪ What happens if a producer starts late or under-delivers (HPA/HSA)? How does the delay affect the RFEUA liabilities of the offtaker?
▪ Who handles transport, blending and delivery to airport?
▪ Who owns and manages stock/certification at intermediate storage?
▪ Do offtakers need to demonstrate any blending capabilities (potentially multi-component blending) before being allowed to participate?
▪ What happens if support ends before the asset’s economic life?
▪ What happens if there is limited interest in the sales auction?
About BDI
The Federation of German Industries (BDI) communicates German industries’ interests to the political authorities concerned She offers strong support for companies in global competition. The BDI has access to a widespread network both within Germany and Europe, to all the important markets and to international organizations. The BDI accompanies the capturing of international markets politically. Also, she offers information and politico-economic guidance on all issues relevant to industries The BDI is the leading organization of German industries and related service providers. She represents 38 inter-trade organizations and more than 100.000 companies with their approximately 8 million employees. Membership is optional. 15 federal representations are advocating industries’ interests on a regional level.
Imprint
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Contact
Marco Kutscher
Expert Energy, Transport and Environment
T: +49 30 2028-1751
m.kutscher@bdi.eu
BDI document number: D 2330