EU carbon market could make green hydrogen e-SAF cheaper than aviation biofuel: analysis

A new analysis from Hydrogen Insight explains how the EU Emissions Trading System (ETS) could give green hydrogen-based synthetic aviation fuels (e-SAF) a cost advantage over conventional biofuels. The key mechanism is that different SAF types qualify for different levels of free ETS allowances, effectively acting as an indirect subsidy. Airlines blending e-SAF from green hydrogen may receive more free allowances, lowering their net fuel cost below that of biofuel blends. This matters because e-SAF production is currently expensive and relies on abundant renewable electricity and electrolyzers. If the EU ETS rules tilt the economics in favor of e-SAF, it could accelerate investment in green hydrogen infrastructure for aviation. The article provides a concrete policy hook for anyone tracking carbon market design and its real-world impact on fuel costs and emissions reduction.