European Commission okays $41.6m to encourage SAF usage in Denmark

The European Commission has approved €36m ($41.6m) for a Danish scheme to encourage use of sustainable aviation fuel (SAF) in the domestic aviation sector to reduce greenhouse gas emissions.

This is the first State aid scheme approved by the Commission that promotes the use of SAF and represents a significant step towards decarbonising the aviation sector.

The scheme be in place until 31 December 2027 with the goal to support at least one domestic air route using 40% SAF and at least 20 commercial sustainable one-way operations weekly, on one or more domestic routes in Denmark.

Under the scheme, the aid will take the form of monthly-paid direct grants that will cover the additional costs linked to using SAF compared to conventional kerosene, including costs related to airport infrastructure.

The aid level will be determined through a competitive bidding process, ensuring cost-effectiveness and efficiency.

The scheme includes rules to prevent overcompensation, namely by ensuring that supported SAF is excluded from parallel support measures under the ReFuelEU Aviation regulation and the EU Emissions Trading System (ETS) directive, and by prohibiting the use of SAF that has already received subsidies from Denmark, other EU Member States, or third countries.

The EU Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU (TFEU) and the Guidelines on State aid for climate, environmental protection and energy (CEEAG).

The TEFU enables member states to support the development of certain economic activities subject to certain conditions, whereas the CEEAG allows member states to support measures reducing or removing CO2 emissions.