- The European Commission’s STIP (5 Nov 2025) aims to scale renewable and low-carbon fuels for EU aviation and maritime, targeting 20 Mt by 2035 and about €100 billion of investment, with roughly €2.9 billion mobilised by 2027.
- IATA welcomes STIP’s acknowledgment of SAF cost and policy barriers but says it lacks firm, embedded solutions such as EU-wide Book-and-Claim, dual RED/CORSIA certification, and better alignment with EU ETS and ReFuelEU.
- Industry groups argue the proposed funding and incentives are too small and uncertain to unlock the required private capital, risking slower SAF deployment and higher cost burdens for EU airlines.
- Key open issues include timelines for implementation, the balance between bio-SAF and e-SAF support, and whether regulatory coherence can deliver demand certainty and competitiveness.
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1. What is STIP, and what does it promise?
The Sustainable Transport Investment Plan (STIP) is a European Commission Communication adopted on 5 November 2025 targeting the aviation and waterborne transport sectors. It forms part of the EU Competitiveness Compass and Clean Industrial Deal and seeks to provide a strategic framework to scale up renewable and low-carbon fuels in order to meet the fuel volume targets set under existing legislation (ReFuelEU for aviation; FuelEU for maritime).
Key quantitative commitments include: to produce ~20 million tonnes of sustainable alternative fuels by 2035 across the two sectors (split into 13.2 Mt biofuels + 6.8 Mt e-fuels), requires ca. €100 billion investment by that date, with at least €2.9 billion mobilised by end-2027.
2. IATA’s reaction: welcomes, but sees gaps
IATA emphasises that STIP correctly acknowledges numerous challenges that aviation stakeholders have long raised: the price difference between SAF and conventional jet fuel; the misalignment of ReFuelEU and EU ETS rules; the need for investment risk mitigation; demand-side predictability; and dual certification (RED/CORSIA).
However, IATA criticises STIP for falling short in key respects: insufficient clarity on when flagship actions will be implemented; lack of binding or detailed rules for Book-and-Claim; an overemphasis on eSAF despite IATA’s study showing sufficient bio-feedstocks; and the risk that limited support leads to supply constrained by technological bottlenecks rather than feedstock availability.
3. Views from broader aviation and clean fuels industry
The coalition DESTINATION 2050, representing airlines, airports, manufacturers and air navigation service providers, broadly describes STIP as “constructive” but insufficient. Their concerns cover underfunding (relative to the €100 billion needed), uncertainty about long-term ETS allowances, and the timely establishment of market-flexibility tools such as Book-and-Claim.
Airlines for Europe (A4E) likewise highlights that mandates alone will not create a functioning SAF market, and warns against the STIP’s “strong tilt” toward e-SAF at the expense of bio-SAF. A4E calls for urgent policy action to reduce cost gaps and ensure affordability.
CLECAT welcomes STIP but emphasizes that public funding proposed under STIP (~€3 billion vs. requirement of ~€100 billion) is too small; the absence of Book-&-Claim is a serious omission; and without price signals and demand certainty, the risks for investors are high.
4. Strategic Implications and Risks
Investment Pull vs Push: $100 billion requirement by 2035 implies massive scaling; market actors will be reluctant without demand-side certainty (offtake agreements, certificates) and regulatory stability. Delays or ambiguity in mechanisms like Book-and-Claim or extension of ETS allowances could slow investment decisions or shift them outside Europe.
Technology Deployment vs Feedstock Potential: IATA’s feedstock study (Sept 2025) estimates Europe has sufficient sustainable biomass to produce >300 Mt bio-SAF annually by mid-century, plus another ~200 Mt from e-SAF, if technological roll-out is accelerated and policy support ensures allocation of feedstock to aviation rather than less hard-to-abate sectors.
Competitiveness and Cost Impacts: Without policy alignment and cost-gap support, airlines face higher fuel costs; this may harm connectivity, route viability, access to weaker airports; could shift production of SAF outside EU, reducing European industrial benefits and jobs.
Regulatory Coherence Important: EU ETS, ReFuelEU, RED, CORSIA, and UDB (Union Database) interactions need harmonization. Misalignment (e.g. operators unable to claim SAF under ETS matching their ReFuelEU flexibility) creates risk and undermines the policy objective.
5. Open Questions and Implementation Challenges
- When and how will the Book-and-Claim mechanism be designed, legislated, and enforced across all EU Member States and operators, including its integration in ETS and ReFuelEU? The industry is pressing for timelines to be made firm.
- Will ETS allowances for SAF be extended and increased beyond 2030 with credible commitments? The uncertainty around this leaves demand and pricing signals incomplete.
- Can public funding (≈ €2.9-3 billion by 2027) be scaled to match required investments (~€100 billion by 2035), including leveraging private capital and financial instruments?
- Will technology support remain neutral, allowing bio-SAFs and e-SAFs to scale together? Or will policy tilt (e.g., toward e-SAF) limit bio-based solutions despite apparent feedstock abundance?
- How will regulatory alignment between EU ETS, ReFuelEU, RED, UDB, CORSIA be managed to reduce the price gap, simplify administrative and reporting burdens, and ensure global harmonization?
6. Recommendations for Stakeholders
From an investment banking perspective, the following actions are critical for capturing opportunity while mitigating risk:
- Prepare or expand SAF / eSAF project pipelines in Europe, but early focus should tilt toward bio-SAFs where feedstock advantage exists, to deliver cost-competitive volumes sooner.
- Engage actively with EU institutions to secure clear design and adoption of Book-and-Claim mechanisms, and ensure harmonized certification protocols across RED and CORSIA.
- Advocate for long-term ETS allowances & supportive price mechanisms, such as double-auction systems, to reduce cost gaps and risks for SAF producers and airline end-users.
- Monitor technology development (PtL plants, hydrogen, carbon capture) and invest selectively in upstream infrastructure (feedstock logistics, certification, database interoperability) critical to scaling SAF supply chains.
- Assess regional risks: EU vs non-EU production, impacts on route networks, and the potential for policy fragmentation across Member States undermining coherent market signals.
Supporting Notes
- IATA’s 23 September 2025 feedstock study estimates Europe can produce over 300 Mt annually of bio-SAF and ~200 Mt of e-SAF by 2050 if technologies scale, and that feedstock availability is not the binding constraint.
- STIP sets a target of 20 Mt of sustainable alternative fuels by 2035 (13.2 Mt biofuels + 6.8 Mt e-fuels), and estimates ~€100 billion in investment needed by then; short-term mobilisation of at least €2.9 billion by end-2027.
- IATA highlights misalignment between ReFuelEU Aviation’s mandate rules and EU ETS rules for SAF claiming, calling for amendments to EU ETS Directive to allow purchase-based claiming EU-wide.
- DESTINATION 2050 partners say the funding under STIP is “disappointingly low” relative to required levels; emphasise need for Book-and-Claim, extension of ETS allowances, and multi-year offtake agreements.
- STIP includes plans for eSAF Early Movers Coalition pilot, €300 million via European Hydrogen Bank, €133 million R&I under Horizon Europe, €153 million for synthetic aviation fuel, and €293 million for maritime fuel projects under the Innovation Fund.
- CLECAT notes public investment under STIP (~€3.5 billion) is far from commensurate with the ~€100 billion needed, and criticizes the absence of Book-and-Claim mechanism.