Germany, Austria and Luxembourg fund €2bn eSAF subsidy scheme

Germany, Austria and Luxembourg will fund synthetic sustainable aviation fuel, or eSAF, which is made from captured carbon and renewable hydrogen.

Germany's federal transport ministry said the three countries are paying into a double-sided auction mechanism. Producers and airlines bid into the scheme, and the subsidies cover the gap between what the fuel costs to supply and what carriers will pay.

Germany is putting in up to €2 billion. Austria and Luxembourg add €60 million each, pushing the combined total past €2 billion, or roughly $2.3 billion.

Fuel bought with the money will be sold in the three countries in proportion to each government's contribution. The goal is to give producers and their backers enough certainty to commit to new plants, and to build a market where airlines can buy the fuel.

German transport minister Steffen Bilger said the countries were pooling their funds to improve investment conditions for the technology. Austria's mobility minister, Peter Hanke, said the joint approach sends a signal in favour of a European market for renewable fuel, offering producers long-term prospects and clearer price signals, and the prospect that eSAF will be available in Austria.

The arrangement comes as a European Union sub-mandate for airlines to use eSAF approaches under the ReFuel EU Aviation Regulation.