January 2023

The Five Minute Feature

The Five Minute Feature: Morgan Foulkes

Speaking at the ACI EUROPE annual New Year reception in the European Parliament, ACI EUROPE President Javier Marín called on the EU to focus on “Fewer sticks and more carrots”, and to mirror the US decarbonisation subsidy regime.

In our Five Minute Feature this month, Airport: The Bulletin asked ACI EUROPE Deputy Director General Morgan Foulkes to take a deeper dive…

Tell us more about the issue with the US decarbonisation subsidy regime. Surely all decarbonisation is good decarbonisation, right?

Of course it is – and the concern at this side is not that there are too many financial incentives and support to decarbonise in the US, but rather that there is simply not enough of that in Europe. The US Inflation Reduction Act (or IRA as it’s known) is a financial plan of 370 billion dollars to support climate friendly technologies and the energy transition – including the development and use of Sustainable Aviation Fuels (SAF). This should be our number one priority over here as well as we desperately need to boost SAF production in Europe in the very short term. Our call here is for emulation and parity, not for a diminution of efforts to decarbonise.

It doesn’t sound like this is an aviation-specific issue…

It’s absolutely true that this concern isn’t specific to aviation – it’s raised alarm bells across European industries, enterprise and policy makers alike. The European Institutions are well aware of it too – at the inauguration of the Swedish Presidency of the Council of EU, President Ursula Von der Leyen highlighted the need for the competitiveness of EU businesses to be ensured, supporting the clean-tech industry.

So what’s the specific concern from the European aviation sector?

It’s quite simply essential that aviation is eligible for any support mechanism being devised by the EU to keep pace with the US. And whilst this isn’t special pleading – we ask for no more or less than any other sector in terms of our eligibility – there’s no denying that we’re carrying a disproportionately heavy financial debt burden post pandemic, are left with little built-in resilience to withstand further shocks, and are one of the hardest industries to decarbonise. So our inclusion and eligibility should be front and centre. Ultimately, this is about financing the EU Fit for 55 package which includes ambitious mandates for the uplifting of SAF, target dates for the deployment of electricity to stationary aircraft at airports and the end of free allowances under the EU emissions trading system for airlines.

ACI EUROPE supports the initiatives in the Fit for 55. What’s the financial issue here then?

ACI EUROPE commissioned a comprehensive third-part study last year to look at this – borne out of our concern that a thorough impact assessment had not been undertaken. Our legislators and policy makers need to ensure that the decarbonisation of aviation happens hand-in-glove with the preservation of the unique economic and social benefits that air connectivity brings – in particular as regards social and territorial cohesion.

The report from Oxera (Assessment of the Impact of the Fit for 55 Policies on Airports) showed that the European Commission’s proposals will mean significant cost increases for airlines resulting in substantial fare increases on European flights. This will in turn reduce demand and consumer choice, potentially cause leakage of carbon emissions, and impact access to regions at the periphery of the EU.

So we can see that the economic challenge ahead – and potentially unintended consequences of the Fit for 55 package – is already of deep concern.

So in short, you’re calling for schemes to mirror this US package. What might this look like in practice?

This is something the European Commission has been tasked to look into by EU States – in order to come-up with proposals in the very short term. In fact, the Commission is looking at a Net Zero Industry Act to channel EU funding in the development of green tech along with more flexible state aid rules. It is crucial that aviation be included within the scope of whatever instrument or initiatives are taken.

More carrots.  Fewer sticks.