The EU emissions trading system and support for aviation

The EU aviation climate action framework is entering a new phase in which delivery and implementation matter as much as the overall design of the policy package. In the European Green Deal and the wider ‘Fit for 55’ package, the policy mix combines a tightening carbon constraint with an explicit fuel-switching strategy. The EU Emissions Trading System (ETS) provides a price signal and revenue base, while ReFuelEU Aviation creates a predictable long-term market for sustainable aviation fuels (SAFs) with steadily rising blending mandates at EU airports. Two milestones made the 23rd Florence Air Forum particularly timely. First, with the ETS aviation is undergoing a comprehensive transition to full auctioning of aviation allowances, thus finalising the phase-out of ‘free’ allowances, which were reduced in 2024 and 2025 before coming to an end. In parallel, the revised framework includes an ETS-financed SAF support mechanism, which reserves allowances from the aviation cap to help close the price gap between eligible alternative aviation fuels and conventional kerosene. This creates a major opportunity but also a practical challenge: how to ensure that support is additional, targeted, can be administered and is resistant to gaming while maximising emission reductions per euro of foregone allowance value. Second, the European Commission’s forthcoming ETS review will revisit aspects of aviation ETS design, including the interface with the ICAO’s CORSIA and its scope. While these questions frame the broader context, the central added value of the forum was to focus on what can be improved now in practice. Therefore, how ETS-linked support, especially for SAF, can be implemented as effectively and efficiently as possible, and how interactions with ReFuelEU and complementary instruments can be simplified without undermining market integrity. This policy brief summarises the key points discussed in the forum.