The European Commission has approved a €36 million (DKK 268 million) Danish measure under EU State aid rules to reduce greenhouse gas emissions in domestic aviation. This initiative promotes the use of sustainable aviation fuel (SAF) for domestic flights, marking a significant step towards decarbonising the aviation sector and aligning with national and EU climate goals.

The Danish scheme

This scheme encourages airlines in Denmark to utilize SAF on domestic routes until December 31, 2027. The objective is to support at least one domestic route using 40% SAF, nearing the technical limit of 50%, exceeding the minimum requirement of 2% set by the ReFuelEU Aviation regulation.

Support will come in the form of monthly direct grants covering the extra costs of using SAF compared to conventional kerosene, including airport infrastructure costs. The aid level will be determined through competitive bidding to ensure efficiency. The scheme aims to support at least 20 sustainable one-way operations weekly on one or more domestic routes in Denmark. It includes measures to prevent overcompensation, ensuring supported SAF is not eligible for additional subsidies under the ReFuelEU Aviation regulation or the EU Emissions Trading System (ETS), and prohibits the use of SAF that has already received subsidies from Denmark or other EU Member States.

The Commissions assessment

The Commission evaluated the scheme under EU State aid rules, particularly Article 107(3)(c) of the TFEU, allowing Member States to support certain economic activities under specific conditions, and the Guidelines on State aid for climate, environmental protection and energy (CEEAG), enabling support for measures that reduce CO₂ emissions.

The Commission found that:

• The scheme is necessary and appropriate for reducing greenhouse gas emissions in aviation, aligning with environmental targets.
• The scheme provides an incentive effect, as airlines would not adopt SAF to the same degree without public support.
• The aid has limited impact on competition and trade within the EU, being proportionate as it is limited to the minimum necessary through competitive bidding. Denmark committed to ensuring that the aid results in overall CO₂ reductions without merely displacing emissions.

Based on this assessment, the Commission approved the Danish scheme under EU State aid rules.

Background

The 2022 CEEAG provides guidance on assessing the compatibility of environmental protection and energy aid measures requiring notification under Article 107(3)(c) TFEU.

The Guidelines establish a flexible framework to help Member States provide necessary support to achieve European Green Deal objectives effectively. They align with EU targets and recent regulatory changes in energy and environmental sectors, emphasizing climate protection.

More information will be available under case number SA.102732 in the State aid register on the Commissions competition website once confidentiality issues are resolved. New state aid decisions will be published online and in the Official Journal as per the Competition Weekly e-News.