IATA, representing 360 airlines and roughly 85% of global air traffic, has called on the EU to restructure its Emissions Trading System before the scheduled review in July 2026. The core problem, as IATA frames it, is a structural imbalance: European aviation is expected to surrender nearly 330 million allowances between 2026 and 2030, generating billions in revenue for Member States, but the SAF Allowance scheme returns only 4-5% of the industry’s total allowance needs over that same period.
The financial pressure has been building since 2024, when the phase-out of free allowances for aviation took effect. Investment analysts at STIP estimate that meeting EU SAF requirements will require EUR 57-67 billion by 2035 and EUR 268-376 billion by 2050. Without structured reinvestment of ETS revenues into SAF production, the cost burden sits almost entirely on airlines while the EU Innovation Fund’s reinvestment has remained, by IATA’s account, “limited” to date.
“The priority must be the full implementation of CORSIA, the reinvestment of EU ETS revenues into SAF and other credible decarbonization solutions, and the elimination of overlapping measures that add cost and complexity without environmental gain.” — Willie Walsh, IATA Director General
IATA laid out four specific asks for the review. First, full CORSIA implementation covering all international flights, including intra-EEA routes, with no regional derogations that would fragment the global carbon framework. Second, the EU should enable SAF book-and-claim under the ETS, requiring amendments to the EU ETS Directive and an extension of the Union Database to aircraft operators, so carriers can claim SAF environmental attributes based on purchase records rather than physical uplift location. Third, a greater portion of aviation ETS revenues should be directed into scaling SAF production and emerging zero-emission technologies. Fourth, the EU should harmonize climate policy with ICAO standards to eliminate overlapping measures that add cost and regulatory complexity without commensurate environmental gain.
Willie Walsh, IATA Director General, said: “European aviation policy must bolster competitiveness as it advances decarbonization. Reviewing the EU ETS offers a critical opportunity to refocus efforts on cost-effective emission reductions. The priority must be the full implementation of CORSIA, the reinvestment of EU ETS revenues into SAF and other credible decarbonization solutions, and the elimination of overlapping measures that add cost and complexity without environmental gain. By doing so, we will protect European air connectivity, a vital strategic asset foundational to EU integration, trade, and commerce. Amid global economic strain and geopolitical volatility, the EU ETS review must deliver a harmonized climate policy framework that balances the sector’s competitiveness with its climate ambitions.”
The IATA statement arrived on the same day as a declaration from Airlines for Europe, in which 16 major airline groups reported that regulatory costs have tripled since 2014, reaching EUR 15.5 billion per year, with projections of EUR 27.6 billion annually by 2030. A4E separately called for the 2030 eSAF sub-mandate to be postponed, a position that follows the EU’s earlier decision to keep the mandate on the books while declining to enforce it. SAFpath covered that regulatory gap in detail. Together, the two statements represent a coordinated escalation of pressure on Brussels with the ETS review now four months away.
Both positions align with the Draghi Report, which identified high costs, regulatory complexity, and underinvestment as core barriers to EU economic resilience. On the investment side, the EU has signaled broader ambition for clean energy infrastructure, including a EUR 75 billion strategy that put SAF alongside SMR financing as priority areas. That strategy gave SAF a significant institutional backer, but how the EU ETS review channels aviation’s own revenue contribution will determine whether supply investment actually scales to meet ReFuelEU mandates.
The EU ETS review proposal is expected in July 2026. The central question before that deadline is whether the review recalibrates the system to redirect aviation revenue into decarbonization, or leaves the current imbalance in place and forces European carriers to absorb a cost structure that 4-5% SAF revenue support cannot offset.
Source: IATA Press Release
