A 40% capital grant on installed equipment costs for a 50,000-tonne e-kerosene facility, combined with available EU and Dutch policy mechanisms, cuts the cost gap with fossil kerosene by more than half, according to a March 2026 ICCT report examining policy interventions for advanced SAF in the Netherlands. For Fischer-Tropsch fuels produced from agricultural residues, the same 40% capital support reduces the cost gap by nearly 90%.
The findings matter because HEFA feedstocks are approaching a structural ceiling — and ReFuelEU’s escalating blending mandates will require advanced pathways including e-kerosene and FT fuels to fill the gap HEFA cannot. Europe’s first ReFuelEU compliance cycle already revealed the scale of the supply challenge. The ICCT’s Netherlands case study translates that supply problem into a specific policy design question: what combination of interventions closes the cost gap enough to attract private capital into advanced SAF production?
According to ICCT, EU ETS aviation auction revenues are projected to exceed €2 billion per year from 2026 — a portion of which could fund a revenue certainty mechanism for advanced SAF producers, providing the long-term price floor that project finance requires. The current EU ETS reinvestment clause covers 20 million allowances and is expected to be fully allocated to HEFA projects by 2030; ICCT concludes it must expand post-2030 if it is to support advanced fuel pathways at the necessary scale.
On the capital side, the report identifies existing EU state aid rules as an underutilised tool. National governments can fund up to 45% of investment costs under current rules, rising to 100% through competitive bidding processes — headroom that most member states have not yet fully exploited for SAF. Reducing electricity grid fees for e-fuel production is flagged as a further lever that can meaningfully reduce operational costs for power-intensive e-kerosene facilities without requiring new subsidy mechanisms.
A 40% capital grant combined with available EU and national policies can reduce the cost gap between FT fuels from agricultural residues and fossil kerosene by nearly 90% — demonstrating that the financing tools to make advanced SAF viable already exist.
The Netherlands case study is explicitly designed as a transferable model. The policy instruments ICCT analyses — capital grants, ETS revenue recycling, state aid flexibility, grid fee reductions — are available to all EU member states. The report’s contribution is to quantify their combined effect rather than treat them as isolated measures. The SAF cost premium has long been identified as the primary barrier to demand; this analysis shows the premium is closeable through tools governments already hold.
With ReFuelEU’s eSAF sub-mandate requiring 35% synthetic fuel content by 2050, member states that move earliest on advanced SAF capital support will have the longest runway to build domestic production capacity. The ICCT report gives policymakers a quantified basis for action — and removes the uncertainty about whether the numbers work.
Source: ICCT
