This article was originally published in French in issue No. 2944 of magazine Air & Cosmos (November 2025).
The European Union is not merely setting a climate compass for air transport: it has progressively built a genuine financial and regulatory ecosystem to accelerate its transition. Enshrined since 2019 in the objective of climate neutrality by 2050 with the Green Deal and implemented through the "Fit for 55" package, this framework targets a sector with considerable investment needs, whether for fleet renewal, the deployment of sustainable aviation fuels (SAF), or airport infrastructure. To mobilize long-term capital, the EU combines transparency, carbon pricing, and targeted public support to offer predictability and financial attractiveness to credible decarbonization projects.
At the heart of this system, regulations and directives form a coherent whole, articulating market instruments, reporting obligations, and financing mechanisms. On one hand, transparency standards direct private flows toward activities aligned with climate objectives, by setting common technical criteria and reducing the risk of greenwashing. On the other, robust price signals increase the cost of carbon use and improve the relative economics of low-carbon alternatives. Finally, public and para-public funding windows, complemented by a modernized State aid framework, reduce the cost of capital and share technological risks.
Taxonomy, CSRD, SFDR: Organizing Capital Allocation Toward Green Aviation
The European taxonomy (Regulation 2020/852) establishes technical criteria to identify activities that substantially contribute to climate objectives. These notably include low-carbon aviation, SAF production, certain airport infrastructure, and retrofit operations. This common grammar guides investors in assessing climate alignment and promotes the channeling of capital toward genuinely transformative projects.
The CSRD requires airlines, lessors, and airports to disclose their emissions, transition plans, and taxonomy alignment according to harmonized standards (ESRS). In parallel, the SFDR obliges asset managers to disclose adverse impacts and the taxonomy alignment of portfolios exposed to aviation. Together, these requirements generate market discipline, increase shareholder engagement, and may ultimately influence the cost of capital. They have fostered the rise of sustainability-linked loans and green bonds, offering traceability and performance metrics. In practice, manufacturers and airports implementing ground electrification projects or SAF supply chains compliant with these frameworks are seeing more abundant financing, on more competitive terms, than non-aligned projects.
EU ETS, CORSIA and ReFuelEU: A Price Signal and Predictable Demand
The European emissions trading system (EU ETS) covers intra-EEA flights with a stricter cap and the progressive elimination of free allowances. The marginal cost of carbon increases, bringing investment decisions closer to trajectories compatible with emission budgets. The articulation with CORSIA extends the logic of pricing and offsetting to international routes, so that traffic growth outside the EU now carries an explicit climate cost, with effects on operators' profitability and financing structure.
The ReFuelEU Aviation directive complements this price signal by creating pan-European and predictable SAF demand through increasing blending mandates, accompanied by a sub-quota for e-fuels, and by prohibiting tankering. This predictability is essential to the bankability of production capacities: it supports the signing of long-term offtake contracts, secures volumes, and reduces price risk. Coupled with the EU ETS, it improves the relative economics of decarbonized flights, incentivizes fleet renewal, and justifies ground infrastructure investments.
InvestEU, Innovation Fund, EIB: Public Capital to De-risk Innovation
Beyond incentive mechanisms, the EU mobilizes public and para-public resources to de-risk projects aligned with the taxonomy. The European Investment Bank (EIB), with its climate policies, provides debt and quasi-equity at conditions linked to environmental performance. It has notably supported R&D on future propulsion systems, e-fuel production, and projects around green hydrogen.
Funded by EU ETS revenues, the Innovation Fund targets technologies with high abatement potential, such as e-kerosene, hydrogen, and ground electrification, with significant funding amounts, including in regional hybrid-powered aviation projects. The InvestEU program complements this system with guarantees and equity financing for low-carbon infrastructure and technologies. The Commission has thus communicated on an EIB operation, guaranteed by InvestEU, benefiting an autonomous solar aircraft program, illustrating the use of European guarantees for breakthrough aeronautical technologies.
State Aid: A Modernized Framework to Accelerate, Without Distorting
The "CEEAG" guidelines frame State aid in the areas of climate, environment, and energy. They establish the principles of proportionality, incentive effect, competitive tendering, and absence of overcompensation, while strengthening notification and monitoring obligations. For beneficiaries and their financiers, the challenge is to contractually anticipate the risks of aid recovery or regulatory evolution to preserve bankability.
This framework is already finding concrete applications in aviation. The Commission has approved a Danish measure of 36 million euros aimed at reducing emissions from domestic air transport by supporting SAF use, the first of its kind to explicitly promote these fuels. This decision illustrates the compatibility between national support and European objectives, when a scheme is well-calibrated and transparent.
Conclusion
By simultaneously structuring transparency, carbon pricing, demand for low-carbon solutions, and the supply of public financing, the European Union has transformed its law into a genuine engine of aviation transition. This framework reduces uncertainty, lowers the cost of capital for aligned projects, and accelerates the industrialization of decarbonization solutions. The challenge for the coming years will be to maintain overall coherence, ensure the industrial scale-up of SAF and new technologies, and support dissemination throughout the value chain, from major hubs to regional players. If it succeeds in combining ambition, predictability, and competitiveness, the European ecosystem could make decarbonized aviation a strategic advantage—for the climate, for the industry, and for travelers.
