Germany, Austria and Luxembourg have launched a €2.1 billion initiative designed to accelerate the market development of electricity-based Sustainable Aviation Fuel (eSAF) in Europe, bringing producers and buyers together through a new double-sided auction mechanism.
Germany will provide the largest share of the funding, committing €2 billion to the programme. Austria and Luxembourg will each contribute €60 million. The amount of subsidised eSAF made available under the initiative will correspond to the financial contribution of each participating country.
The three-country agreement is intended to address one of the main challenges facing the industrial development of eSAF: the gap between the long-term commitments required by producers to finance new production capacity and the much shorter contract periods typically used by aviation fuel buyers.
Under the planned double-sided auction system, eSAF producers will submit supply bids while buyers will indicate their demand through a competitive process. An intermediary will then balance supply and demand prices, with government subsidies used to help close the remaining price gap between the two sides.
Germany’s Federal Minister of Transport, Steffen Bilger, said that Europe needs both ambitious eSAF targets and greater investment in industrial production.
“When it comes to eSAF, Europe needs not only ambitious targets but also investment in industrial production. Germany, Austria and Luxembourg are jointly demonstrating how European cooperation works in practice. We are pooling our funding to create better conditions for investment decisions in a technology of the future.”
Bilger also highlighted the broader industrial implications of the programme, describing eSAF not only as a climate policy issue but also as an opportunity to create added value, expertise and jobs in Europe. He said the investment could simultaneously strengthen Europe’s energy and supply-chain independence while supporting innovation and helping aviation reduce its climate impact step by step.
Industrial-scale eSAF production requires substantial investment and continues to face structural challenges linked to both timing and cost. Producers need long-term offtake agreements to support investment decisions, while airlines and other eSAF buyers generally operate under aviation fuel contracts covering considerably shorter periods.
The double-sided auction mechanism is designed specifically to bridge this mismatch and create more predictable market conditions for both sides.
Austria’s Minister for Mobility, Peter Hanke, said the joint financing effort sends a strong signal in favour of establishing a European market for renewable aviation fuels.
“By jointly funding eSAF, Germany, Austria and Luxembourg are sending a strong signal in favour of establishing a European market for renewable fuel. We are creating long-term prospects for producers, promoting transparent price signals and helping to ensure that eSAF will also be available in Austria.”
Hanke added that the initiative should also strengthen European resilience and reduce dependence on fuel imports from outside the region. Bringing eSAF to market, he said, would help create the conditions for the aviation sector to meet European targets while delivering measurable CO₂ savings.
The overall objective of the programme is to encourage investment decisions for new eSAF production facilities while supporting the development of a competitive market for purchasing the fuel.
The funding programme remains subject to approval under European Union state aid rules by the European Commission.
Luxembourg’s Minister for Mobility and Public Works, Yuriko Backes, said her country was committed to working alongside Austria and Germany to support the development of climate-friendly aviation.
“Luxembourg stands determinedly alongside Austria and Germany in promoting climate-friendly aviation. By joining the eSAF Early Movers Coalition, we are supporting the expansion of eSAF production, reducing dependence on fossil fuels and accelerating their EU-wide market introduction.”
Backes said Luxembourg also aims to contribute to the development of new production capacity while helping ensure that part of the resulting output is made available to the domestic market. She added that building sustainable mobility requires action now to meet both market demand and public expectations for effective climate measures.
eSAF is currently produced using renewable hydrogen and sustainable carbon. The hydrogen is generated through electrolysis powered by renewable electricity.
Germany, Austria and Luxembourg are also founding members of the eSAF Early Movers’ Coalition, which was launched in December 2025.
The coalition was established to accelerate the market ramp-up of eSAF across Europe through cooperation, the exchange of experience and joint financial support.
