The STIP: is the EU doing enough for e-fuels?
The long-awaited Sustainable Transport Investment Plan makes welcome progress to send a stable and positive investment signal for low-emission shipping and aviation technologies. However, its shortfalls risk undermining its own successes and raises questions about the European Commission’s commitment to the most sustainable solutions needed for competitive industry and energy independence.
The Sustainable Transport Investment Plan (STIP), launched earlier this month, ends a long wait since it was announced in February as a key pillar of the EU Clean Industrial Deal. The plan outlines short- and medium-term measures to help decarbonise aviation and waterborne transport, which will be funded with at least €2.9bn by the end of 2027 through existing EU funding programmes.
Despite positive signals, the STIP is let down by three key shortfalls: lacking of differentiation between renewable and so-called ‘low-carbon’ fuels, casting doubt on the stability of regulations, and failing to identify the value of expanding the EU emissions trading system (ETS).
The blurred line between “renewable” and “low-carbon” support
In principle, the STIP promises support for “renewable and low-carbon fuels” for the aviation and maritime sector. In practice, however, it fails to clearly differentiate between e-fuels produced from renewable electricity and less sustainable alternatives such as biofuels. The European Commission predominantly groups all alternatives under the umbrella terms SAF (“Sustainable Aviation Fuels”) and to SMF (“Sustainable Maritime Fuels”) across the announced measures.
Without clear earmarking, the financial support announced through The Innovation Fund, InvestEU, the EIB, the EIC and Horizon Europe all treat e-fuels and biofuels as equally eligible for now. This leaves the Hydrogen Bank’s €300m auction for aviation and maritime the only clearly earmarked measure for e-fuels announced in the STIP – a positive signal, but far too limited when all other programmes continue to pool radically different technologies in the same pot.
The new market tools announced in the STIP follow the same logic. The pilot double-sided auction mechanism, which could dramatically help e-fuel producers access investment, is already set to lose its focus: the future EU-wide instrument will expand from an initial exclusive e-kerosene support system to include all so-called SAF and SMF.
Similarly, the Commission’s plans to assess a book-and-claim system and the extension of ETS allowances for aviation and maritime will not focus on e-fuels only.
These announcements not only create fragmented funding pathways that innovators must navigate across multiple programmes, but it may also introduce uncertainty for investors in renewable solutions who could lack visibility on a dedicated pipeline for e-fuel projects. Less sustainable alternatives like biofuels are likely to continue receiving EU support and win competitive calls, as the latest Innovation Fund selection already illustrates.
Without explicit safeguards, this situation only prolongs the status quo rather than creating the momentum that renewable e-fuels urgently need to take off. Under the banner of ‘tech neutrality’, an unlevel playing field persists, reinforcing the dominance of biofuels and failing to create the conditions needed to scale renewable alternatives.
At the same time, zero-carbon emission options remain largely aspirational and acknowledged in the text, yet still without any significant dedicated support to bring them closer to market reality.
The risk of opening a regulatory Pandora’s Box
Another concern emerging from the STIP is that it opens the doors to revisiting core pieces of the EU’s regulatory framework, in some cases earlier than expected.
The STIP refers to the need to update or assess the EU ETS, monitoring, reporting and verification framework (MRV) and FuelEU Maritime. In some sections even groups them together, suggesting that a simultaneous revision might be on the cards.
This prospect is particularly striking for FuelEU Maritime, which is not due for review until the end of 2027 (or in the eventuality that the IMO Net-Zero Framework is adopted), yet is presented in the text as closely linked to the review of the EU ETS, announced for the third quarter of 2026.
For ReFuelEU Aviation, the STIP now suggests that clarifying obligations on SAF traceability, the mandatory use of the Union Database, and certain reporting simplifications may require changes.
It is not clear whether these updates would involve limited technical adjustments or fully reopening the primary legislation before the planned reviews, nor how these reviews would be sequenced across legislative files.
For investors and innovators, this ambiguity can be problematic: these pieces of legislation provide the targets and therefore core long-term investment signals for e-fuels. Even the suggestion of reopening them before the first wave of implementation is complete may undermine confidence and the de-risking effect they’re designed to have. Opening the files also risks new compromises being negotiated and existing targets being diluted, just as crucial final investment decisions are expected.
What if the extension of the ETS was the missing piece of the puzzle?
One glaring omission from the STIP is any substantial recognition of the value extending the EU Emissions Trading System (ETS) would have in supporting the scale-up of e-fuels.
This potential is huge: extending the ETS to all departing flights in Europe could generate €80bn more in revenues between 2027-2035, portions of which could fund support mechanisms like those included in the STIP. The European Commission fails to note this opportunity in the STIP, instead stating its intention to work to strengthen CORSIA, the international aviation offsetting scheme.
While an international system is of course desirable, CORSIA is structurally unfit for purpose and a far cry from the ambition of the ETS. While the latter incentivises real emission reductions pricing all emissions, CORSIA only aims to offset excess emissions above an already high baseline – and that’s before we get to the efficacy of offsetting at all. In this context, gesturing towards a stronger CORSIA does little to incentivise sustainable transport investment.
Recycling ETS revenues from maritime and aviation could play a key role in financing the development and deployment of renewable fuels. For example, just a quarter of existing aviation ETS revenues could fund a substantial portion of a financial support scheme for EU e-kerosene demand up to 2040. But the STIP remains cautious and only notes that the European Commission will encourage Member States to reinvest these revenues in the decarbonisation of these sectors, missing the opportunity for the introduction of a mandatory proposal.
By not fully engaging with the potential of ETS revenues, the STIP overlooks one of the most promising instruments for providing long-term, scalable financial support. This leaves a key lever for accelerating e-fuels deployment at the margins, when it should be central to Europe’s decarbonisation planning.
Conclusion: a signal is sent, but it must now become the breakthrough green fuels need
The STIP creates momentum, recognition and key funding for investment, but not yet the decisive push that Europe needs to unlock large-scale investment in renewable e-fuels and zero-carbon emission technologies.
Turning it into that breakthrough will require targeted policies, clearer priorities, and the courage to move beyond ‘technology neutrality’ and instead confidently back the solutions with the greatest potential to cut emissions and cultivate long-term competitiveness, in line with the best-available science. In practice, this means:
Ring-fencing funds for renewable hydrogen-based fuels, ensuring they are not competing on equal footing with less sustainable alternatives.
Recycling portions of ETS revenues back into green aviation and maritime investments, bolstered with new streams of revenue unlocked by extending the ETS to international flights and vessels between 400 and 5.000 GT.
Clarifying if, how and when key legislation may be updated, noting the risk that early reopening could undermine the current mandates and investments.
Introducing an EU-wide double-sided auction system exclusively for e-fuels, avoiding expansion to all SAF/SMF that would dilute its impact.
Implementing a book-and-claim certification scheme exclusively for e-kerosene that operates only for EEA-based producers and is time-bound with a clear end-date.
Read the SASHA Coalition’s STIP policy briefing paper and its initial response to the plan.
