Germany, Austria and Luxembourg have launched a joint funding initiative worth up to €2.12 billion to accelerate the development and market uptake of electricity-based Sustainable Aviation Fuel (eSAF) in Europe.
Under the programme, Germany will provide up to €2 billion, while Austria and Luxembourg will each contribute up to €60 million. The initiative will use a double-sided auction mechanism designed to bring eSAF producers and buyers together while using public funding to help bridge gaps between supply and demand prices.
The three countries said the objective is to create stronger investment conditions for new eSAF production facilities while developing a competitive market for purchasing the fuel.
Double-Sided Auction Targets Investment Gap
The funding mechanism addresses a structural challenge facing emerging eSAF production.
Producers typically require long-term offtake commitments to secure financing for new facilities, while airlines and other fuel buyers generally purchase aviation fuel under shorter-term contracts. This difference in investment horizons can make it difficult for developers to secure final investment decisions for large-scale production projects.
The proposed double-sided auction is designed to address that gap.
Under the mechanism, eSAF producers will submit offers while prospective buyers submit their demand through a competitive process. An intermediary will then use government support to bridge any remaining difference between the supply and demand prices.
The governments said the approach is intended to combine long-term revenue visibility for producers with competitive purchasing conditions for buyers.
Funding Linked to National Contributions
The supported eSAF volumes will be placed on the markets of Germany, Austria and Luxembourg in proportion to each country’s contribution to the programme.
Germany’s contribution represents the largest share of the funding, while Austria and Luxembourg will each provide up to €60 million.
The programme is intended to support investment in new production capacity and establish a more developed European market for synthetic aviation fuel.
Germany’s Federal Ministry of Transport said its national market consultation on the planned funding mechanism had been completed, with feedback from industry and academia indicating broad interest in accelerating eSAF production and addressing existing investment barriers.
Programme Requires EU State-Aid Approval
The joint funding scheme is subject to approval under European Union state-aid rules by the European Commission.
The requirement means that the announcement establishes the framework for the programme and its intended funding commitments, but implementation remains dependent on the relevant regulatory approval.
The European Commission has already identified double-sided auctions as a potential mechanism for reducing investment and revenue risks associated with renewable aviation fuels.
The Commission’s eSAF Early Movers Coalition, launched in December 2025, brings together EU member states seeking to accelerate production and uptake of synthetic aviation fuels. Members agreed to cooperate on double-sided auctions, with an initial auction planned for 2026.
eSAF at the Centre of European Aviation Decarbonisation
Electricity-based Sustainable Aviation Fuel, also referred to as power-to-liquid fuel, is produced using renewable hydrogen and sustainable carbon. The hydrogen is generated through electrolysis using renewable electricity.
The European Commission considers eSAF an important component of the aviation sector’s transition towards lower-carbon fuels. Under the ReFuelEU Aviation framework, eSAF is required to account for 1.2% of fuel supplied at EU airports by 2030, increasing to 35% by 2050.
The Commission has also identified a significant need for new investment in renewable and low-carbon fuel production. Its Sustainable Transport Investment Plan estimates that more than €100 billion of investment will be needed by 2035 to scale up production of renewable and low-carbon fuels across transport.
Three Founding Coalition Members
Germany, Austria and Luxembourg are founding members of the eSAF Early Movers Coalition, which was launched in December 2025 alongside Finland, France, the Netherlands, Portugal and Spain.
The coalition was established to encourage cooperation, exchange experience and mobilise financial support for synthetic aviation fuel production across Europe.
The new three-country funding programme represents the next stage of that cooperation, with the participating governments seeking to move from policy commitments towards mechanisms capable of supporting actual production investments.
For airlines and the wider aviation fuel supply chain, increased eSAF production could provide an additional source of lower-carbon fuel while helping Europe develop domestic production capacity and reduce dependence on imported aviation fuels.
The programme therefore combines climate, industrial and energy-security objectives, with its eventual impact depending on the outcome of the state-aid approval process and the ability of the auction mechanism to unlock investment in commercial-scale eSAF production.
