Germany Is Spending €2 Billion to Discover the Real Price of Clean Jet Fuel

Germany plans to use a €2-billion support envelope to run an auction for eSAF based on the H2Global double-auction approach. In that model a public intermediary signs long-term purchase agreements with the cheapest qualifying producers, while selling the fuel forward to distributors under shorter contracts; public money covers the difference. The structure is intended to separate producers' need for long-term revenue certainty from buyers' reluctance to commit to high prices for a decade or more.

The government acknowledges that synthetic jet fuel currently costs many times more than conventional jet fuel: EASA’s 2025 reference puts eSAF at about €7,520 per tonne versus €640 per tonne for fossil jet fuel. At that reference production cost, a €2-billion budget would cover roughly 266,000 tonnes if the state fully purchased fuel at production cost; because Germany plans to subsidize the spread between purchase and resale prices rather than the whole cost, the supported volumes could be larger. Policymakers frame the auction primarily as an industrial-development tool to move projects from planning to financed plants rather than as a near-term decarbonization fix for aviation.

Europe already hosts numerous proposed eSAF projects — Transport & Environment lists 41 large-scale initiatives with nearly 3 million tonnes of potential annual output — but only a handful are advanced and none has taken a final investment decision. The financing impasse stems from producers needing decade-long contracts to fund billion-euro facilities while airlines and fuel distributors are unwilling to lock in those high prices for so long. The double-auction mechanism aims to resolve that deadlock by making producers compete to close the subsidy gap and by generating price-discovery data for governments.

Germany has precedent with H2Global: an earlier 2022 pilot included an eSAF lot that ended without awards, leading to a reallocation of funds to renewable methanol. That outcome underlines the importance of matching tender design, budgets and qualification timelines to market maturity. Conversely, the broader H2Global program did secure a contract for renewable ammonia: Fertiglobe was awarded up to 397,000 tonnes cumulatively through 2033 at a delivered price of €1,000 per tonne, showing the mechanism can make viable supply bankable. The new proposal tightens eligibility by requiring ASTM certification, compliance with EU renewable-fuel rules and production within the European Economic Area, and it sits alongside an eight-country Early Movers Coalition aiming to mobilize at least €500 million for an initial multinational auction.

A remaining tension is geographic: limiting qualifying production to the EEA improves traceability and fosters a European industrial base but excludes many regions with lower-cost renewable resources. The auction’s competitive design seeks to reward projects with cheaper electricity, higher efficiencies and better carbon sourcing, and policymakers expect the subsidy gap to narrow in later rounds — or else conclude that the technology is not progressing fast enough to merit continued public support.