The aviation industry and the stall in aircraft innovation

Policy measures to date have not been enough to incentivise aircraft manufacturers to deploy cleaner and more cutting-edge technology.

Poor application of the “polluter pays” principle for aviation still makes it relatively inexpensive to operate a plane using cheap, highly polluting fossil jet fuel. Prior T&E analysis has shown that a more effective application of relevant policies, such as carbon pricing and jet fuel taxation, would reduce the price gap between technologies such as hydrogen aircraft, and old, fossil-powered planes. This would accelerate the transition towards cleaner aircraft.

Similarly, aircraft CO2 standards are widely regarded as a policy lever to help drive the design and uptake of more efficient aircraft. However, the existing standards, recommended in 2016 by the International Civil Aviation Organization (ICAO), fell behind the newest developments in aircraft technology at the time, as recognised by aviation regulators, and are comfortably met by current planes, not driving further innovation in aircraft design or production.

ICAO’s Committee for Aviation Environmental Protection (CAEP) recently recommended that these standards be updated. However, while they are more stringent, these new standards still fall well short of pushing manufacturers to innovate faster. For instance, the Boeing 737 MAX 8, a plane designed in the 1960s and upgraded with a 2010s engine, may still comply with the in-production standard applicable from 2035 onwards.

These weak CO₂ standards have also led to lax criteria for green investments in the EU Taxonomy. As most of the planes currently on the market, including the majority of the Airbus aircraft portfolio, meet the existing CO₂ criterion for transitional activities, neither investors nor manufacturers have a strong incentive to accelerate the shift to more efficient aircraft designs.

Lastly, there are currently no policies to support or mandate the use of disruptive technologies, particularly zero-emission (ZE) aircraft. Policies that ban fossil fuel use on some routes, or provide preferential access to airports, would help build early markets for ZE planes and other green tech, to prove their commercial viability ahead of their wider adoption.

European research funding for aviation is not backed by policy

Programmes like Clean Aviation, a €4 billion public private partnership partly funded by the European Commission under Horizon Europe, play a central role in supporting the European aviation industry in its quest for aircraft innovation.

However, due to the lack of policies and market pressure, new aircraft designs, such as Airbus’ hydrogen plane – which has received hundreds of millions of euros from the European Commission and the French government – keep being delayed.

To make Clean Aviation and other research programmes as effective as possible, the EU must ensure that R&D investments are accompanied by a policy framework to support the commercial development and uptake of cleaner, more efficient aircraft, and diversify investments to also support new companies aiming to enter the market.