Expert Insights with PwC: ReFuel EU Aviation's impact on Hydrogen
Adj. Prof. Jürgen Peterseim
Director, Sustainability, Energy Transition & Decarbonisation
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PwC Germany
Dirk Niemeier
Lead for Clean Hydrogen, CCUS and Sustainable Fuels
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PwC Strategy & Germany
Juergen Peterseim is a senior professional with 20 years’ experience in energy transition. His core expertise is around net-zero roadmaps, energy efficiency, and low carbon/ green energy sources. Juergen has developed net zero and technology roadmaps for more than 50 companies from various sectors and is working in the sustainability area for 20 years. At PwC he is focusing on the net-zero transformation and alternative fuels. Dirk Niemeier is a Director and the Clean Hydrogen, CCUS and Sustainable Fuels lead at Strategy&, based in Munich. With more than 20 years of experience, he supports clients from the energy sector, the manufacturing and the mobility industry on decarbonization-related market and business models, strategy development, and corporate transformations.
In this interview, both share their insights on the impact of ReFuel EU Aviation on Hydrogen, PtL, and more, ahead of the Sustainable Aviation Futures Congress in May.
Europe has been leading in hydrogen policy and investment. What key regulatory frameworks and incentives are proving most effective in accelerating clean hydrogen adoption for aviation?
Clearly most effective is the ReFuel EU regulation, especially with the announced penalties that make failure to comply very unattractive (though it is not clear who is suing / charging the companies not complying really and how long it might take to push the claims through). Another contributor is the fact that early producers realized interesting profits and thus have inspired "imitators" to invest as well. Finally, business-related greenhouse gas reporting plays a role. Businesses are looking to reduce their scope 3 footprint, and for many, travel-related emissions are a significant contributor. Hence, there is demand from the business community to procure SAF to meet their own net-zero commitments.
Hydrogen’s role in aviation is still debated, whether as a direct fuel or as a key feedstock for Power-to-Liquid. From a European perspective, which pathway is likely to scale faster?
With an answer to this question, you are asking to a certain extent for the belief of the person you are asking. Our belief is that elementary hydrogen as a fuel will not scale fast as the first commercial aircrafts will only be in commercial operations around 2040 -2045; until there is a relevant market penetration, it might take another 10 years for airlines to exchange a larger part of their fleets, so elementary hydrogen is a long and uncertain shot. On the other hand, eFuels / eSAF are currently 2-3 times more expensive to produce compared to HEFA or other biogenic SAF; significant funding and development are required to raise maturity so investors will dare to build (and finance) industrial-scale PtL plants; nevertheless, the quotas from 2030 and funding programs help progress, and I can imagine that PtL will follow biogenic SAF only as much as required (by quotas or bio feedstock limitations) but will play a role in the aviation market well ahead of elementary hydrogen.
The EU has ambitious targets for green hydrogen production, but infrastructure remains a major bottleneck. What are the most critical investments needed to develop a viable hydrogen supply chain for aviation?
The investment requirements for the PtL chain include RE power production on an immense scale, H2 production plants and H2 pipelines, CO2 capture plants (point source or even direct air) - all ideally in local proximity, and then refining, mixing, and terminal infrastructure/harbors. The complexity of this chain, the partly low technological readiness/industrial experience (e.g., for CO2 capture), and the cost of the final product are the main challenges for a large-scale PtL supply chain.
How do you see the interplay between EU policy and global hydrogen developments influencing SAF and hydrogen-powered flight adoption?
EU policy incentivizes global SAF producers to invest in SAF production, as some regions outside Europe show very good conditions for SAF production (both bio and PtL), supporting global uptake and faster price decline.
Additionally, EU regulations are recognized in other regions of the world and adapted into their own regional regulations (e.g., UK, US IRA), driving further adoption globally. In both cases, there is a positive halo effect of EU regulation on the global SAF market and adoption.
With multiple hydrogen production pathways, what do you see as the most viable near-term and long-term options?
The most viable pathway for hydrogen is electrolyzer-produced hydrogen from green renewables; algae, pyrolysis, and others show too low maturity. SAF from blue hydrogen (i.e., capturing fossil CO2 and replacing it with biogenic or DAC) might be technically possible but has reputational and regulatory acceptance issues.
What lessons can North America and other regions take from Europe’s approach to integrating hydrogen into the aviation sector?
We think the most relevant takeaway should be the quotas combined with funding of technological developments because the PtL industry will not evolve without these two. It is important to note that the current ReFuel EU directive has a very small impact on ticket prices while providing market certainty. In 2025, the impact on ticket prices will be less than 1%, hence there is no affordability problem. It is crucial to ensure that this policy remains in place to provide investors with the certainty they need to make investment decisions into plants with a 30+ year lifespan.