Europe heading down wrong route to decarbonise air travel, study warns

New, independent research provides the first detailed economic comparison of Europe’s options to decarbonise air travel - set against a backdrop of global geopolitical uncertainty and the EU’s ambition to enhance economic competitiveness.

A new report by Fathom Consulting finds that hydrogen-powered aircraft represent a once-in-a-generation industrial opportunity for Europe.

With the United States retreating from climate and innovation funding under a second Trump administration, there are significant economic gains on offer if Europe is able to take the global lead in clean aviation.

But with China rapidly advancing its position in clean technologies, the window of opportunity will not remain open for long, and will require European policymakers to switch course from their narrow focus on biofuels and allocate significant funds to hydrogen research and development.

The report, Europe’s flightpath to economic competitiveness, commissioned by the European Climate Foundation, is being released ahead of the 2025 Paris Air Show, where sustainable aviation and industrial strategy will take centre stage. It presents comprehensive economic analysis comparing the costs and benefits of the different pathways to decarbonise aviation, informing decision-making at a critical juncture for Europe’s industrial and climate ambitions.

Strategic insights

• The United States is pulling back from decarbonisation initiatives, creating space for Europe to cement and enhance its position as an aerospace leader

• Investing more in hydrogen-powered zero-emission flight (ZEF) R&D not only positions Europe as a frontrunner in clean aerospace technology but also supports efforts to close the productivity gap with the US

• Securing a clear first-mover advantage on ZEF can help Europe stay ahead of competition from China, which is moving up the economic value chain and taking leadership on many decarbonisation technologies, including solar panels, batteries and electric vehicles

• There is a growing perception that Europe is weakening its ambition amid changes, actual and rumoured, to Airbus’s ZEROe programme; this risks undermining confidence in Europe’s leadership at a time when global momentum around clean aviation is accelerating

• The future of aviation is central to the EU’s Clean Industrial Deal - bold policy and investment, particularly in R&D for hydrogen technologies, can secure Europe’s aerospace leadership and boost productivity, while shaping the continent’s industrial future

Key findings

• Fathom’s economic modelling, using the newly developed Fathom Aviation Decarbonisation Model (FADM), shows that when scaled up in the long term, flying hydrogen-powered planes is likely to be cheaper than flying planes with sustainable aviation fuel (SAF)

• The economic spillover benefits of R&D in hydrogen-powered aircraft, including gains in productivity, make this the economically optimal route to net-zero aviation, not just for the sector, but for society as a whole

• Fathom’s analysis indicates a far greater market opportunity in hydrogen-based fuel technology and aircraft than the waste-based biofuels that are the focus of current policy and investments; these biofuels become more expensive than hydrogen fuels and aircraft once they reach 15% market penetration due to feedstock constraints, whereas e-kerosene and ZEF costs will trend downwards thanks to economies of scale and learning by doing

• This new perspective goes beyond emissions and challenges the prevailing focus on SAF, highlighting the long-term economic potential of zero-emission aircraft as a more viable and beneficial path for Europe’s competitiveness

The charts below show the levelised costs of flying in 2050 in our central scenario. The first shows that ZEF becomes cheaper than other decarbonisation options when more than 35% of European aviation is decarbonised. The second chart indicates that if the economic spillovers from ZEF R&D were subtracted from ticket prices, that flying with ZEF would be cheaper than with fossil kerosene, and all other decarbonisation options, at all levels of decarbonisation.

Policy recommendations

• Accelerate R&D for single-aisle and twin-aisle hydrogen-powered zero-emission aircraft by scaling up funding through Clean Industrial Deal (CID) instruments such as the EU Innovation Fund, Horizon Europe, and the Clean Aviation Joint Undertaking

• Support the production of clean electricity, hydrogen and hydrogen-related infrastructure, specifically for aviation, through the Sustainable Transport Investment Plan (STIP)

• Investigate the potential military benefits of ZEF; a preliminary assessment in this study suggests there are notable benefits, meaning that ZEF promotion could be a legitimate use of funds, under growing military budgets

• European aircraft manufacturers should act on the threat posed by China, which has taken the lead on other decarbonisation technologies and has recently been investing heavily in aerospace; failing to recognise this threat, as incumbents in other sectors such as autos have done, poses a significant threat to future sales, market share and profitability, with negative implications for shareholders

“Europe urgently needs to find new sources of productivity growth if it is to thrive as an independent power in the new geopolitical realities," said Erik Britton, Managing Director & CEO of Fathom Consulting

"Fortunately, the region still leads the world in aerospace, which is one of the most innovative industrial sectors but also one of the most carbon-intensive. By aggressively supporting innovation in the decarbonisation of aviation, European policymakers can hit two major policy goals simultaneously: to boost productivity across the whole economy, and to reduce carbon emissions.

"This paper provides a clear, objective assessment of the range of options for decarbonisation of European aviation, along with the costs and benefits of each. It's time for Europe to flex its institutional and technological muscles. Which is the right strategy? Whichever is the hardest to achieve.”

“Our modelling shows that when done at scale, hydrogen-powered zero emission flight will become the cheapest low-carbon form of flying," added Brian Davidson, report author and Head of Energy and Climate at Fathom Consulting

"The case for hydrogen is even stronger when we consider the broader economic benefits of the R&D spending needed to fully unlock this technology. It is important for Europe to look beyond the easy wins or playing catch up with China on technologies such as batteries and EVs. By supporting hydrogen-powered aviation Europe can protect its aviation industry, continue to lead on decarbonisation, spur innovation and boost flagging productivity in the wider economy.”

BlueSky Business Aviation News | 12th June 2025 | Issue #799