Ireland is set to ask the European Commission to take the unusual step of dropping a tariff on aviation fuel to lower fuel costs for airlines.
It comes amid fears of flight cancellations this summer due to the global fuel crisis.
Aer Lingus announced on Sunday it planned to cancel or reschedule about 2 per cent of its flights, affecting thousands of passengers, as it carries out what it describes as “mandatory maintenance” on aircraft.
Minister for Energy Darragh O’Brien said on Sunday he would write to the EU energy commissioner asking for duties on sustainable aviation fuel (SAF) imported from the United States to be removed on an exceptional basis while the conflict in the Middle East continues.
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O’Brien also told The Irish Times that since the US and Israel attacked Iran in late February, 100 per cent of Ireland’s supply of aviation fuel is now sourced in the US.
He said there were, therefore, no concerns about the supply of aviation fuel. It is understood this has been confirmed by the two big domestic airlines, Ryanair and Aer Lingus. The biggest concern for the sector at the moment was increases in prices, O’Brien said.
Earlier O’Brien told RTÉ’s This Week: “We’re seeing increases in the price of jet fuel. So there are cost pressures there for airlines, and airlines will make commercial decisions, separate to Government ... But what I’m saying to people is our supplies and our reserves [of aviation fuel] in Ireland are very robust, with a 70-day reserve.”
SAF is made from biological sources as a cleaner alternative to kerosene. In the EU a minimum of 2 per cent must be blended with conventional aviation fuel. A duty is imposed on imports of SAF from the US under strict EU anti-dumping rules and also because production is subsidised in the US.
The duty on SAF is about 8 per cent. However, although it makes up only a small percentage of the blend when mixed with kerosene, it costs between three and seven times more to produce compared with jet fuel and therefore has an impact on overall cost.
O’Brien also said on Sunday that the Government is preparing for domestic electricity prices to increase by between 4 and 9 per cent, kicking in between May and July, with significantly higher rises expected for household gas bills.
Asked about comments on Friday by Minister for Enterprise Peter Burke that bills might increase by as much as 30 per cent, O’Brien said the increases would not be that high.
“[For] electricity, we’re not looking at increases in that sphere. It would be single-digit increases. We are looking at increases of between 4 to 9 per cent, depending on the provider.
“With gas it’s more than that, but not [as high] as 30 per cent,” he said.
Government sources said the State’s reserve of 70 days’ supply of aviation fuel was sufficient for a complete shutdown of the supply chain for that period.
The sources added that if aviation fuel supplies were rationed by 20 per cent because of the continuing global energy crisis, it would mean there were sufficient reserves in Ireland to keep aviation fully operational for a year.
Meanwhile, the European Commission is preparing advice to national governments encouraging them to implement “energy voucher” schemes for vulnerable households and introduce a temporary ban on power disconnections, as part of an EU plan to get to grips with the worsening energy crisis.
