UK Government backs SAF production
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The Government has today published a consultation setting out how it intends to support the green fuels sector and provide certainty for SAF producers, in the latest step in the Government’s plan to support the aviation sector and kickstart economic growth.
This new support for the sustainable aviation fuel industry - helping to tackle emissions, establish Britain as a clean energy superpower and allow the UK to go further and faster with expansion plans - should mean passengers could soon enjoy greener plane journeys.
The SAF industry is crucial for the future of aviation, offering a sustainable alternative to traditional jet fuels. By reducing greenhouse gas emissions by up to 70% compared to fossil fuels, SAF will play a vital role in delivering our clean energy mission as part of the government's Plan for Change and allow the UK to back airport expansion in line with climate commitments.
Backing investment in the low carbon sector also has huge potential for driving economic growth, as it is expected to support up to 15,000 new jobs and deliver £5 billion to the UK economy by 2050.
As this is still a new and emerging industry, today’s proposals will tackle the current uncertainty in the sector by introducing an industry funded price guarantee – known as the Revenue Certainty Mechanism (RCM) – to ensure a steady income flow for producers, even if the price of SAF fluctuates, helping to keep down costs for airlines and holidaymakers.
The proposals will help to reduce risk, give investors the confidence they need to invest in UK SAF plants and help the sector secure the supply it needs to bolster the SAF industry in the UK. The Mechanism is also designed to limit costs and protect holidaymakers and working people against significant cost increases, with any rises expected to be in line with the usual variation of ticket prices.
The revenue certainty comes alongside the introduction of the SAF Mandate in January, which requires a growing percentage of aviation fuel to come from sustainable sources, supporting the industry by securing demand and driving production in the UK. The mandate was one of the first in the world to be put into law, once again putting the UK at the forefront of decarbonising air travel.
The revenue certainty mechanism combined with the mandate will contribute to our net zero goals, enabling the aviation sector to continue to grow, including through airport expansions. This is also expected to drive significant investment into the SAF sector, creating green jobs, fostering innovation to driving growth as part of the Plan for Change.
Aviation Minister, Mike Kane said: “We are committed to building the technology and fuel supply that will see greener flying become a reality, in a way that protects consumers.
“As part of our Plan for Change, these proposals will power up SAF production in the UK, support thousands of green jobs and bolster expansion plans.”
Tim Alderslade, Chief Executive of Airlines UK, said: "UK airlines support the RCM as a means of driving production in SAF and ensuring the industry can comply with the mandate.
“We look forward to working with Government on its design with a particular focus on encouraging a competitive market and supporting FOAK plants. The goal must be the production of as much SAF at the cheapest possible price for consumers, to help the industry get to net zero, support growth in UK aviation whilst minimising the impact on passengers."
Karen Dee, Chief Executive of AirportsUK, said: "SAF will play a key role in decarbonising aviation and a revenue certainty mechanism will not only ensure the UK can access enough supply but also that we can benefit from thousands of jobs and billions in investment.
"Airports will work with government as part of the aviation sector to develop the right solution that will give the market the confidence it needs to bring investment forward, enabling a new UK industry producing homegrown SAF to emerge.
"This in turn will allow the UK's global air connectivity to expand sustainably, within our net zero targets, and play an increasing role in growing our economy, something the government is prioritising to drive up the prosperity of the whole country."
Gaynor Hartnell, Chief Executive of the Renewable Transport Fuel Association, said: “The RCM is essential if SAF is to be manufactured here in the UK, rather than imported. Home produced SAF leads to more jobs and improved fuel security, plus it’s a better way of dealing with household and commercial waste than burning it for electricity generation.”
The consultation will run from 3rd to 31st March 2025, with the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill being laid in Parliament in the Spring. This support will build on the £63 million recently announced by the Chancellor in her growth speech to boost production of alternative fuels in the UK.
Last month the Chancellor also invited Heathrow Airport to bring forward expansion plans for consideration by the summer. The Government will then review the Airports National Policy Statement (ANPS) to ensure that any scheme is delivered in line with our legal, environmental and climate obligations.
In September last year, the Department announced a refreshed and rejuvenated Jet Zero Taskforce which is serving as the driving force to transform how people fly – aligning with the government’s missions to make the UK a clean energy superpower and kickstart the economy.
In a further boost for sustainable aviation, the UK led the charge for new carbon limits on aircrafts at the International Civil Aviation Organization (ICAO) which will see all new aircraft types become 10% more efficient from 2031. This will help cut emissions and fuel costs, benefitting passengers as well as the planet. Regulations on aircraft noise will also be strengthened from 2029, to make planes quieter when taking off and landing.
The RCM will help deliver certainty in the green fuels market, supporting stable production of the SAF needed for aviation decarbonisation. The scheme is similar to that used in the UK’s world-leading renewables sector and could now boost domestic sustainable fuel production, driving investment in the UK SAF industry and boosting the economy through more green jobs.
This is a temporary measure, while SAF market prices are uncertain, to help scale early technologies while supporting a competitive market for SAF production. The Government will monitor its impacts and can manage liabilities by capping the support to a pre-agreed volume of SAF, as well as agreeing the strike price within contracts.
