Sustainable Aviation Fuel Mandate

Thursday 25th April 2024 Written Statements

[The Secretary of State for Transport (Mr Mark Harper)]

This Government are fiercely proud of the success of Britain’s aviation industry, and are committed to ensuring it continues to grow and succeed in future. Decarbonisation is critical to that future, and today we are setting out another key step in delivering that by publishing the full policy detail of a world leading sustainable aviation fuel mandate which will deliver 10% of all jet fuel in flights taking off from the UK from sustainable sources by 2030 and 22% by 2040. It will be one of the first in the world to be put into law and, subject to parliamentary approval, will be implemented from 1 January 2025, once again putting the UK at the forefront of decarbonising air travel. We are also today launching a consultation on an industry-funded revenue certainty mechanism to support investment in the UK’s SAF production industry.

Today’s announcements are good for aviation, the environment and for the UK overall, with the SAF industry estimated to add over £1.8 billion to the economy and create over 10,000 jobs across the country. The SAF mandate will drive demand for SAF in the UK, secure emission reductions and provide investor confidence. A revenue certainty mechanism will also incentivise investment in UK SAF production, helping to drive growth across the UK, secure the supply of British-made SAF, and maintain the UK’s position as a global leader.

This is part of the Government’s plan to deliver on our net zero commitments while ensuring we take a pragmatic and proportionate approach which minimises unnecessary burdens on the public.

SAF mandate

Following extensive consultations with the industry the SAF mandate will deliver emission reductions of 2.7 MtCO₂e in 2030 and 6.3 MtCO₂e in 2040 and create high value jobs, particularly in the production of the most advanced fuel types. The Government will lay secondary legislation this summer so that the scheme comes into effect on 1 January 2025.

The Government first consulted on the introduction of a SAF mandate in July 2022 and subsequently confirmed it would be introduced from 2025. This suggested at least 10% of UK aviation fuel should come from sustainable sources by 2030 and included key elements, such as robust sustainability criteria, to ensure fuels drive genuine benefits and sub-targets to incentivise diverse SAF production pathways. A second consultation, in March 2023, focused on the detail of the scheme, key policy parameters and design of the SAF mandate. Today, the Government are confirming a trajectory for the mandate from 2025 up to 2040 that is ambitious but realistic. The mandate will start in 2025 at 2% of total UK jet fuel demand, increase on a linear basis to 10% in 2030 and then to 22% in 2040. From 2040, the obligation will remain at 22% until there is greater certainty regarding SAF supply.

The mandate will also include a cap on the feedstocks that are used in the hydroprocessed esters and fatty acids process. HEFA is currently the only commercially available SAF; however, it is dependent on limited feedstocks that cannot deliver our long-term SAF goals alone. HEFA SAF has an important part to play in the 2020s alongside the commercial development of advanced fuels that are less dependent on limited feedstocks. Today’s publication confirms that HEFA supply will not be limited under the mandate trajectory for the first two years, before falling to 71% of the total in 2030 and 33% in 2040. This will allow SAF demand to be met while incentivising the development of new SAF technologies. The UK is already producing HEFA SAF and we welcome the further development of this UK industry alongside more advanced SAF technologies. We recognise that there is a broader global HEFA market, and therefore there is no limit on the amount of HEFA that can be produced in the UK.

To drive innovation and diversification, a separate obligation on power-to-liquid fuels will be introduced from 2028 and will reach 3.5% of total jet fuel demand in 2040. This will accelerate the development of this high-tech fuel, which is less dependent on feedstocks and can generate greater emission reductions. The mandate includes buy-out mechanisms for both the main and power-to-liquid obligations to incentivise supply while protecting consumers where suppliers are unable to secure a supply of SAF. These will be set at £4.70 and £5.00 per litre of fuel, respectively. These provide a significant incentive for fuel suppliers to supply SAF into the market rather than pay the buy-out. They also set a maximum price for the scheme, and therefore deliver emission reductions at an acceptable cost.

While we recognise SAF may be more expensive than traditional jet fuel in the immediate term, we are ensuring that decarbonisation does not come at the expense of consumers. This plan is part of our approach to ensure that the rationing of flights through “demand management” is ruled out. The plan includes a review mechanism to help manage prices and minimise the impact on ticket fares for passengers. The Government also have the power to change key limits within the mandate to block higher price rises in the case of SAF shortages—keeping the impact on consumers to a minimum.

Providing sufficient SAF is available, any increases in air fares as a result of SAF will fall well within the range of usual fluctuations in prices we see every year and the Government have plans in place to prevent any major hikes. This is part of the Government’s plan to deliver on our ambitious net zero commitments while ensuring we take a pragmatic and proportionate approach which minimises unnecessary burdens on the public.

Revenue certainty mechanism

The Government committed in September 2023 to introduce an industry-funded revenue certainty mechanism for UK SAF plants and set out how it could be delivered by the end of 2026. Fulfilling our commitment in the Energy Act 2023, the launch of the consultation today demonstrates the Government’s ambition to develop a SAF industry in the UK. Such a mechanism will provide confidence in the sector and help to bring forward investment in UK SAF plants.

The consultation sets out four options that have been developed alongside stakeholders, through forums such as the Jet Zero Council. It provides a detailed assessment of these four options, looking at a range of factors from how quickly a mechanism could be delivered, to the scale of investment it is likely to bring forward. Views from stakeholders across the whole supply chain will be critical to the next phase of work and we welcome responses from all interested parties.

[HCWS429]