The Parliamentary Under-Secretary of State for Transport (Mike Kane)
I beg to move,
That the draft Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024, which was laid before this House on 24 July, be approved.
I want to take a moment to pay tribute to my former constituent Ken Eastham, who died recently at the age of 96. He served the people of Blackley and Broughton in this House from 1979 to 1997. He knew me as a child, and was delighted that I became a Member of Parliament. He worked diligently on behalf of his constituents. I will remember him, his late wife Doris, with whom I kept in contact, and his family in my prayers tonight.
As a fuel that can be used in existing aircraft, sustainable aviation fuel, or SAF, is one of the most effective ways of starting to decarbonise flights. The greenhouse gas emissions associated with the use of SAF are 70% less than those from fossil jet fuel on a life-cycle basis. This Government recognise the urgency of the global climate challenge, and the opportunities that are available from leading on the development of these technologies. It is a core part of our mission to make the UK a clean energy superpower, and it is one of the many steps that we are taking to decarbonise aviation, which include our plans for airspace modernisation. The SAF mandate will support the decarbonisation of the aviation industry by creating demand for SAF in the UK. The scheme has been developed over several years, during which there have been two formal consultations and significant stakeholder consultation. In July this year, we confirmed the detail of the proposed SAF mandate set out in the statutory instrument, and that was received positively by stakeholders.
The SAF mandate is one of several Government initiatives to support the development, production and use of SAF in the UK. The advanced fuel fund, for example, is currently supporting 13 UK plants with £135 million of grant funding. Additionally, the Government are introducing a revenue support certainty mechanism Bill, which was included in the King’s Speech and will support SAF producers who are seeking to invest in new plants in the UK. It will 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.
Alongside the potential for SAF to reduce carbon emissions on a life-cycle basis—compared to that of traditional jet fuel—there are significant economic benefits associated with the development of a domestic SAF industry. Industry research estimates that such development could generate up to 60,000 new jobs by 2050, adding up to £10 billion gross value added per annum. That supports our growth mission to kick-start economic growth across the UK.
The introduction of a SAF mandate marks an important step forward for the decarbonisation of the aviation sector. It will provide a long-term incentive for SAF use in the UK by setting a guaranteed level of demand, demonstrating the UK’s world-leading commitment to SAF uptake. It will also provide clarity for investors: a clear signal to develop SAF production facilities and more advanced SAF technologies in the UK and globally. Crucially, the mandate could reduce aviation emissions by up to 2.7 megatonnes of carbon dioxide equivalents in 2030, and by up to 6.3 megatonnes of CO2 equivalents in 2040.
Decarbonising transport is a key focus for this Government. It is central to the delivery of the UK’s cross-economy climate targets, and directly supports the Prime Minister’s mission to accelerate our journey to net zero. Delivering greener transport is also one of the five priorities that my right hon. Friend the Secretary of State for Transport has set out for the Department. This statutory instrument will deliver on our manifesto pledge to secure the UK aviation industry’s long-term future by promoting sustainable aviation fuels. It will impose an annual sustainable aviation fuel obligation on every company that supplies jet fuel over a certain threshold in a specified period. The SI will operate a tradeable certificate scheme, whereby the supplier of SAF is rewarded in proportion to its greenhouse gas emissions reduction.
To be eligible for certificates, the supplied SAF must meet strict sustainability criteria, including that it must be a residual waste or residue-derived biofuel, a recycled carbon fuel, a low-carbon hydrogen fuel or a power-to-liquid fuel. The certificates can be used to discharge a supplier’s obligation or sold to other suppliers. If this statutory instrument is approved, the SAF mandate will take effect on 1 January 2025. The SAF mandate will require 2% of jet fuel to be made from sustainable sources in 2025, 10% in 2030 and 22% in 2040. It is one of the world’s most ambitious frameworks to drive demand for SAF.
A successful and resilient SAF industry will need a range of technologies and feedstocks to meet increasing demand. The SAF mandate drives the diversity of technologies and feedstocks in two main ways. First, we will create space for more advanced fuels by setting a future cap on fuels that will be limited by feedstock supply. Fuels derived from segregated oils and fats are known as hydroprocessed esters and fatty acids. We recognise that HEFA will make an important contribution to meeting the SAF mandate, particularly in the early stages of the mandate. HEFA can contribute 100% of the SAF demand required under the mandate in 2025 and 2026. The cap will then gradually tighten, decreasing to 71% in 2030 and 35% in 2040. The mandate will still allow around 1 million tonnes of HEFA-derived SAF to be supplied each year in the UK from 2035.
Secondly, to accelerate the development of advanced fuels, a specific obligation on suppliers to supply power-to-liquid fuels will be introduced. Power-to-liquid fuels have a lower risk of feedstock competition and other negative environmental impacts. From 2028, the power-to-liquid obligation will be set at 0.2% of total jet fuel demand, increasing to 3.5% in 2040. Fuel suppliers will be able to meet their SAF mandate obligation in three ways: they can supply SAF and earn certificates, buy certificates from others who have supplied fuel, or pay a buy-out price. The buy-out mechanism will apply to both the main obligation and the power-to-liquid obligation, which will operate as a method of compliance if there is insufficient SAF supply in the market. This SI sets out the buy-out prices, which represent a significant incentive to supply SAF to the UK market. They are set at a level that encourages the supply of SAF over the use of the buy-out and set a maximum cost for the scheme, thereby delivering a greenhouse gas emissions reduction at an acceptable cost.
As I have mentioned, for fuel to be eligible for certificates, it must align with strict sustainability criteria and be made from sustainable wastes or residues. SAF produced from food, feed or energy crops will not be allowed. Suppliers must therefore report information to the mandate administrator to demonstrate compliance with the sustainability criteria for each application. The mandate administrator will have the power to not issue certificates if sufficient evidence is not provided. It will also have the power to revoke certificates if inaccurate or fraudulent information is provided, and to issue civil penalties to suppliers for lack of compliance.
The information that fuel suppliers provide must be independently verified before suppliers can apply for SAF certificates. To ensure that the design of the SAF mandate reflects the latest technological and commercial developments on SAF, there will be continuous monitoring of trends, and formal reviews will be conducted and published every five years, with the first review carried out by 2030. To support fuel suppliers, the administration of the SAF mandate is closely aligned with the administration of the renewable transport fuels obligation, which currently obligates suppliers of road fuels in a very similar way.
The Government recognise that sectors such as aviation are vital for achieving economic growth, shaping the future of clean energy and delivering for our communities. The development of the SAF mandate, alongside other priorities such as modernising our airspace, is a key part of this Government’s ambitious and pragmatic approach to decarbonising transport and promoting economic growth, ensuring that the UK continues to lead the way on SAF globally. I commend this order to the House.
The Parliamentary Under-Secretary of State for Transport (Mike Kane)
My goodness, it is a pleasure to see you in the Chair, Madam Deputy Speaker. Congratulations on your election.
It has been a collegiate debate and I am grateful to all the hon. Members who have attended. I am grateful to the Opposition for their support. I say to the hon. Member for Mid Buckinghamshire (Greg Smith) that I am looking forward to a picture on his social media of his SAF-powered Land Rover as he goes canvassing in his constituency—that is a must-see for us all.
Mike Kane
That is good news. The issue has had good cross-party support: when I was in opposition, I supported the Government on it.
In his maiden speech, the hon. Member for Witney (Charlie Maynard), who is no longer in his place, thanked his predecessor, and I put on record my own tribute to the former Member for Witney; he undertook my current role with diligence, care and good humour and I wish him the best for the future.
Really, this legislation was set out by the Labour Government in 2003 in the aviation White Paper, “The Future of Air Transport”, in which we talked about the future of decarbonising aviation for the first time and about bringing in new sustainable fuels.
The shadow Minister had some specific questions. He asked about ticket prices. The Government recognise that SAF will be more expensive than traditional jet fuel, and it is right that the costs, as we have agreed in the past, are borne by the polluters—they will not be borne by the Government. I think the figures are that, by 2030, we expect tickets to be £4 more, which will be a 2% increase, and by 2040, we expect them to be £10 more, which will be a 5.5% increase. Before Mayor Burnham re-regulated the buses in Greater Manchester, a person could fly from Manchester airport to Dublin for £12.99 but they could not cross my conurbation on a bus and change transport providers for that amount of money. The shadow Minister was right to raise that point, but the increase is negligible.
The shadow Minister asked about the future fuel funds. We have seen some great things going on in private industry. In the north-west of England, we see Fulcrum BioEnergy producing sustainable aviation fuel at Ellesmere Port; we see Velocys in the north-east doing it at Immingham—I will come to my hon. Friend the Member for Easington (Grahame Morris) in a minute—and Alpha Air doing it in Teesside. That is really good for the regeneration of post-industrial areas in parts of the north of England.
The shadow Minister talked about power to liquid. Yes, that is the future. In my speech, I set out some ambitious targets that we will have to meet to reduce the HEFA and improve power to liquid. He asked about our ambition. The UK does not want to be at a competitive disadvantage, which is why we have carefully balanced the HEFA cap in a way that recognises that HEFA is, currently, the only commercially available type of SAF, but that does not mean that we cannot go further and faster. I mentioned in my speech that there will be reviews every five years, starting in 2030, so I hope that that satisfies the Opposition. I am grateful for their support in this area.
Let me turn now to my hon. Friend the Member for Easington. I always like to thank him for his contribution to transport debates; he is always in these debates. He is a stalwart when it comes to transport issues and he is really considered. He is right that there are too many anagrams in the field of sustainable aviation fuel. When the Conservatives were in power, they always talked about the bonfire of regulations. Perhaps we should start the bonfire of anagrams. My hon. Friend is not wrong, but we will have to see. He did say that these are good, sustainable industrial jobs in parts of the country where we need them. That is what SAF brings us and that is what the Government are trying to achieve.
I also thank the Liberal Democrats for their support on this issue. We are working with suppliers. I have had roundtable discussions with suppliers, particularly in opposition, and there is more to come in government. I have mentioned some of the companies that we were working with. This is an ambition, but I think that we can go further and faster. The figures that I gave are not set in stone. We should be promoting new technologies, because there are new technologies beyond this area. There is hydrogen battery power. When it comes to UK emissions, would it not be a great day when a Minister can say that there will be no carbon burned in any planes flying internally within the UK? That would be a great place to be.
As a north of England Member, however, I have to disagree with the idea that we should stop people flying because there is a train. That might be fine in an area where there are great, reliable train services, but I invite the hon. Member for Bath (Wera Hobhouse) to come on my Avanti train occasionally to see how unreliable and how poor that service is. We have to keep it in mind that, one day in the future, we will improve the rail services through our great British rail Bill, but at the moment we have absolutely no plans as a Government to stop people flying.
Mike Kane
I thank the hon. Member for his intervention, but I am grateful for small mercies; the Liberal Democrats are supporting this move. I thank the former Minister, the right hon. Member for Basildon and Billericay (Mr Holden) for his time in the Department and in this role.
To my hon. Friend the Member for Exeter (Steve Race), I say very well done. What an excellent and considered maiden speech he made. The personal testimony about his mother and his sister was really poignant. That speech will stand him in good stead. I was, however, a bit perturbed to hear about the former Member for Exeter, who was a passionate advocate of sustainable aviation in this place, whistling the tune to “The Great Escape” while out canvassing. A day probably does not go by in this place without one of us whistling “The Great Escape”. I was once taught by a sage old Whip that most MPs spend their whole life trying to get here and then the rest of the week trying to get away. I say to my hon. Friend the Member for Exeter again that that was a really great, well-considered maiden speech, and I wish him all the very best for his years ahead on these Benches.
That speech was followed by another very well-considered maiden speech from the hon. Member for Newbury (Mr Dillon). I do not think that anyone can beat the fact that he has the home of “The Great British Bake Off” in his constituency. That is amazing and no Member can beat that. When it comes to our beautiful chalk streams such as the ones in Newbury, or to our skies, it is our sacred mission to protect our environment for future generations. That is why we must keep talking about decarbonisation, which is what we are doing here tonight. I say very well done to the hon. Member and I wish him well for the future.
Finally, let me come to the hon. Member for South Basildon and East Thurrock (James McMurdock). I, too, pay tribute to his predecessor, Stephen Metcalfe. My first speech in a Bill Committee up in a dusty corridor was terrible and he wrote me a note saying, “Really well done, Mike”, and I still have that note on my wall today. What a lovely, lovely man he is. I congratulate the hon. Member, who raised the subject of childbirth and early maternal care, which we should come back to a lot more in this House in the future; there is still a lot more to do in that area. He may be a latter-day Wat Tyler, with the peasants’ revolt quote, but on a personal level I hope that there is not a great rising of Reform. However, I wish the hon. Member the best for his career in this place.
I thank Members again for their consideration. For those questions where it has not been possible for me to provide a response today, I ask Members please to let me know and I will write to them. SAF presents a key opportunity to decarbonise UK aviation and secure a long-term future for the sector. These draft regulations demonstrate how we can capitalise on this opportunity. Mandating the use of SAF has the potential to generate significant greenhouse gas savings, and ultimately play a pivotal role in achieving net zero. I commend this order to the house.
Question put and agreed to.
Resolved,
That the draft Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024, which was laid before this House on 24 July, be approved.
Madam Deputy Speaker (Judith Cummins)
We now come to the next item of business. I call the Minister to move the motion.