Sustainable Aviation Fuel Bill (Third sitting)
Thursday 17th July 2025
(1 day, 20 hours ago)
Public Bill CommitteesSustainable Aviation Fuel Bill 2024-26 View all Sustainable Aviation Fuel Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 July 2025 - (17 Jul 2025)
The Committee divided: - Ayes: 3 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 9 - Question accordingly negatived.
The Chair
Will everyone kindly ensure that all electronic devices are switched to silent or, ideally, off? We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped together for debate. A Member who has put their name to the lead amendment in a group is called first; in the case of a stand part debate, the Minister will be called to speak first. Other Members are then free to indicate that they wish to speak in that debate simply by bobbing.
At the end of a debate on a group of amendments, new clauses and schedules, I will call the Member who moved the lead amendment or new clause again. Before they sit down, they will need to indicate whether they wish to withdraw it or to seek a decision. If any Member wishes to press to a vote any other amendment, including grouped new clauses and schedules, they need to let me know. Decisions are taken in the order in which amendments and new clauses fall in the amendment paper. I hope that that explanation is helpful.
Clause 1
Direction to offer revenue certainty contract
Greg Smith (Mid Buckinghamshire) (Con)
I beg to move amendment 3, in clause 1, page 2, line 4, at end insert—
“(4A) The terms under subsection (1)(c) must include a requirement for the producer to consider the longevity of supply and relative environmental impact when prioritising between organic and synthetic derived sustainable aviation fuel solutions.”
Greg Smith
It is a pleasure to serve under your chairmanship, Mr Western. As I have throughout the passage of the Bill, I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests—I am taking a safety-first approach here—and the donation from Nemesis of synthetic road fuel for a constituency surgery tour last year. That is not relevant to sustainable aviation fuel, but I want to be entirely transparent about it, as I have been throughout the passage of the Bill.
Before I speak to amendment 3, a broad comment about all the amendments I will speak to today is that, fundamentally the Opposition are not a million miles from the Government on the Bill. However, as I am sure you expect us to do, Mr Western, it is our job as His Majesty’s loyal Opposition to kick the tyres and ensure that the Bill is as strong and workable as it can be. We share the ambition to decarbonise aviation and ensure that everybody still can fly for pleasure or business, and that businesses can move goods around the world using air freight.
It is in that spirit that I tabled amendment 3, which aims to ensure that the producers that come forward for the various contracts consider the full breadth of the sustainable aviation fuel technologies available. On Tuesday, we heard oral evidence from manufacturers of wholly synthetic, waste-derived and feedstock-derived sustainable aviation fuels. It is important to look at the panoply of fuels in relation to the long-term environmental impact and the practicalities of producing them today.
As I said on Second Reading, my big fear, which led to my tabling the amendment, is that industries might be stood up only to be turned off again in 10 or 20 years, as the technology becomes redundant. For example, in the oral evidence session on Tuesday we almost had a debate about the possible pitfall of there not being a waste supply to create waste-derived sustainable aviation fuel. Many local authorities up and down the land, my own in Buckinghamshire included, are tied up in 10, 20 or even 30-year financial obligations to, for example, the financing of energy for waste incinerators, which in some parts of the country are connected to heat networks. It may therefore not be possible for councils to say simply, “No, we want to move our waste to a equally productive but different form.” Those contracts exist.
The point of the amendment is to ensure that we look through that very clear lens to see which of the technologies available for producing sustainable aviation fuel will have the longevity of supply and relative environmental impact in the long term. From the evidence we heard the other day, it is clear that some technologies are at a different point of development from others, but none is actually that far away.
For example, the evidence we heard from Zero Petroleum was that it is ready to scale a wholly synthetic production facility right now. Of course, that does not happen overnight—it takes some considerable time to build any facility—but the scalability is able to happen right now. The Government should reflect on that point and should not look just at the technologies that are available right here, right now. I would argue that, too often in this country, we look for alignment with the technology that is available today, when that which is only hours, days, weeks or months away may well be better and worth waiting for.
That is the point of the amendment: ensuring that we get this right for the long term, so that we have a supply of sustainable and, I hope, synthetic—entirely man-made from air and water—fuels available for this country, so that we have the liquid hydrocarbons there, available for purchase, using the price mechanism which sits at the heart of the Bill to get production going, so that our aviation sector can continue to flourish and be available for all that wish to use it.
The Parliamentary Under-Secretary of State for Transport (Mike Kane)
It is a pleasure to serve under your chairmanship, Mr Western. We often discuss our bicycles and their technology, but today we have to talk about the revenue certainty mechanism, which I am glad we are doing.
The RCM is part of the Government’s agenda to decarbonise aviation in the United Kingdom. I will address the amendment moved by the hon. Member for Mid Buckinghamshire, but first I put on the record my thanks to him and other Opposition parties for their general support for what we are trying to do in the Bill.
This Government back synthetic power-to-liquid SAF, which is why we have introduced a separate power-to-liquid sub-obligation, the SAF mandate. We have a separate power-to-liquid pot in the advanced fuel fund, which we are funding up to £63 million. Any RCM contracts awarded will be on the basis of the design phase of the project, including technological pathway and feedstock designation. I hope that answers the hon. Member’s worries about redundancy, because the process will evolve.
Making changes to feedstock requirements or fuel type after contracts are awarded would be extremely challenging for producers. Instead, during our contract allocation process, it is for the Government to decide on the right mix of SAF that will be supported under the revenue certainty mechanism. Given that, I ask the hon. Member to withdraw the amendment.
The clause allows the Secretary of State to direct the counterparty to enter into a revenue certainty contract with a SAF producer. The Secretary of State will decide who gets revenue certainty contracts through an allocation process. Making the leap from lab to commercial scale is difficult for SAF producers—we heard that in the evidence sessions on Tuesday. Commercial plants typically cost £600 million to £2 billion, so they need to attract a lot of investment, yet first-of-a-kind plants often struggle to get investment because there is no clear, predictable market price for SAF. The revenue certainty mechanism will address that.
Under the revenue certainty mechanism a SAF producer will enter into a private law contract with a Government-backed counterparty that sets a strike price for SAF. If the producer sells SAF for less than the strike price, the counterparty will pay the difference. If the producer sells it for more than the strike price, it will pay the counterparty. This follows the example of similar schemes in the renewables sector, which showed that a private law contract with a Government-backed counterparty is a rock-solid commitment that will drive investment into projects.
As we heard in our evidence sessions on Tuesday, British SAF producers are ready. They have the tech and the innovation; they just need the final piece of support from the Government to take off. That is why SAF producers, airlines, environmental groups and investors back these measures.
A Government-backed counterparty will enter into the contracts rather than the Secretary of State, because investors value the day-to-day independence of a Government-owned private company and its insulation from political change. The counterparty will also have expertise in contract administration. This follows the model of contracts for difference schemes in other renewables sectors, where the Low Carbon Contracts Company, a Government-owned body, enters into the contracts, rather than the Secretary of State for Energy Security and Net Zero.
When we consulted on how the revenue certainty mechanism should be administered, stakeholders strongly supported having a counterparty. The clause ensures that the Secretary of State can exercise control over how and on what terms the counterparty enters into the revenue certainty contracts. This is consistent with the approach for similar schemes. The Government will set eligibility and assessment criteria for the competition to allocate contracts, which will focus on ensuring value for money, maximising the benefits of UK SAF production, and supporting viable projects. Any restrictions on our ability to decide which projects to allocate contracts to would affect those objectives and jeopardise the whole scheme.
The allocation process and the terms of the contract will need to be consistent with the requirements of the Subsidy Control Act 2022, which makes sure there is oversight of the mechanism by the Competition and Markets Authority through the mandatory referral process. The oversight will ensure that the objectives of the revenue certainty mechanism address the subsidy control principles set out in that Act. This includes ensuring that the scheme addresses an identified market failure, that any funding provided is proportionate to achieve that objective, and that any distortions of competition, investment or trade are minimised effectively.
Clause 2 provides that producers must be notified of a direction made under clause 1 that affects them. This provides transparency and ensures that producers are aware of any directions towards them. It also gives the Secretary of State powers to revoke a direction and its effect, which protects the Government from entering into a contract where a producer has not met the criteria defined during the allocation process due to unexpected circumstances. We need to ensure that the taxpayer and the sector are protected, and this clause ensures that we can remove ourselves from the contract negotiation process if any issues arise.
Clause 3 enables the Secretary of State to make regulations requiring the counterparty to maintain a register and publish the revenue certainty contracts, subject to any necessary redactions. This will ensure transparency by keeping a register of successful applicants and information on specific agreements, and make it clear which SAF producers have received contracts and on what terms. We will also continue to publish information on the volume of SAF supplied under the SAF mandate. These publication requirements will balance transparency and the commercial and confidential nature of contracts and negotiations. We believe that any stronger requirements to publish information may make producers reluctant to enter into negotiations or affect our ability to ensure value for money.
Greg Smith
I accept many of the arguments that the Minister has put forward. I note he acknowledged that, off the back of the evidence sessions on Tuesday, all the current technologies are ready. That is a really important point for the Committee and the whole House to reflect upon as the Bill progresses. There has been something of a narrative from the usual vested interests in the country suggesting that one technology or another is not in the right state to be able to move forward, or to produce sustainable aviation fuel at the scale we need as a country. It is very welcome that the Minister acknowledged in his remarks that the technologies are already to scale, whether the fuel is HEFA-derived, waste-derived or entirely synthetic following the Fischer-Tropsch process at large.
Mike Kane
Clause 4 enables the Secretary of State to designate a counterparty for the revenue certainty mechanism. It also sets out that the counterparty must be a company wholly owned by the Government. There are several reasons for doing that. First, a Government-owned counterparty will be highly creditworthy, meaning that producers will find it easier to get cheaper financing, so their costs will be lower and the SAF they produce cheaper.
Secondly, the counterparty will have day-to-day operational independence, giving investors confidence that the scheme will not be changed or dismantled. This approach follows similar schemes for renewable electricity generation and for hydrogen production and carbon capture. For those reasons, the Low Carbon Contracts Company, a Government-owned private company, acts as the counterparty. The LCCC has significant expertise in delivering similar contracts, and we have worked closely with it when developing the Bill.
The clause also states that the Government-owned counterparty must consent to being designated. In practice, it is very unlikely that the designated counterparty would fail to provide or withdraw its consent, but it is important that there is a theoretical exit option, as the Government cannot force a private entity to undertake actions that may be to its detriment.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Transfer schemes
Question proposed, That the clause stand part of the Bill.
Mike Kane
Clause 5 enables the Secretary of State to make the scheme transferring the property rights or liability of a company whose designation has been revoked to the new designated counterparty. The power might be needed if it is no longer appropriate for the designated counterparty to continue its current role. The clause will give the Secretary of State the power to act quickly to avoid any disruption to the revenue certainty mechanism, including to existing revenue certainty contracts or negotiations.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Levy on suppliers
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 7 to 9 stand part.
New clause 2—Review of Sustainable Aviation Fuel Levy Impact—
“(1) The Secretary of State must, within twelve months starting on the day on which Regulations are made under section 6 of this Act, publish and lay before Parliament a report which reviews the impact of those Regulations on the sustainable aviation fuel industry in the UK.
(2) The report under subsection (1) must include, but is not limited to—
(a) an assessment of the impact of the levy on—
(i) demand for sustainable aviation fuel (‘SAF’) in the United Kingdom, with particular regard to whether the levy has increased production of and demand for SAF in such a way as meets SAF Mandate obligations; and
(ii) demand and production of UK produced SAF compared to non-domestic production;
(b) an analysis of any beneficial impact of Regulations made under section 6 of this Act as opposed to projections of benefits of using alternative revenue streams to fund the revenue certainty mechanism, including but not limited to, aviation industry contributions to the UK Emissions Trading Scheme; and
(c) recommendations for any further actions or policy adjustments that may be required based on the findings of the review.
(3) When carrying out a review under this section the Secretary of State must consult relevant stakeholders, including but not limited to—
(a) aviation fuel suppliers,
(b) sustainable aviation fuel producers,
(c) airlines,
(d) consumer representatives, and
(e) environmental groups.
(4) In this section, ‘SAF Mandate’ means an obligation imposed on a provider of SAF under the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.”
This new clause would require the Secretary of State to carry out a review of the effect of the introduction of the levy; sets out things the review must consider; and stakeholders the Secretary of State must consult during the review.
New clause 6—Review of International Alignment of Sustainable Aviation Fuel Support under this Act with schemes in the ECAA—
“(1) Within twelve months of the day on which this Act is passed, the Secretary of State must publish and lay before Parliament a report detailing the degree to which the levy imposed under section 6 and the revenue certainty mechanism established under this Act aligns with relevant policies and support schemes for sustainable aviation fuel in the European Common Aviation Area (ECAA).
(2) The report required under subsection (1) must include, but is not limited to—
(a) an assessment of the current level of alignment of the levy and the revenue certainty mechanism with ECAA policies and support schemes concerning sustainable aviation fuel; and
(b) recommendations for specific steps or policy adjustments that may be required to increase alignment between aviation in the United Kingdom and the ECAA, where such alignment would be beneficial for the United Kingdom's sustainable aviation fuel industry.”
This new clause requires the Secretary of State to publish a report within twelve months, assessing the alignment of the Sustainable Aviation Fuel levy and revenue certainty mechanism with the European Common Aviation Area.
Mike Kane
Clause 6 enables the Secretary of State to introduce, through regulations, a levy on aviation fuel suppliers to meet the costs of payments made by the counterparty to SAF producers and to cover the counterparty’s administrative costs. We plan to fund the revenue certainty mechanism through a levy on industry because it is right that the costs of decarbonising air travel are borne by the aviation sector rather than the taxpayer. We are levying aviation fuel suppliers because placing the levy higher up the supply chain spreads costs across the sector and reduces administrative burdens, and because aviation fuel suppliers will benefit from the greater volumes and lower prices for SAF that the revenue certainty mechanism will create.
Broadly, if the counterparty has incurred costs in a set period, we will cover those costs by levying aviation fuel suppliers based on their share of the fossil fuel market during that period. We are continuing to work closely with industry on the details of how the levy will operate. This approach is in line with the approach of other contracts-for-difference-style schemes, such as in the renewable electricity sector where there is a levy on electricity suppliers. The clause will also ensure that the counterparty’s obligations and activities in respect to the levy are appropriately regulated. I assure Members that the regulations under this clause will be subject to consultation and the affirmative parliamentary procedure, so there will be further opportunities for scrutiny in this area.
Clause 7 enables the levy regulations to require a person who is liable to pay the levy to provide financial collateral to the counterparty. This acts as a failsafe if there is cause for concern about non-payment. It ensures that if a levied party does not make a payment, the counterparty can take any owed money through the collateral. Without this power, there is a risk that non-payments to the counterparty lead to the Government needing to provide financial assistance to ensure that the counterparty can make payments under the revenue certainty mechanism contracts.
Clause 8 enables the levy regulations to include provisions to ensure that the levy is administered efficiently. It allows the Secretary of State to confer statutory functions on the counterparty, such as collecting levy payments and enforcing regulations. It is vital that the counterparty has the powers and functions it needs to operate efficiently and effectively.
Clause 9 will allow us to make regulations on who will calculate matters relating to the levy, and how—for example, how levy payments should be calculated and who is responsible for doing so. It ensures that calculations are made in an appropriate way by people who are qualified to do so. The regulations made under this clause will be subject to consultation and the affirmative procedure.
Mr Paul Kohler (Wimbledon) (LD)
I rise to speak on clause 6 and new clause 6. As we have heard, clause 6 would create a levy on fuel producers. While I do not necessarily believe that to be the wrong approach, as with much of the Bill, the devil will be in the detail that is not available for us to scrutinise here, for obvious reasons. As my hon. Friend the Member for Sutton and Cheam will make clear, there may be unintended consequences if the regulations are not designed correctly.
In my opinion, leaving much of the mechanism to a later date is not necessarily a bad thing—I agree with the flexibility that is being put in place. With a new, emerging technology and industry, ensuring that the Government’s hands are not tied at this early stage is a strength, not a weakness. That notwithstanding, some assurances should be given about how the mechanism will be designed, and how the potential flaws raised in the written evidence received by the Committee will be sidestepped. I point in particular to the written evidence from Valero.
Clause 6(3) implies that the levy will be based on criteria relating to the historical market share of fuel suppliers. That has been raised by those in the industry as potentially having unintended consequences. As I raised yesterday with the Minister, who I am not convinced gave me the clearest of answers, there have been worries that it may allow new market entrants not to pay any levy, as they will not have had a previous market share. Will he commit to ensuring that the levy regulations will account for such obvious loopholes?
It is clear that the challenge of decarbonisation, both in aviation and beyond, is great and will not be solved without collaboration with our closest international partners. I therefore tabled new clause 6, which would require the Government to review the differences between our approach to sustainable aviation fuel and that of our European partners in the European common aviation area. With 71% of international air passengers at UK airports travelling to or from Europe, it seems sensible that we should strive to be in broad alignment with Europe with regard to SAF.
I appreciate that there may be differences: in the case of the early part of our SAF mandate, we are going further and faster than the ECAA, but our European partners may accelerate beyond our thresholds later on. However, we believe it is important to remain mindful of what our partners across Europe are doing in an industry that has international competition at its very heart. The new clause would ensure that the Government are fully aware of differences in policy, and alive to any unintended consequences or differences that the Bill could result in for those in the aviation industry. We think that would be helpful.
I would welcome the Minister’s observations on both the mechanism that we have suggested and the broader issue of alignment with our European partners. This is, of course, a probing clause. Can the Minister assure the Committee that the Government will keep a watching brief on what the ECAA are doing with regard to SAF from here on?
Greg Smith
I will make one or two brief comments on the new clauses that have been tabled by the Liberal Democrat members of the Committee. The official Opposition have some sympathy with new clause 2. It is always sensible with any new legislation to ensure, within a reasonable timeframe, that it is doing what it was meant to do. We can all debate things when they are a new idea in Committee and in the House, and on paper they might seem as though they are going to be all fine and rosy, but of course we can never predict that with 100% certainty. The review that new clause 2 would bake into the Bill—we can all do the parliamentary arithmetic; it will become an Act at some point in the near future—seems fundamentally sensible.
I understand where the Liberal Democrat spokesman, the hon. Member for Wimbledon, is coming from with new clause 6, because of course by definition aviation is a global industry. By practicality, the vast majority of flights leaving these shores are going to other countries. I therefore understand why the hon. Gentleman would seek a degree of co-operation on the fuel that airlines leaving UK airports and landing in other countries will have to refuel with. Those airlines will have to use the fuel that is available in France, the United States of America, Australia, India or anywhere else. That level of co-operation is important.
I would merely push back a little in arguing that we need to keep a careful eye on not just the European area; it needs to go much further than that. An enormous number of UK aircraft will be refuelling in countries all over the world. It is about trying to get that certainty of supply of a level of fuel that aligns with what we are setting down as our values—the blends that we, as the United Kingdom of Great Britain and Northern Ireland, have baked into the SAF mandate.
The other side of the coin to the Bill is that we should seek to use our influence abroad to achieve things in other countries. We will probably be unable to do so in many of them, but it does not hurt to have that overview and ambition to be the world leaders on sustainable aviation fuel, and to see whether we can encourage others to follow our lead.
Luke Taylor (Sutton and Cheam) (LD)
I rise very briefly to speak in favour of new clause 2, which I have tabled. Generally, the intent was to provide a check-in and reporting mechanism for the success of the Bill. We are all in favour of its objectives; I think that it is the care, and the attention to understanding how it is progressing, that is needed. I therefore ask the Minister what measures will be taken by the Government to achieve the aims of the new clause. Will that be through the jet zero taskforce, or will there be another mechanism for us to understand and monitor the progress and success of these measures? I would be interested to hear his response on how that might be done.
Mike Kane
I thank hon. Members for their contributions. Let me start by addressing the point made by the Opposition spokesperson, the hon. Member for Mid Buckinghamshire, about the overview and ambition of this legislation. We are the first legislature in the world to attempt to create this revenue certainty mechanism. The SAF mandate was a key commitment in our election manifesto last July, and the eyes of the world, as some of our witnesses said the other day, are on us doing this work, because people are following our lead. I therefore want to bake in the competitive advantage of being ahead of the game in this area, and being a world leader in this area too.
Chris Vince (Harlow) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Western. The Minister talks about all eyes from across the world being on the Bill. I must declare an interest, because I have an international airport on the very edge of my constituency, which obviously serves Harlow and where people from Harlow are employed. It is the industry itself that is really looking at this debate, and it was very clear from Tuesday’s evidence that the industry, particularly airports such as Stansted and Heathrow, are in favour of the Bill and moving it forward as quickly as we can.
Mike Kane
My hon. Friend is a doughty campaigner for Stansted airport, which is near his constituency. Stansted is part of Manchester Airports Group Ltd, or MAG, which I know is extraordinarily keen—along with other airports, AirportsUK, airlines and nearly all the other people who gave evidence—that we pass this legislation.
Coming back to the Bill, new clause 2, which was tabled by the hon. Member for Sutton and Cheam, would make it a requirement to carry out a review of the impact of levy regulations on sustainable fuels and the industry in the UK 12 months after they are introduced. The levy regulations will not have a significant impact in the 12 months after they are made. Contract payments will form the majority of levied costs. However, contracts need to be negotiated and signed, plants built, and SAF produced and sold before costs are incurred, which is very unlikely to happen in the first 12 months. Also, review clauses are commonly included in secondary legislation and we do not need separate powers in the Bill to include them in the levy regulations. The levy regulations will be subject to the affirmative procedure, which will allow Members of both Houses to scrutinise them. Given that, I ask the hon. Member for Sutton and Cheam not to press the new clause when we come to it later.
I turn to new clause 6, which was tabled by the hon. Member for Wimbledon. I understand his concerns about the effectiveness of the SAF revenue certainty mechanism and how our policy aligns with the ECAA. I assure him that the UK’s overall SAF framework and requirements have many similarities to those of the EU, generally allowing the same certification schemes to be used, reducing administrative burden and minimising market access barriers. We actively monitor the SAF market including policies elsewhere in the world, just as the world is monitoring this Bill, to ensure that we provide the right level of support to the sector.
As I have said, I am proud that we will be the first country in the world to introduce a dedicated SAF revenue certainty mechanism. Alongside the implementation of the SAF mandate from 1 January 2025, we are leading the way in having clear and effective policies, grounded in legislation, that address the demand and supply of SAF. International Governments and stakeholders frequently point to the UK as an example to emulate, based on our forward-leaning and comprehensive SAF policy framework.
The UK plays a key role in international discourse on SAF and has cultivated strong bilateral relationships on SAF with countries worldwide. The UK promotes co-ordinated international action on aviation emissions through the International Civil Aviation Organisation. Given the active measures that we have in place, I ask the hon. Gentlemen not to press the new clause to a vote.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clauses 7 to 9 ordered to stand part of the Bill.
The Chair
I remind Members that the order of decisions follows the order in which amendments and new clauses appear on the amendment paper. Therefore, although we have also just debated new clauses 2 and 6, decisions on new clauses are taken after decisions on existing clauses, amendments to those clauses and schedules. There will be an opportunity for a decision on them later.
Clause 10
Payment of surpluses to levy payers
Question proposed, That the clause stand part of the Bill.
Mike Kane
Clause 10 enables the Secretary of State to make regulations to ensure that a designated counterparty pays any surplus it collects to the people who have paid the levy. There would be a surplus when a SAF producer sells SAF for above the strike price, and therefore makes payments to the counterparty. In that situation, it is right that the surplus is paid to those who pay the levy. It provides some potential upside to levied parties and will help to balance the flows of payments as the price of SAF fluctuates over time.
The clause also allows the Secretary of State to make regulations requiring someone who receives a surplus payment to pass it on to their customers. This is because we expect levied parties to pass on the costs of the levy to their customers, such as airlines and air freight operators, and it is therefore right that any surplus is also passed on.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Financial penalties
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendment 2.
The schedule.
Mike Kane
Clause 11 creates new civil penalties that are necessary to secure the payment of the levy and compliance with regulations. Any penalty will be limited to a maximum of the lesser of £100,000 or 10% of the turnover being penalised. This penalty can be imposed for failing to pay the levy and failing to pass on the benefits of surplus payments to customers in accordance with the regulations under clause 10(1)(b). This penalty is consistent with similar penalties under the SAF mandate. The clause also allows these penalties to be adjusted in line with inflation.
The schedule sets out the procedure for notices, appeals and recovery of penalties. It ensures that anyone who has to pay the penalty will be told why, how much they have to pay, their right to appeal and the deadline for making any payment.
I will also speak to Government amendment 2, which inserts “or Northern Ireland” after “Wales” in the schedule. The amendment will ensure that an unpaid penalty is recoverable in Northern Ireland as if it were payable under an order of the county court, as is the case in England and Wales. The amendment corrects a drafting error and does not reflect a change in policy intention.
Greg Smith
I do not have a great deal to say on the provisions, other than that it is always regrettable when Northern Ireland is forgotten and has to be inserted via an amendment.
On the clause, I have no problem with financial penalties for failure to comply with the law, so I am not attacking the clause per se, but what will the appeal mechanism be? When it comes to law that involves financial penalties, a company will often have a legitimate case—force majeure, or whatever it might be—as to why it has been unable to comply with the letter of the law, and it is always important, as a matter of natural justice, for an appeal mechanism to be in place. Does the Minister intend to enable appeals where such financial penalties are given?
Mike Kane
I am grateful to the hon. Member. Because this will be a matter between the counterparty and the companies invited to bid, it will be subject to normal contract law, but I am happy to write to him on the matter of appeals more specifically.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Schedule
Financial penalties for failure to comply with levy regulations
Amendment made: 2, in the schedule, page 10, line 28, after “Wales” insert “or Northern Ireland”.—(Mike Kane.)
This amendment ensures that an unpaid penalty is recoverable in Northern Ireland as if it were payable under an order of the county court, as is the case in England and Wales.
Schedule, as amended, agreed to.
Clause 12
Power to direct designated counterparty
Greg Smith
I beg to move amendment 4, in clause 12, page 7, line 12, at end insert—
“(3) A direction given under subsection (1) must include a requirement for the designated counterparty to report on—
(a) the impact of any revenue certainty contract on the fluctuation of the average price to consumers of an airfare over the proceeding 12 month period;
(b) a projection of the expected impact of any revenue certainty contract on the fluctuation of the average price to consumers of an airfare over the following five year period.
(4) A report under paragraph (a) must be made within one year of the date of Royal Assent to this Act and annually thereafter.
(5) The Secretary of State must lay a report made under paragraph (a) before Parliament.”
Amendment 4 focuses on UK IP, which I alluded to earlier. Given that we have been told throughout the passage of the Bill, and the Opposition agree, that we need to underpin domestic sovereign fuel security, there should be a provision in the Bill that gives preference to UK IP and UK producers—not just those that might happen to make the fuel here, but those that are using UK-derived innovation and technology to do so. Of course, we exist in a global marketplace and are often reliant on imports, but it would be regrettable if the Bill enabled the standing-up of industries that are based entirely on foreign-owned technology. That is what the amendment seeks to correct.
The Chair
Order. Minister, given that the Opposition spokesperson spoke to another amendment, perhaps we could allow him the opportunity to say a few words on amendment 4.
Greg Smith
I apologise, Mr Western, for getting ahead of myself. I went slightly cross-eyed as I looked down at my notes, and have two amendments back to back. I stand by what I said, and maybe we can save some time later as I have already made my comments on amendment 5. We all make mistakes; we are all human.
Turning to amendment 4, then, much has been made of the cost to the end user. We had a good debate on Second Reading in which all agreed, across the House and all political parties, that the challenge, as we decarbonise and move to net zero, is that everyone must still be able to do the things that they want to do—to fly and move goods around—but in a cleaner, decarbonised, and net zero way. We have been the first in the western world to legislate for that by 2050.
When I heard the Minister say—in both the private briefings that he gave before the Bill was introduced to the House, for which I am grateful, and then on the Floor of the House on Second Reading—that the net impact would be only plus or minus £1.50 on an ultimate airfare, I was delighted. I took him at his word. I thought, “Fantastic. That is something that consumers will surely be happy with”—particularly if it is on the minus £1.50 side of the equation. Yet, in the evidence sessions on Tuesday, I am not sure that a single witness was willing to put their own name to that plus or minus £1.50 fluctuation. Some witnesses went even further by saying they thought that was—I hesitate to use this word—a conservative estimate.
The point of amendment 4 is to try to ensure that we get something baked into the Bill that acknowledges the ultimate potential cost to the end user: the consumer, the person, any of our constituents who wish to book a flight to go on holiday or on a business trip.
Graeme Downie (Dunfermline and Dollar) (Lab)
The hon. Member reflects the concern that we all have to make sure that our constituents can continue to go on holiday, and that trade can continue to happen, but does he agree that, in addition to some of the information that we heard, there was also a concern about the cost of doing nothing? That could actually cause costs to go much higher than any estimate given by anyone in the evidence sessions, therefore we should proceed as quickly as we can.
Greg Smith
I am grateful to the hon. Gentleman for that point; I do not think that we are misaligned on that argument. Yes, we need to move to sustainable aviation fuel, preferably at the better end of that technology. It is this very Bill that will ensure that we can, as a country, move faster towards that aim with—I have used the phrase before—the other side of the coin of the Bill, which is the SAF mandate. When the Conservatives were in government, we were heading towards that, but I fully acknowledge that it is the new Government who have introduced it to the House. I totally agree with the hon. Gentleman that there is a cost to doing nothing, but it is incumbent on all of us on behalf of our constituents, and the businesses that operate within our constituencies and require the use of air freight, to ensure that we are not legislating for something that will put an undue additional financial burden on them.
The point of the amendment is to embrace the Minister’s commitments at the Dispatch Box on Second Reading, and in the briefings beforehand—which, I repeat, I was grateful to him for putting on—and to ensure that as the Committee potentially allows the Bill to go on to Report, and further through the parliamentary process, we are confident in those numbers, and about the impact that we, collectively, as a Committee and ultimately as Members of Parliament, are putting on the statute book. It is in that spirit that the amendment has been put forward. I ask the Minister to ensure that the projections he has reported from the Dispatch Box come to fruition, so we do not end up looking back in probably a few years’ time, as opposed to a few months’ time, and discovering that the plus or minus £1.50 was much worse than that, as some of the witnesses we heard from on Tuesday suggested.
The Chair
As the Opposition spokesperson has spoken to both amendments, I invite Members to speak to amendment 4, and to amendment 5, in clause 12, page 7, line 12, at end insert—
“(3) A direction given under subsection (1) must include a requirement for the designated counterparty, where a venue certainty contract would result in a new production facility, to prioritise entering into any such contracts with producers that will use UK owned technologies in that facility.”
Mr Kohler
I have a brief question. When the Minister talked about the effect of £1.50 either way on airfares, was he talking about the effect of just the levy or the effect of the mandate as well? As we heard on Tuesday, the mandate will have far more of an effect on prices than the levy, given the premium that is likely to be repayable on SAF.
Mike Kane
Well done to the hon. Member for Mid Buckinghamshire; he pulled it out of the fire there with the amendments. He is right that we are putting SAF on the statute book. We should have put it on the statute book years ago, which is why it was in our manifesto and we are doing the right thing now. I will address the questions about £1.50 in a moment.
Amendment 4 tabled by the hon. Member would put a requirement on the counterparty to report on the effect of the introduction of the revenue certainty mechanism on air travel prices. Once operating, the revenue certainty mechanism is expected to make minimal changes to fares with an average ticket price, as we have said, decreasing or increasing by up to £1.50 on average per year. I remind him that that is less than a bus fare on Andy Burnham’s Bee Network in Greater Manchester where I live. I would offer to pay it, but it is quite cumulative over time and I do not have that type of resource—I am happy to fund the hon. Member for one year at £1.50 if he so wishes. That figure comes from a DFT analysis.
The costs of the scheme and the impact on ticket prices will be kept under continual review. The Government will also set the approach to the allocation of contracts, the number of contracts awarded and the scale of support they provide. Those controls will help to minimise any potential impacts on airfares. The costs of the scheme will also be reported in the DFT annual report and accounts in the usual way. I therefore ask the hon. Member to withdraw his amendment.
The hon. Member for Wimbledon asked whether the figure refers to the mandate or the revenue certainty mechanism. I assure him that it is just the revenue certainty mechanism.
Greg Smith
I am grateful to you for rescuing me, Mr Western, by grouping both amendments in the same debate. I made a mistake, so I put my hands up to that.
I am grateful for the Minister’s response. I will not press the matter to a vote but, as with the earlier amendment, when projections are made I think it is incumbent on the Government to find a way of giving comfort to all the travelling public and all those businesses that use air freight that the provisions of the Bill—I fully accept the comments of the hon. Member for Wimbledon on the wider effects of the mandate—will not produce a much higher cost to them when they go on their holidays or business trips or move goods around the world.
Ahead of Report, will the Minister and his team in the Department look at ways to kick the tyres on those presumptions—in particular given the evidence we heard on Tuesday—and check that they are robust as possible and have the confidence of industry? I would be grateful for that, and we may well return to it on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mike Kane
The clause gives the Secretary of State the ability to control some of the activities of the designated counterparty through directions. The counterparty will maintain day-to-day independence and the power is limited to the functions conferred on the counterparty under or by virtue of the Bill. However, it is important that the Secretary of State can direct the counterparty on the exercise of its functions to ensure that the revenue certainty mechanism operates effectively and as intended. Any direction by the Secretary of State must also be published to ensure transparency.
Clause 13 requires the counterparty to provide information or advice to the Secretary of State about the revenue certainty mechanism. That ensures that the Secretary of State can get the information and advice needed to understand how the scheme is working in practice, and to ensure that the revenue certainty contracts and levy are working effectively.
Question put and agreed to.
Clause 12 accordingly ordered to stand part of the Bill.
Clause 13 ordered to stand part of the Bill.
Clause 14
Financial assistance for designated counterparty
Question proposed, That the clause stand part of the Bill.
Mike Kane
The clause will enable the Secretary of State to provide financial assistance to the counterparty to ensure that it can always meet its liabilities under the revenue certainty contracts. The intention is that the counterparty will be funded through the levy payments from suppliers of aviation fuel in the UK. The power is a back-up to assure SAF producers and investors that the counterparty will always be able to meet its obligations.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
New Clause 1
Black bin waste
“(1) The Secretary of State must, within two months of the passing of this Act, publish and lay before Parliament, guidance on the opportunities available for local authorities in England to support the production of Sustainable Aviation Fuel through the use of black bin waste.
(2) Within six months of the publication of guidance under subsection (1) the Secretary of State may, by regulation, require local authorities in England to prioritise the creation of sustainable fuel in the disposal of their black bin waste unless the local authority deems it to be significantly financially disadvantageous to do so.
(3) Regulations under subsection (2) must define the meaning of ‘significantly financially disadvantageous’ for the purposes of this section.
(4) Regulations made under subsection (2) are subject to the affirmative resolution procedure.”—(Luke Taylor.)
Brought up, and read the First time.
Luke Taylor
I beg to move, That the clause be read a Second time.
I move the new clause simply to discuss some of the interesting issues that it raises. In the evidence session on Tuesday, we heard about the opportunities for the diversion of residual municipal waste into the production of second-generation SAF. We have heard from many in Committee this morning about the challenges to do with the incineration of waste and the impact of that on our communities, but a lot of us maintain, or agree, that that is the least worst option. The opportunity here is that there is a slightly less worse option for the disposal of that remaining municipal waste.
New clause 1 aims to give the Minister a bit of a nudge towards examining the opportunities and how the waste hierarchy could reflect how that waste is potentially reused. There are also broader questions not only about the residual waste but about plastics recycling, such as whether there is an opportunity to incorporate changes in the way that plastics recycling is prioritised, and whether it is a suitable feedstuff for SAF. New clause 1 is an opportunity to raise some of those questions, and for the Minister to give some assurances and responses on them.
Mike Kane
I think the hon. Member for Sutton and Cheam has a point, in that the public will be interested in how this is made. Advanced-waste SAF, including SAF made from non-recyclable municipal solid waste, is a key part of the SAF industry. We have backed and invested in this kind of SAF in our grant funding programme, the advanced fuels fund, as I mentioned earlier, and we are backing it again in this Bill, providing the revenue certainty that advanced waste-based SAF producers need to attract investment and scale up fast.
The hon. Member’s new clause, however, is not what the SAF producers need, and would place more burdens on our local authorities. There is nothing preventing local authorities from using their municipal solid waste for SAF production if they believe that it provides the best value for money and environmental outcomes. We heard in evidence the other day, when waste actually has a value to it, is it waste any more?
However, municipal waste often needs to be pre-treated and processed before it is used in SAF production. This often means that SAF producers look to buy their waste from processors, rather than from local authorities. We do not believe that access to municipal solid waste is currently a significant barrier for UK SAF production, and it is likely that discussions on the availability of municipal solid waste would happen once a project is close to taking a financial investment decision. I ask the hon. Member to withdraw his new clause.
Luke Taylor
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 3
Review of the supply of bioethanol for use in sustainable aviation fuel production
“(1) The Secretary of State must, within six months of the passing of this Act, publish and lay before Parliament a report reviewing measures to encourage the supply of materials for Sustainable Aviation Fuel.
(2) The report under subsection (1) must include—
(a) an assessment of the impact of the closure of bioethanol plants on the ability to encourage overall increases in sustainable aviation fuel production;
(b) options for mitigating any adverse impacts on the availability of supply of sustainable aviation fuel by the closure of bioethanol plants;
(c) recommendations for any necessary Government action to promote a stable supply of bioethanol for Sustainable Aviation Fuel.”—(Mr Kohler.)
This new clause would require the Secretary of State to lay before Parliament a report outlining measures to encourage the supply of materials for SAFs, including considering the impact of bioethanol plant closures on encouragement to increase supply.
Brought up, and read the First time.
Mr Kohler
I beg to move, That the clause be read a Second time.
New clause 3 would require the Secretary of State to publish a report within six months of the Act’s passing, reviewing how we can better secure the supply of bioethanol for use in sustainable aviation fuel production.
The success of the UK’s sustainable aviation fuel ambitions will rely not only on bold targets and optimistic projections, but on the reliable availability of the resources needed for manufacturing. Bioethanol will be a resource that can be part of the manufacturing process for SAF, and help support a low-carbon industry in the UK, yet while the Government continue to laud their commitment to green aviation, they have stood by while domestic bioethanol production is at risk from Donald Trump’s bully boy tactics.
Since the signing of the UK-US trade deal, the owners of two UK bioethanol plants based in Hull and Teesside have threatened to close the sites as the trade agreement fundamentally undermines their business position. This Government have given US ethanol producers a 1.4 billion litre tariff-free quota—equivalent to the UK’s entire annual demand for the product—and completely undercut the industry, making the UK vulnerable to the whims of, to put it at its mildest, the mercurial Trump Administration.
The new clause would require the Government to assess the impact of plant closures on SAF production potential, set out options to mitigate supply risks and, crucially, recommend the policy steps needed to promote a stable domestic supply of bioethanol. We cannot afford to leave this to chance, or to the good will of a US President who, as we all know, simply cannot be trusted. If the Government are serious about scaling up SAF production, they must ensure that the raw materials are available. That means a proper strategy to support and stabilise the UK’s bioethanol sector.
Greg Smith
I absolutely understand and appreciate where the hon. Gentleman is coming from with this new clause. This topic came up in the oral evidence sessions and on Second Reading.
It is of great concern that the slightly lower tariffs deal done with the United States of America has clearly and materially threatened UK production of bioethanol, which of course has many uses. Many of us on the petrol station forecourt will have seen the curious E5 and E10 labels on the petrol pumps, which is about the ethanol blended with the regular fossil fuel. Our consumption of it as a country is particularly high.
As we are debating the potential future of bioethanol in sustainable aviation fuel production, it is incumbent upon the Government to reflect, within the scope of the Bill, on how much domestic supply there can be. So much of the Bill is underpinned by sovereign capability and fuel security—a point on which the Opposition and I think the Liberal Democrats are equally aligned on; it is so important—and so surely this new clause must also be important to the Government. I ask the Minister to reflect on that when he responds.
Mike Kane
I am extraordinarily proud that we have a Prime Minister and a Government who are rebuilding the UK’s reputation across the world once again, building trade deals with our closest partners across the planet, whether that be India, America or the recent agreement with the European Union. That is where Britain should be—leading and involved, not on the fringes as we have been for many years.
We are debating sustainable aviation fuel, but this is also about decarbonising the planes that will fly in our skies for generations to come. That US trade deal is zero tariff on aviation technology, which is a huge deal for this country, making it a world leader again in the future.
However, I am worried for the workers and families who have been affected by the trade deal. Ministers and officials, including the Business and Transport Secretaries, have met the companies consistently during this challenging time—those companies were struggling regardless of the time—to understand their concerns, discuss what action could be taken and to support them, because that is what good Governments do. The Department for Business and Trade is in discussions on requests for support from the UK bioethanol sector. As a responsible Government, there is a series of strict criteria and well-established due diligence processes that we must follow to consider such requests.
While I would like to see a thriving UK bioethanol sector, we would not expect a significant impact on the SAF mandate if there were to be a reduction in that sector’s production. That is because the UK bioethanol plants use crops that are not eligible for the SAF mandate. The SAF mandate, which is the framework for the supply of SAF in the UK, sets targets based on the availability of waste feedstocks rather than crop feedstocks. The SAF mandate is a global scheme and can use fuels from all around the world, providing an opportunity to draw upon a diverse pool of feedstocks.
However, we also want to encourage a UK industry. In January, the Chancellor announced £63 million of funding this year to help grow UK supply of SAF through the advanced fuels fund, which has been further extended in the recent Budget through to 2029-30. The SAF revenue certainty mechanism—the subject of the Bill—will also boost investment in UK SAF production.
Finally, under the SAF mandate, a formal review of the whole scheme has been built into the legislation, with the first review taking place in 2030. That will provide an opportunity to make an assessment on the availability of SAF supply. The above steps demonstrate how many of the recommendations set out in the hon. Member for Wimbledon’s new clause are already being undertaken by the Government. Given that, I ask him to withdraw it.
The Chair
With this it will be convenient to discuss new clause 5—Increasing greenhouse gas saving potential of sustainable aviation fuel—
“(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report which sets out a strategy for increasing the greenhouse gas emission saving resulting from the promotion of sustainable aviation fuel production in the United Kingdom.
(2) The report required under subsection (1) must include, but not be limited to—
(a) proposals for incentivising the research and development of Sustainable Aviation Fuels that maximise greenhouse gas emission savings;
(b) an assessment of, and recommendations for increases to, the minimum required greenhouse gas emission reduction in order for a Sustainable Aviation Fuel to be issued a SAF certificate;
(c) an assessment of, and recommendations for increases to, minimum ratios for renewable content in blended sustainable aviation fuels, for the purpose of more quickly reducing greenhouse gas emissions.
(3) Twelve months after the publication of the report required under subsection (1) and within every twelve months thereafter, the Secretary of State must publish a further report which—
(a) sets out progress against the strategy, and
(b) makes any necessary adjustments to the strategy as a result of developments in the sustainable aviation fuel industry.
(4) In this section, ‘SAF certificate’ has the meaning given in article 2 of the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.”
Mr Kohler
As we are all aware, aviation is one of the most challenging sectors to decarbonise and one of the fastest growing sources of emissions worldwide. While other sectors benefit from mature, low-carbon technologies, aviation remains heavily dependent on fossil jet fuel, and is one of the few industries where there is not an alternative available already. The Bill will attempt to grow the alternative industry, but it is clear that its provisions are only the first steps on a long journey to reach net zero by 2050 in aviation. If we are serious about hitting net zero by 2050, we must be equally serious about tracking our progress and course-correcting where necessary.
New clause 4 would require the Secretary of State to conduct an annual review of what contribution the revenue certainty mechanism is making in helping the UK achieve its target of net zero aviation emissions by 2050. It is a simple step that would help us to understand further the impact our SAF policy is having on our net zero targets, and whether other changes or alterations will be needed in the jet zero plan. It would allow us to ensure we understand, year by year, whether we are making the progress the science demands. Are SAF volumes increasing fast enough? Are emissions falling across domestic and international routes fast enough? Are the technologies we are backing delivering real, verifiable carbon savings? To reach net zero, those are the questions we should ask, and we must ensure that we have the evidence base to do so. The new clause would help provide us with that information as a guard against complacency.
New clause 5 would also contribute to our net zero responsibilities. It would require the Secretary of State to, within six months of the day on which the Bill is passed, publish and lay before a Parliament a report that sets out a strategy for increasing greenhouse gas emission savings from SAF production in the UK. It would allow us to understand and ensure that we are implementing new technologies within SAF production. The point of SAF is to reduce the carbon cycle of jet fuel. We should be vigilant in ensuring that anything marked as SAF delivers just that.
New clause 5 consequently sets a minimum standard of the lifetime carbon emissions that can be classed as SAF, and ensures that that is monitored effectively. If we do not embed a culture of accountability, we risk drifting and passing legislation that sounds ambitious but fails to deliver at the pace required. With only 25 years left to decarbonise a sector that today remains overwhelming fossil fuelled, we cannot afford complacency. This Government have rightly set the bold target of net zero aviation by 2050, which the Liberal Democrats support, but targets must be matched with transparent measurement and a willingness to adapt. These new clauses would simply give us the tools to do just that, and I urge Members to support them.
Greg Smith
I understand the argument that the hon. Gentleman is making with new clause 4, but I would argue that it is unnecessary; the whole point of the Bill is to decarbonise aviation. As the Minister said himself, and as I hope the Committee will accept, the Bill was conceived and finds its origins under the last Government, and it was then carried through by this Government, so it is something that we can rightly be proud of on both sides of the House. As we are leading the world on this issue, I am not sure that new clause 4 is necessary.
However, new clause 5 is more interesting, because it goes to the very crux of the debate we had earlier on the various technologies that can produce sustainable aviation fuel in the United Kingdom. It goes without saying that, while all forms of sustainable aviation fuel—as we know it at the moment—are greener than their fossil fuel equivalent, there is significant variation in the greenhouse gas and carbon emissions between using blends or 100% sustainable aviation fuel in an aircraft. The merits of new clause 5 go to the absolute centre of the debate on which of those technologies, or which of those great innovations, can deliver the closest to net zero over the coming years and decades, if not net zero itself.
If new clause 5 were baked into the Bill, and ultimately the Act, it would be interesting to see how it would enable us judge among those different technologies. I have talked in the House many times about the importance of whole-system analysis, which is an analysis not just of the effect while the jet engines are turning and the planes are in the sky, but of the whole impact on greenhouse gas and carbon emissions of manufacturing the fuel and what is done with the waste product afterwards, particularly carbon. New clause 5 would go to the heart of discovering that.
One of the things that we have seen in evidence, and that we have talked before about in the Chamber, is the effect when certain fuels are derived, in part, from atmospheric carbon capture—the carbon emitted post combustion, which comes out of the tailpipe of the aircraft, is the same amount of carbon that is recaptured from the atmosphere to make the next lot of fuel. New clause 5 has the merit of enabling us to command the Government to review that, which is why His Majesty’s Official Opposition have sympathy with it.
Luke Taylor
I rise briefly to press this question to the Minister: if the Government oppose the new clauses, how are they are going to incorporate their intent? I think they probably agree with the intent but are probably just resistant to their being outlined as they are. I ask the Minister to go into as much detail as he can on whether that will happen through the jet zero taskforce or something else.
Mike Kane
A latter day Hilaire Belloc, in my humble opinion. However, on this occasion, the hon. Member for Wimbledon will no doubt know that I disagree with him.
Committee members will be aware that SAF is considered to be essential in achieving net zero for aviation medium and long-haul flights, which account for about 80% of CO2 emissions from aviation. The Government update Parliament and the public regularly on the progress towards net zero targets across the economy, including by laying in Parliament an annual statement of emissions and annual publications of official greenhouse gas emissions statistics. They include granular detail on emissions from all economic sectors, including domestic and international aviation. Furthermore, the Climate Change Committee reports to Parliament each year on progress in reducing emissions, including for transport, and there is a statutory duty on the Government to respond to the points that it raises.
To address the points raised by the hon. Member for Sutton and Cheam, we continue to publish statistics on the volume of SAF supplied each year in the UK and under the SAF mandate. Together, these measures provide a clear picture of progress towards decarbonising aviation, so I would ask the hon. Member for Wimbledon to withdraw his new clause.
Luke Taylor
The Minister has spoken about the tonnage from SAF, but the real question is whether statistics and information will be available on the sources of each of those SAF types, so that we can examine how each of the various streams of SAF production are contributing and also understand the net carbon benefit. He has talked about the carbon production from the burning, but we need to see the detail of the SAF streams to understand the benefits and the progress towards decarbonisation in more detail. Is that something the Government might consider?
Mike Kane
I do not have the answer in front of me, but I commit to providing the hon. Gentleman with an answer in due course. I thought the point he was making was about whether we are being open and transparent across all sectors in the UK in showing how we are decarbonising the aviation sector. [Interruption.] I do now have the answer. Who knew? The miracle of mobile telephony—it will save writing my signature to him with the electronic pen. The SAF mandate and statistics include details of feedstocks and the origin of the SAF. I hope that answers his question, but if he wants more information—we are all keen on this—I would ask him to please keep in touch.
New clause 5, entitled “Increasing greenhouse gas saving potential of sustainable aviation fuel”, was tabled by the hon. Member for Wimbledon. The SAF mandate is the UK’s key policy to decarbonise jet fuel. It does that by securing demand for SAF, by obligating the supply of an increasing amount of SAF in the overall UK aviation fuel mix. The SAF mandate rewards SAF in proportion to the greenhouse gas savings its achieves. That will encourage SAF developers to improve continuously on their greenhouse gas savings. To ensure that the SAF mandate reflects the latest technological and commercial developments, there will be continuous monitoring of trends and the impacts of the mandate. Formal reviews will be conducted and published at least every five years, with a formal review in 2030. The formal reviews will already include certain elements of the new clause, namely the minimum greenhouse gas savings threshold and the minimum targets for supply of SAF. Following the review, there will be an opportunity to update the legislation as needed.
Greg Smith
The central question is whether that review, when it comes, looks at the greenhouse gas savings while the aircraft is in use, or gives a whole-system analysis, from the production and use of the fuel to the benefits of using the by-products, post combustion, to make more fuel. That is an important clarification that we need.
Mike Kane
My kingdom for a chemistry degree! I will let the hon. Gentleman know the answer to his question in due course.
To go back to the point, new clause 5 would duplicate the process already embedded in the SAF mandate legislation. I therefore ask the hon. Member for Wimbledon not to press the new clause.
Mr Kohler
New clause 4 was of course a probing amendment, and the Minister has satisfied most of us that enough will be done to report on our progress towards net zero. I was less convinced by the Minister’s answer to new clause 5. With or without a chemistry degree, the point is a simple one: SAF is green, but some SAF is greener than other SAF. I am not convinced that the Government are yet embracing that or doing enough to work out which SAF should be pushed because it is the most beneficial to the environment. We will press new clause 5 to a Division, but not new clause 4. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 5
Increasing greenhouse gas saving potential of sustainable aviation fuel
“(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report which sets out a strategy for increasing the greenhouse gas emission saving resulting from the promotion of sustainable aviation fuel production in the United Kingdom.
(2) The report required under subsection (1) must include, but not be limited to—
(a) proposals for incentivising the research and development of Sustainable Aviation Fuels that maximise greenhouse gas emission savings;
(b) an assessment of, and recommendations for increases to, the minimum required greenhouse gas emission reduction in order for a Sustainable Aviation Fuel to be issued a SAF certificate;
(c) an assessment of, and recommendations for increases to, minimum ratios for renewable content in blended sustainable aviation fuels, for the purpose of more quickly reducing greenhouse gas emissions.
(3) Twelve months after the publication of the report required under subsection (1) and within every twelve months thereafter, the Secretary of State must publish a further report which—
(a) sets out progress against the strategy, and
(b) makes any necessary adjustments to the strategy as a result of developments in the sustainable aviation fuel industry.
(4) In this section, “SAF certificate” has the meaning given in article 2 of the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.”—(Mr Kohler.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Sustainable Aviation Fuel Bill (Fourth sitting)
Thursday 17th July 2025
(1 day, 20 hours ago)
Public Bill CommitteesSustainable Aviation Fuel Bill 2024-26 View all Sustainable Aviation Fuel Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 July 2025 - (17 Jul 2025)
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
Mr Paul Kohler (Wimbledon) (LD)
I beg to move, That the clause be read a Second time.
If we are serious about meeting our climate obligations and economic ambitions, then transparency, accountability and evidence-led policy must be at the heart of the legislation. The ambition of the Bill to build a whole new industry is to be lauded, but it lacks the level of scrutiny that such a large project entails. The Bill sets a framework, but frameworks alone do not produce fuel. Nor do they deliver jobs, attract investment or lower emissions. We must not content ourselves with well-intentioned ambition. After previous broken promises by—I am sorry to say—the Conservatives—to have five plants up and running by now, we have already seen that ambition alone will not deliver what we need.
To truly build the sustainable aviation fuel industry, we must track progress, identify bottlenecks and act on evidence. That is what the new clause provides. It demands a detailed assessment of SAF production levels, uptake by airlines and investment in infrastructure. Further, it requires the Government to consult widely with a full range of stakeholders, widely enough drawn to include employees and unions, as well as producers, suppliers, environmental experts, academics and, importantly, the communities whose lives will be affected, whether by new plants, changes in aviation demand or environmental impact.
The new clause would ensure that Ministers come back to the House not with warm words but with evidence, consultation and a plan. I urge the Minister to accept it in the spirit in which it is offered—constructive, collaborative and committed to making the legislation truly fit for purpose.
The Parliamentary Under-Secretary of State for Transport (Mike Kane)
I thank the hon. Member for the new clause, which seeks to ensure parliamentary scrutiny and that the SAF revenue certainty mechanism will run effectively. I also thank him for saying that I am full of warm words, because I am.
I agree with the hon. Member that it is important to have measures to assess the impact of the Bill and make necessary recommendations; however, significant developments in the SAF industry are unlikely within the first 12 months after the Bill becomes an Act. We are committed to deliver the revenue certainty mechanism as soon as possible, but it is vital that such complex contracts are considered carefully, with time taken to get them right. That will involve negotiations with potential SAF producers.
I reassure the hon. Member that we are committed to transparency in the Bill. We have committed to publishing details of who receives revenue certainty contracts and on what terms. We will also continue to publish annual data on the volume of SAF supplied under the SAF mandate. I hope that he accepts the explanations in the spirit in which they are given and withdraws his new clause.
Mr Kohler
I am grateful for the Minister’s flattering and sometimes unctuous words. He makes a good point about 12 months not being sufficient time to give such a report, and I acknowledge the assurances that he has given. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 8
Review of the Potential Conversion of Industrial Sites for Sustainable Aviation Fuel Production
“(1) Within twelve months of the day on which this Act is passed, the Secretary of State must lay before Parliament and publish a report into the merits of converting disused oil refineries and other relevant existing industrial sites into facilities for the production of sustainable aviation fuel.
(2) The report required under subsection (1) must include, but is not limited to—
(a) an assessment of the technical and operational feasibility of such conversions;
(b) an evaluation of the economic viability of such conversions;
(c) the cost effectiveness of such conversions compared to new build production facilities, taking into account—
(i) the ability to use existing infrastructure such as tanks and pipelines;
(ii) the complexities of environmental remediation and site preparation.
(iii) the availability and suitability of a skilled workforce within proximity to such sites.
(d) recommendations for government actions to facilitate and incentivise such conversions, where they are deemed beneficial for enhancing the resilience and increasing the domestic production of sustainable aviation fuel industry.
(3) In preparing the report required under subsection (1), the Secretary of State must consult relevant stakeholders, including, but not limited to—
(a) sustainable aviation fuel producers,
(b) representatives of the oil and gas industry and workforce,
(c) environmental organisations,
(d) local authorities, and
(e) academic experts.
(4) The report must be accompanied by a statement from the Secretary of State on how the findings of the report will be addressed through Government action.”—(Mr Kohler.)
This new clause mandates the Secretary of State to publish a report within twelve months, reviewing the merits of converting disused oil refineries and other industrial sites for Sustainable Aviation Fuel production.
Brought up, and read the First time.
Mr Kohler
I beg to move, That the clause be read a Second time.
New clause 8 calls on the Secretary of State to publish a report within 12 months on the merits of converting disused oil refineries and other existing industrial sites into sustainable aviation fuel production facilities—and there is an opportunity to have such a report early on. Many Members present, including, notably, the hon. Member for Falkirk, have spoken about the strength and possibilities of SAF to reinvigorate and reuse industrial sites.
The UK has several disused oil refineries and industrial sites, which already possess critical infrastructure—storage tanks, pipelines, grid connections—and are often located near skilled workforces familiar with complex industrial processes. That presents a real opportunity to repurpose existing assets, accelerating the deployment of SAF production, supporting local economies, and reducing the cost compared with greenfield sites, but we must proceed with a clear understanding of the technical feasibility, operational requirements and environmental considerations for such conversions.
Environmental remediation, site preparation and ensuring community support are complex challenges that require careful evaluation. The new clause would mandate a thorough, evidence-based report that would address such technical, economic and environmental factors, and include consultation of a wide range of stakeholders, including SAF producers, the oil and gas workforce, unions, environmental organisations, local authorities and academic experts. The findings will help the Government to shape policies and incentives that maximise the benefits of such conversions where appropriate. I do not think we can simply leave it to market mechanisms; the Government need to intervene here.
This is not about preserving the fossil fuel past, but transitioning our industrial heritage and workforce, and some of our dying economies, to a new sustainable future. The UK’s industrial regions deserve a just transition that leverages their existing strengths to help to power the green economy. The new clause would be a step towards securing the resilience and growth of a domestic SAF industry that can create good jobs, strengthen supply chains and reduce reliance on imports. I urge the Minister to welcome this practical proposal, accept the new clause and commit to a clear timeline for delivering the report. The future of UK aviation depends on not only ambitious targets but pragmatic steps to make those targets achievable and bring the country with us. The new clause would help us to take one such step.
Greg Smith (Mid Buckinghamshire) (Con)
New clause 8 has considerable merit. It is always preferable where new industrial facilities are to be built—in this case for the production of sustainable aviation fuel—for those identified sites to have had former brownfield status and former industrial use. I have no argument with that element of the new clause.
The one note of caution I have on the new clause is that many of the existing sites—certainly oil refinery sites—are not necessarily located in the right places currently for certain SAF technologies. That includes the e-fuels and power-to-liquid solutions, which require, as part of the process, electrolysis and the creation of green hydrogen. Of course, if the hydrogen element that goes into making the SAF is not green hydrogen, the whole problem becomes rather academic—we could still make the fuel, but the reality is that it would not be as green as we want it to be. Those SAF production facilities, by definition, would need to be located in places with potential large-scale offshore wind, electricity production or, possibly, nuclear generation.
If we look across the world at such fuel plants that have been created, Porsche, for example, chose the hills of Chile to produce its particular fuel, because it can leverage off the wind power that it can get up there. In our country, Orkney seems to have been a popular site for harnessing the offshore wind technology available up there. While I fully support the principle that underpins the new clause—for many SAF production sites to be on former industrial or oil refinery sites—I simply wish to add the note of caution that they might not be suitable for every application and technology out there.
Mike Kane
On new clause 8, the hon. Member for Wimbledon is right to talk about deindustrialisation. Growing up in the 1970s, I saw the impacts of that, particularly on the east side of Manchester, with the chemical and mining industries being wiped out. In this day and age, we are still getting over that in my great city. I reassure him that we are supporting the SAF industry, in part, to grasp this opportunity for deindustrialised areas. Emerging SAF projects are often located on former industrial sites, and I remind the Committee that, if we do this right, our low-carbon fuels industry can support up to 15,000 jobs and £5 billion to the economy by 2050.
I also reassure the hon. Member that work is ongoing across Government on the future of our refineries. We are acting urgently in response to the deeply concerning news of insolvency at Prax Lindsey oil refinery, and have put £200 million into the National Wealth Fund to back investment at Grangemouth. I want that work to continue at pace, and am conscious that specific sites will need to be considered on a case-by-case basis. Commissioning an additional separate report would not be beneficial, and would risk delaying potential investment decisions. Given that, I ask the hon. Member to withdraw the motion.
Euan Stainbank (Falkirk) (Lab)
In Grangemouth, we have £200 million dedicated from the National Wealth Fund, and Project Willow, which has two SAF options contained within it. Does the hon. Member acknowledge that, and acknowledge that we need to move at pace to deal with deindustrialisation in such places? His new clause would risk potentially adding another layer of report-making, rather than the real action that needs to be taken in places such as my constituency.
Mr Kohler
Such a report would not require there to be a delay. The report would be within 12 months, and we have already heard from the Minister that not much will happen within the first 12 months. That was the excuse given earlier in Committee for not doing various things. A report to focus attention on these sites would be useful and helpful, and I really cannot see why there should be any objection to it.
Question put, That the clause be read a Second time.
Mike Kane
I beg to move amendment 1, in clause 15, page 8, line 7, leave out paragraphs (c) and (d) and insert—
“(c) section 10 (payment of surpluses to levy payers);
(d) section 11(4)(a) (power to amend maximum financial penalty);”.
This amendment switches the order of paragraphs (c) and (d) so that the sections referred to appear in sequential order. It also corrects a cross-reference. The substance is unchanged.
Mike Kane
Clause 15 provides that regulations are to be made by statutory instrument and that they may make different provision for different purposes and supplementary, incidental, transitional or saving provision. As we have already discussed, the regulation-making powers in clauses 1(6), 6(1), 10 and 11(4)(a) are subject to the affirmative procedure. The regulation-making powers in clauses 3(1) and 11(4)(b), which are largely administrative, are subject to the negative procedure; these powers will not alter the fundamental elements of the revenue certainty mechanism.
Clause 16 provides information on how terms that are used throughout the Bill should be interpreted. It should be noted that our intention is for the revenue certainty mechanism only to support SAF production that would be eligible for the SAF mandate. This will be set out in the eligibility criteria during contract allocation.
Clause 17 states that the Bill extends to England and Wales, Scotland and Northern Ireland. Clause 18 sets out when the provisions of the Bill will come into force. We expect all the legislation for a revenue certainty mechanism to be in place by the end of 2026. We will continue to monitor the estimated delivery date and work with industry to deliver an effective revenue certainty mechanism as soon as possible. Clause 19 confirms that the Bill will be named the Sustainable Aviation Fuel Act upon Royal Assent.
Amendment 1 agreed to.
Clause 15, as amended, ordered to stand part of the Bill.
Clauses 16 to 19 ordered to stand part of the Bill.
Question proposed, That the Chair do report the Bill, as amended, to the House.
Mike Kane
Thank you, Mr Western, for chairing the Committee. I also thank the Clerks, Hansard Reporters and Doorkeepers for overseeing proceedings. The Committee also benefited from the expertise of our witnesses and those who provided written evidence. As this is a hugely technical Bill and the world is watching us, I pay a massive tribute to the civil servants in my Department who worked on it.
I thank all hon. Members who made this issue a manifesto commitment at the general election. I thank the Opposition for supporting the Bill and for their valuable contributions and insights. I thank the shadow Minister, the hon. Member for Mid Buckinghamshire, the Liberal Democrat spokesman, the hon. Member for Wimbledon, and all other Committee members. I thank them for their expertise and insight, and for the broadly positive, collaborative nature that they brought to the Committee. We all want the SAF industry in this country to grow and succeed so that we secure our world-class aviation sector’s future. I look forward to further engagement with hon. Members on the Bill.
Greg Smith
I associate myself with the Minister’s thanks to everyone who has worked so hard on the Bill, particularly the civil servants; I welcomed the ability to discuss the Bill with them in a private briefing before Second Reading. I also thank the Doorkeepers, Hansard and the Clerks for ensuring that the Committee has run smoothly.
It is quite a pleasant experience to engage with a Bill in opposition when there is fundamental agreement on the direction of travel. The other Bill Committee of this Parliament on which I was shadow Minister was for the Employment Rights Bill, where we did not enjoy quite the same level of consensus, but to meet the challenges of decarbonising our aviation industry it is important that this Bill progresses rapidly.
However, I urge the Minister, who has been kind and engaged throughout the process, to continue to reflect on the points that I have raised in Committee and that the shadow Secretary of State, my hon. Friend the Member for Orpington (Gareth Bacon), raised on Second Reading, as well as the many worthy points that the Liberal Democrats have raised. If we can keep going in the spirit of cross-party working and reflect on some of the points about UK intellectual property—making this a UK success story, making the UK a world leader and ensuring that the technologies that emerge genuinely do what they say they will—then I think all of Parliament, not just the Government, can be proud to push the Bill through.
Question put and agreed to.
Bill, as amended, accordingly to be reported.