Sustainable Aviation Fuel Bill

Lord Ravensdale Excerpts

Committee stage
Wednesday 10th December 2025 Lords Chamber

Moved by

[Lord Ravensdale]

1: Clause 1, page 1, line 5, at end insert “, subject to sections (Further provision about power to liquid fuels) and (Further provision about the direction to offer revenue certainty contract),”
Member's explanatory statement
This amendment is consequential on Lord Ravensdale’s amendments adding new sections “Further provision about power to liquid fuels” and “Further provision about the direction to offer revenue certainty contract”.

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[Lord Ravensdale (CB)]

My Lords, I shall speak to my Amendments 1, 5 and 6, and Amendment 3 in the name of the noble Baroness, Lady Bloomfield. I declare my interests as a chief engineer working for AtkinsRéalis and as co-chair of Legislators for Nuclear.

Turning first to Amendment 5, I listened carefully to what the Minister had to say at Second Reading on this matter and was pleased to hear some clarification on competitive allocation. Of course, to get the market moving, most contracts will initially be likely to be bilateral between the counterparty and the SAF provider, but the legislation must be future-proofed.

We had a lot of discussion in the other place and at Second Reading here on the effect on air fares of this legislation. The way to bring costs down and deliver value for money is, of course, through competition. In the longer term, we need a mechanism similar to offshore wind whereby a strike price and an auction are put in place. That would apply the right competitive pressure to the markets and put downward pressure on costs. All other similar government legislation—for example, the Energy Act 2023 for hydrogen carbon capture and storage, and the Energy Act 2004 for offshore wind—include such provisions, but the Bill does not. Clarity on how this competitive process will be set out is important, so I propose this amendment.

Amendment 5 is based upon Section 76 of the Energy Act 2023, but it has been tweaked so that, rather than spelling out all the things regulation might cover, I give the Secretary of State the power to make rules. This reduces the complexity of the other Acts by avoiding the need to table complex secondary legislation and instead covers this through a rule-making power. Through the framework, the amendment also allows the Secretary of State to make decisions on aspects such as the process of producing SAF, the outputs and, critically, the location of production, which feeds into some of the amendments in the next group.

Overall, Amendment 5 is an opportunity for the Government to clarify the overarching strategy of the Bill in moving from bilateral negotiation to competitive allocation by embedding competition within the Bill. This would clarify the Bill and ensure that the benefits of competition in lowering costs are taken forward.

Turning to Amendment 6, there is another opportunity here for the Government in aligning the Bill with the SAF mandate order. The strategic nature of power-to-liquid fuel, or third-generation SAF—eSAF—has been recognised by the Government. In the SAF mandate order, there is a table that specifies by calendar year the percentage of SAF that must be in power-to-liquid form.

It is crucial that the revenue certainty mechanism secures enough eSAF production capacity to meet the SAF mandate in the UK; otherwise, there is a real risk that the mandate will not be able to be met due to global scarcity. Analysis from the Transport & Environment NGO shows that the UK cannot rely on eSAF imports from the EU, for example, to meet the SAF mandate, as planned EU production capacity is just enough to meet EU regulations. That shows the importance of aligning the revenue certainty mechanism with the SAF mandate order.

In Amendment 6, I am proposing to take aviation fuel demand in the UK, which is around 10 million tonnes per year—that figure is at the lower end of aviation fuel demand over the past couple of decades and is taken from ONS data—and multiply that figure by the percentages in the SAF mandate order.

The amendment would help the Government to ensure that the revenue certainty mechanism and domestic SAF production delivers the quantities of power-to-liquid fuel that are required to meet the SAF mandate. Critically, it would ensure that we have join-up between these two parallel pieces of legislation and that the revenue certainty mechanism is joined up with the SAF mandate order.

I will also speak to Amendment 3 in the name of the noble Baroness, Lady Bloomfield. This amendment, which is very straightforward, proposes a modification to the SAF revenue certainty contract having a default length of 10 years in that it would extend it to 20 years. This is particularly of interest for nuclear-derived SAF. If a SAF offtake is to support the investment in a nuclear power station like an electricity offtake agreement does today, revenue certainty beyond 10 years is highly likely to be required. Ten years’ offtake of SAF is too short to be bankable and is likely to block a SAF developer from supporting investments in nuclear new-build projects, as they would need to do in order to comply with the SAF mandate. This amendment is to probe whether a change to the 10-year period is required for certain classes of projects or whether the option of longer-term contracts is open in the existing legislation. I beg to move.

[Lord Harper (Con)]

My Lords, I rise to speak briefly to this group of amendments. I strongly agree on the importance of having a proper framework for these contracts and a competitive process. The lesson from the energy market is that that competitive process is important to make sure that we achieve the policy objective, which is the production of the fuel, but at the lowest possible cost, which in the end will be passed on to consumers, so having some sort of competitive process is very important.

Two amendments in this group are potentially conflicting. I understand the argument in favour of allowing a longer contract period, particularly for nuclear-derived power-to-liquid fuel, as the noble Lord said, but equally, I would not want that to be the automatic default for all these contracts. I was struck by the amendment from my noble friend Lord Moylan about making sure that it is possible for the Government to exit from these contracts. From my point of view, the attraction here is just to make sure that we learn one of the lessons from the energy market. There is a balance to strike here. We want long-term contracts to give the certainty to the investors and those going into first-to-market plants in the UK to produce this, but we do not want to lock in contracts longer than necessary but potentially at a point where the market price is lower and we are effectively holding the price higher than it needs to be. We have learned some lessons from how that works in the energy market. The amendments on the paper may not be the right way of doing that.

The Minister referred in his speech at Second Reading to the contracts for difference models from the energy market. When he winds up this group, I would be interested to hear what the Government have learned. What detailed work has been done about getting these contracts right at the outset but also enabling them to be flexed as the circumstances change, so that we get the right level of price protection which is necessary to get the initial investment and produce investor certainty but do not keep it going past the point at which investors are making returns above what was necessary to get them to invest? Obviously, you cannot change those rules retrospectively, so it is about getting the right level of certainty. I will be interested to hear what the Minister has to say there.

I am supportive of the thrust of the noble Lord’s Amendment 6 on power-to-liquid fuels. The only thing I would quibble with is that it has a “must” in it; I do not know the likelihood of this, but I would not want to force the Government to enter into revenue certainty contracts that were not necessary to produce. If we had producers producing enough of that third-generation sustainable aviation fuel, I would not want to force the Government into having to enter into unnecessary revenue certainty contracts. Therefore, I support the thrust of the noble Lord’s argument, which is to make sure that enough of the third-generation SAF is produced to meet the requirements in the mandate, but I would not want the Government to be forced to do that. So the wording in the amendment just needs something which says that they only have to do that if not doing so would not allow that level of fuel to be produced for the market.

[Lord Ravensdale (CB)]

I thank the noble Lord for his comments on the amendments. I would certainly be open to what he is saying about the wording in that amendment. I will just say that the way we have structured this amendment is to provide 1 million tonnes of oil equivalent figure. We have tried to do it using a floor mechanism, so we looked at the total aviation fuel demand in the UK over the past 20 years or so, took the lowest figure and simply multiplied that by the percentages in the SAF mandate order. I hope that by providing that floor mechanism, there is that flexibility there, but I certainly take his point about the wording.

[Lord Harper (Con)]

I am grateful to the noble Lord for that clarification. As I said, I certainly agree with the thrust of his amendments; I just would not want there to be a legislative mandate for the Government to do something that proves to be unnecessary. Again, I think we need to understand from the Minister what is the appropriate amount of flexibility for the Government to have in practice, because we want the Government to use the lessons from those contracts and to have the appropriate level of negotiating space to strike the best deal for aviation consumers. However, we also want to make sure that the Government do not give away unnecessary amounts of consumers’ money that is not necessary to produce the results.

Overall, the amendments in this group are helpful in enabling us to have that debate and to just test what lessons we have learned from the way these sorts of contracts work in the energy market, but also the amount of negotiating space that Ministers will need when they are directing the counterparty to strike the best possible commercial deal.

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[Lord Moylan (Con)]

We are all agreed that we should be talking about contract length, but my amendment is the only one that refers to it. That is the point that I am trying to make.

The noble Lord, Lord Ravensdale, in respect of competition, says that there must be at least an opening in the future for these revenue certainty mechanism contracts to be awarded competitively. He seeks to put this in the Bill now and appeared to say that, if this is not done now, through a device such as that which he is proposing, there would not be in future an opportunity for competitive procurement. If I have misrepresented him, I will give way and be corrected—I see that he is about to rise, so I might as well complete the point before he corrects me. My understanding is that there is nothing to prevent competitive procurement taking place from day one under these arrangements. Therefore, it is not necessary to put in place an arrangement to secure it. I am open to being corrected on all hands about this, because I am groping my way in the dark through this thicket.

[Lord Ravensdale (CB)]

I agree with what the noble Lord has said. The Minister provided the clarification at Second Reading that there is nothing in the Bill that prevents competition. However, for consistency with the other legislation that I outlined that has such direction on similar competitive processes in the energy Acts, and for clarity on the strategy, it would be beneficial to have that process set out in the Bill.

[Lord Moylan (Con)]

I am grateful to the noble Lord for explaining that. I am glad we are broadly ad idem, but he helps me to my third point.

The assumption by the noble Lord, Lord Ravensdale, appears to be that the procurement of all future SAF, including non-HEFA SAF and potentially at some stage power to liquid, will have to depend upon or be supported by a revenue certainty mechanism, or at least some form of subsidy or support from the state. That appears to be the assumption. I wholly deprecate that assumption. It is appalling that we should embark upon this project with a view to a regime of perpetual subsidies. If SAF is not rapidly producible on a commercial basis in this country then, as I shall come to in other amendments, the whole project should be reconsidered at this stage.

However, I am comforted in thinking that the Government do not envisage perpetual subsidy by my reading of Clause 1(7) and (8). These are the subsections that I referred to before, so I will not read them out again, but why would the Government put in place what is, in effect, a sunset clause if they envisaged a need for perpetual subsidy? The Minister may want to confirm this, but subsections (7) and (8) taken together are a sunset clause. At the end of 10 or possibly 15 years, no more contracts can be awarded without further primary legislation. There is a degree of confusion, which I may have participated in, concerning what we are discussing. We are giving the Minister the opportunity to bring a blast of fresh air to clear the fog and explain it all to us, so that we know what we are talking about, because up to now I am not entirely sure that we all do.

My Amendment 2 has been explained very well by the noble Baroness, Lady Pidgeon. I do not need to elaborate on what it says, but I have not yet given any rationale for why it should commend itself to the Committee. Amendment 2 seeks to limit the length of contracts. The reason is very simple. This Bill is a large slice of corporate welfare. Having given to the industry, through the SAF mandate which we approved last year, a guarantee of uptake of SAF so that you know that your product is going to have to be bought, this is not enough for them, and we are now going to give them, in addition, a guaranteed price. That is what they are demanding.

I do not blame them for demanding that. Let us have guaranteed demand and a guaranteed price—that is a very pretty place to be in. Let us transfer all the risk somewhere else. Who is going to pay that guaranteed price? Not the Government, because it is not a subsidy. They have discovered from the electricity market the contract for difference, which the noble Lord, Lord Ravensdale, has referred to as a model—a structure which has given us the highest electricity prices in the civilised world. This points to the cost of SAF falling on the airlines and, potentially and ultimately, on the passenger. We will come to this later, but the Government have assessed what that might mean in pounds per ticket. That is the subject of a later amendment which I will not trouble your Lordships with now.

Recognising the large element of corporate welfare in the Bill and the need to get away from that and to incentivise competition, I suggest that there should be some basis for limiting the contract, and therefore the benefits that accrue to the producers of SAF. I am grateful to my noble friend Lord Harper for supporting this. I have suggested 10 years, which is of course an arbitrary number—it might be six years, it might be seven years, or it might be eight years. I have also suggested including a break clause, which I put at five years, so that if the Government saw that this was all going well and that the thing was becoming commercial, they could walk away—which must be their ambition. I put that break clause at five years, which is an equally arbitrary number. If the Minister agreed on the principle, I am sure that he and I could sit down and rapidly agree a maximum length of contract and an appropriate term for the break clause.

It is in that direction that we should be looking if we are not to burden young people. There are not so many young people in the Committee this evening. Many of us are getting to the point where our best flying days are behind us, but when you look to young people who perhaps work in other parts of the House and say, “You are going to be paying for this for the next 20 years. You and your wives and children, and even potentially your grandchildren, are going to be paying for this slice of corporate welfare, so if we don’t get it right the burden falls on you”, and one thinks about that, then of course one is moved very strongly, and is surely moved in the direction of supporting my Amendment 2.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I thank noble Lords for this group of amendments. Amendments 1 and 6 would require the Secretary of State to enter into at least one revenue certainty contract with a SAF producer that is using power-to-liquid technology. The Government recognise the potential that power-to-liquid fuel may have. These fuels will have high greenhouse gas emissions reduction potential, with a low risk of environmental issues such as land use change.

However, adopting these amendments would limit the Government’s allocation flexibility by setting criteria in advance, which could ultimately reduce value for money in the contracts agreed. It is important that the allocation strategy is able to reflect different technologies as they develop. The Government will establish a fair and transparent process to assess each project’s key costs, benefits and risks. This process will be developed over the coming months and will involve consultation with stakeholders.

The decisions on contract allocation will be determined during the contract allocation process. The noble Lord, Lord Moylan, is right that we do not want perpetual subsidy, but we have to establish over time the opportunity for different technologies to develop.

The noble Lord, Lord Moylan, is right in his remarks about contract lengths; there is no humiliation there at all. The length of contracts is not set out in the Bill, and the amendments other than his Amendment 2 would extend the time in which the contracts could be entered into, not the length of the contracts themselves. We are engaging a range of stakeholders on contract length because it obviously makes sense to talk to the market about that. No final decisions have yet been made.

Contracts issued under similar schemes are generally for a period of 10 to 15 years, which reflects a standard debt repayment period. Limiting the contract to 10 years may not be sufficient to attract the investment necessary to construct these plants, and I contend that it is premature to decide the contract length until the market has advised what it would need to construct the plants that would make the fuel.

The Bill allows the Secretary of State crucial flexibility to adjust any standard contract length in between allocation rounds in the light of emerging market evidence. It also preserves optionality for the potential needs of emerging pathways—for example, nuclear-derived SAF. The addition of a no-fault break clause would, of course, undermine the certainty provided by the contract and seriously risks losing the investor confidence that the Bill aims to increase.

In respect of the point made by the noble Lord, Lord Harper, the learning from the energy market is that the contracts need to be long enough to secure the investment that we are talking about. The noble Baroness, Lady Pidgeon, asked what the right contract length is. I think we have to establish that by talking to the market, so it is premature to determine it now.

On the contrary, Amendment 3 seeks to extend the time in which revenue certainty contracts can be allocated from 10 years to 20 years. The purpose of the Bill is to kick-start the industry in this country. The revenue certainty mechanism is intended to be a time-limited measure and to stimulate the early market. Once investors have confidence in the market price and the first-of-a-kind technology has proved itself at commercial scale—to the point made by the noble Lord, Lord Moylan—the mechanism should no longer be needed.

The Government contend that Amendment 3 is not the right way to go. However, if the Government find in due course that it is necessary to extend the provision, Clause 1(8) will allow the Secretary of State to extend the period by which contracts can be allocated in five-year increments by making regulations by the affirmative resolution, so that Parliament can take a view about the applicability of that extension at the time that it is proposed.

Amendment 5 from the noble Lord, Lord Ravensdale, seeks to include a contract allocation framework in the Bill. The Government will need to carefully consider and work with industry on the specifics of contract allocation. This will ensure that there will be a fair and transparent allocation process that evaluates the key costs, benefits and risks of each project. This will be developed over the coming months and will be rightly subject to consultation with stakeholders. The amendment as it stands would reduce the Government’s leverage in negotiations by setting criteria in advance and limit the ability to secure the best value for money in the contract signed.

The noble Lord, Lord Ravensdale, referred to the Energy Act 2023. The allocation framework was included in the Energy Act 2013 and the Energy Act 2023 to ensure that the Secretary of State could effectively regulate the activities of an allocation body where one is appointed under that legislation. In this Bill, the Secretary of State will carry out the allocation process, so it is not necessary to set out an allocation framework to govern the activities of an allocation body.

I hope that my explanations have answered the concerns and that noble Lords feel able not to press their amendments.

[Lord Ravensdale (CB)]

The Minister’s response to Amendment 6 is appreciated, but there is a risk that if the amount of third generation SAF or power-to-liquid that needs to be produced is not set out, then the Bill would not, in effect, align with the SAF mandates, which have clear percentages on power-to-liquid fuel requirements. Does he accept that there is a bit of a gap between this legislation and delivering the SAF mandates, in that one does not support the other?

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for his intervention. If he is willing, I will take that point away and contemplate it further.

[Lord Ravensdale (CB)]

I thank the Minister. This has been an excellent short debate and the noble Lord, Lord Moylan, and the Minister, certainly provided the clarity on contract length that we were missing. I was pleased to hear that the allocation process will be fleshed out through a consultation. For now, I beg leave to withdraw my amendment.

Amendment 1 withdrawn.

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The amendment from the noble Lord, Lord Grayling, is in a similar vein. We share his intentions and what he sets out to do. However, Amendment 18 goes a little further and is clearer in defining what production is. Whereas his amendment sets out a useful boundary, ours fills in the framework inside that boundary. Without a statutory definition of UK production, and without the reporting duty that our amendment would provide, it is difficult with the other amendment to guarantee that levy revenues are genuinely strengthening domestic capacity.

[Lord Ravensdale (CB)]

My Lords, I rise briefly to support Amendment 18, to which I have added my name, and the other amendment in this group. As has been said, it is important for the Government to consider setting out the definitions in the amendments of what manufacture means and how it is going to be supported in making sure that this is all UK-based. As the noble Lord, Lord Harper, said, that is the point of the Bill.

[Lord Hendy of Richmond Hill (Lab)]

I join the noble Earl, Lord Russell, in sending the noble Lord, Lord Grayling, our good wishes for him and his family. I congratulate the noble Earl on his recent nomination for a life peerage. That is an odd sentence to say, but there you go. The noble Baroness, Lady Jones, has got lucky by signing this amendment, as she will shortly hear.

The revenue certainty mechanism is intended to support only eligible SAF plants in the UK, and this will be ensured through the allocation process. This Government are committed to supporting the UK SAF sector through our advanced fuels fund, which is supporting projects across the UK, and through the revenue certainty mechanism. The UK SAF sector will create jobs and growth opportunities in the UK, help secure a supply of SAF for UK airlines and enhance energy security.

On Amendment 4, SAF projects that use imported precursors still offer significant economic benefits to the UK because of the investment needed to construct them and the employment that they would provide. I fully recognise the strong points made by noble Lords this evening around UK production being in the Bill, and I will seriously consider this point ahead of the next stage of the Bill. I will invite noble Lords who have spoken tonight—or rather those who tabled the amendments—to meet me and my officials ahead of the next stage. I therefore invite the noble Lord to withdraw the amendment.

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Moved by

[Lord Ravensdale]

21: Clause 16, page 8, leave out lines 34 to 36 and insert—
““relevant crops” means starch-rich crops, sugars, oil crops and main crops, where “starch-rich crops” include—(a) cereals (regardless of whether only the grains are used or the whole plant),(b) tubers and root crops, including potatoes, Jerusalem artichokes, sweet potatoes, cassava and yams, and(c) corm crops, including taro and cocoyam;“renewable transport fuel” means anything that is (or could be treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004 (see sections 131D(2) and 132(1) of that Act), other than such fuel where it is derived from relevant crops;”Member’s explanatory statement
This amendment will include nuclear-derived power-to-liquid fuels in the scope of sustainable aviation fuels for which Revenue Certainty Contracts can be offered, and remove food crops, using the same definition of “relevant crops” as the Renewable Transport Fuel Obligations Order for surface transport (SI 2007/3072).

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[Lord Ravensdale (CB)]

My Lords, as the noble Lord, Lord Moylan, referred to earlier, I think this wraps up a number of points in previous groups. It is a good point at which to have this debate about what actually qualifies for support under the revenue certainty mechanism. First, I take the opportunity to congratulate the noble Earl, Lord Russell, and the noble Lord, Lord Addington, on their peerages. It is absolutely brilliant news, and I am really pleased for them.

There are two parts to this amendment, and I would like to deal with them in reverse order. At Second Reading, I asked a question on the eligibility of nuclear energy or nuclear-derived SAF. The Minister said:

“SAF produced using nuclear energy is and will be eligible for the SAF mandate”.—[Official Report, 20/11/25; col. 990.]


I noted that he said the SAF mandate and not the revenue certainty mechanism. What I am really after from the Minister is explicit clarity that nuclear-derived fuels are within the scope of the revenue certainty mechanism, and perhaps some commentary on how this flows through the legislation.

The reason for needing this clarity is that the legislative route is a little convoluted. Clause 16 defines sustainable aviation fuel as

“aviation fuel that is renewable transport fuel”.

Renewable transport fuel is defined in the same clause as

“anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”.

As I said at Second Reading, I proposed the amendment to the Energy Act 2023 that led to the insertion of Section 131D into the Energy Act 2004, which treats recycled carbon fuels and nuclear-derived fuels as renewable transport fuels. But it was stated there that it required secondary legislation to take effect and to treat these fuels as renewable transport fuels. I noted that this has been done for recycled carbon fuels, but the secondary legislation has not been done for nuclear-derived fuels.

We have this quite convoluted route through the 2004 Act, the 2023 Act, the secondary legislation and the SAF mandate, so I would appreciate that clarity from the Minister on nuclear-derived fuels. That is the second part of my amendment to ensure that they would be within the scope of the Bill.

My second point is around the eligibility for this Bill of certain types of sustainable aviation fuel. I am seeking to exclude first-generation SAFs from the revenue certainty mechanism. I do not see the need for crop-based biofuels to be given support, because the production pathways for these fuels are already there—they are already commercialised at scale. On previous groups we have talked a lot about some of the issues with crop-based biofuels: they are CO₂ saving; they compete with food, potentially raising food prices; they drive land use change and reduce biodiversity. Those fuels have all those other effects, and they are already commercially viable and commercialised, so I cannot see why we need them to be within the scope of the revenue certainty mechanism.

That is brought out in a lot of the government guidance as well. The driver behind the Bill is to provide a mechanism for second and third-generation sustainable aviation fuels. That has been stated repeatedly by the Government. I cannot see a good reason for including these fuels within the revenue certainty mechanism. I look forward to the Minister’s thoughts around that. I beg to move.

[Lord Moylan (Con)]

If noble Lords do not object, I will speak now rather than later in this group because, having read his amendment, I agreed with the noble Lord, Lord Ravensdale, before Committee that it would be sensible if we grouped these two amendments together. We are both trying to get at the same thing and, in a sense, I am not going to say anything very different from what he said, but I am going to take a different approach. It is fair to say that both of us want to limit the deploying of these contracts, or at least to know what limits the Government are going to apply themselves.

As the noble Lord, Lord Ravensdale, said, Clause 16, states that

“sustainable aviation fuel’ means aviation fuel that is renewable transport fuel”,

and earlier it states that

“renewable transport fuel’ means anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”,

in which the noble Lord played a certain part in amending in 2023.

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[Lord Hendy of Richmond Hill (Lab)]

My Lords, the noble Lord, Lord Moylan, asked some questions in relation to Amendment 19 in his closing remarks. I will write to him and provide a copy to all noble Lords about standing by the cost-benefit analysis on ticket prices and how we can control the cost to passengers by controlling costs through the allocation process. For good measure, I will also clarify the phrase “per year”.

On Amendment 21, I understand the desire of the noble Lord, Lord Ravensdale, to exclude crops from the revenue certainty mechanism. Several other noble Lords also spoke about their concerns on growing crops for purposes other than food at Second Reading. The noble Earl, Lord Russell, just now, was realistic about some of the practicalities of doing so. The sustainability criteria in the revenue certainty mechanism will align with the criteria in the SAF mandate.

As I mentioned before, there will be a call for evidence shortly, focusing on the potential benefits, risks and trade-offs of using crops in SAF production. The scope of the call for evidence will include different types of crops, including feed crops, dedicated energy crops and cover crops. While this call for evidence will neither propose any changes to the SAF mandate nor signal the future direction of the mandate, we would not want to expressly exclude SAF derived from relevant crops from the scope of the RCM if they might be included in the SAF mandate in the future.

We will, of course, continue to engage with industry on these issues. I echo the words of the noble Earl, Lord Russell, that this is developing and things will change over time. We need to understand it, and that call for evidence is part of that process.

The noble Lord, Lord Ravensdale, and the noble Earl, Lord Russell, referred to nuclear eligibility. We will match that in the SAF mandate. We are already supporting nuclear through the advanced fuels fund, which we believe to be right.

Turning to Amendment 22, I agree with the noble Lord, Lord Moylan, that HEFA SAF—I hate these acronyms—has already overcome many of the barriers to investment. For that reason, in our response to the first consultation on RCM, we announced that HEFA SAF projects will be excluded from the first round of contract allocation. I hope what I have said is sufficient to persuade the noble Lord to withdraw his amendment.

[Lord Ravensdale (CB)]

Just to clarify what he said, could the Minister just confirm that nuclear-derived fuels are eligible under the SAF mandate and that they are also eligible under the revenue certainty mechanism, please?

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[Lord Hendy of Richmond Hill (Lab)]

In answer to the noble Lord, I will not do that at this stage, but I will consider what he has just said.

[Lord Ravensdale (CB)]

I thank noble Lords for this short debate. In terms of eligibility of crop-based biofuels, as the noble Earl, Lord Russell, said, this is a journey we are going on and, absolutely, crop-based biofuels are part of that journey. The noble Lord, Lord Moylan said, and made the case quite strongly, that we have not heard any rationale for why those fuels should specifically get support under the revenue certainty mechanism, but I look forward to those further conversations. We have had the clarification on nuclear-derived fuels. On that basis, I beg leave to withdraw the amendment.

Amendment 21 withdrawn.

Sustainable Aviation Fuel Bill

Lord Ravensdale Excerpts

2nd reading
Thursday 20th November 2025 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, I declare my interests as a chief engineer working for AtkinsRéalis and co-chair of Legislators for Nuclear. I look forward to the maiden speech of the right reverend Prelate the Bishop of Chester. I support the Bill, with the caveat that costs to consumers of these measures must always be front and centre, with all the freedoms that cheap air travel has opened up to people from all backgrounds in recent decades. But I accept that there is a strategic need to invest in the long-term sustainability of aviation fuel for the UK and that we need a revenue certainty mechanism alongside the mandate.

I have three broad points. My first is around the definitions in the Bill of fuels that are eligible for the revenue certainty mechanism. Clause 16 defines “sustainable aviation fuel” as,

“aviation fuel that is renewable transport fuel”.

“Renewable transport fuel” is defined in the same clause as,

“anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”.

It then refers to Sections 131D and 132. I proposed the amendment to what is now the Energy Act 2023 that led to Section 131D, which treats recycled carbon fuels and nuclear-derived fuels as renewable transport fuels. That amendment was therefore a key enabler for this Bill in enabling support for second-generation and types of third-generation SAF.

However, this requires secondary legislation to take effect and treat these fuels as renewable transport fuels. This has not been completely done for the surface transport renewable transport fuel order; it has been done only for recycled carbon fuels. But it has been done for the sustainable aviation renewable transport fuel order, so we have quite a convoluted legislative route here between various Acts and secondary legislation. Can the Minister please confirm that recycled carbon fuels and nuclear-derived fuels are within the scope of the revenue certainty mechanism outlined in the Bill?

Clearly, recycled carbon fuels will be very important in the near term. Over the medium to long term, nuclear could well be a significant source of synthetic fuels due to the potential economic efficiency it brings to hydrogen production, whether that is high-temperature electrolysis, with the current pressurised water reactor plants, or, looking further ahead, the sulphur-iodine cycle in advanced high-temperature nuclear plant.

My second point is around the powers that the Government are taking in the Bill. They have clearly stated that they do not intend to offer contracts for first-generation SAF based on hydrogenated esters and fatty acids—HEFA. Should this therefore be stated in the Bill? The Government should take only the powers they need, given that this Bill is a framework for the long term. There is a case that the powers in the Bill should be limited to second-generation and third-generation sustainable aviation fuels. I do not foresee any good reason why HEFA fuels would need such support, so I believe that this could be clearly stated in the Bill.

My third point is around value for money and competition. We rightly heard a lot of discussion in the other place around costs to consumers and analysis on the £1.50 impacts on airfares. The Minister clearly stated that we need to get the right balance between investors and consumers with the prices that are negotiated, but another way of looking at this relates to the competitive structure within the Bill. Of course, the way the Bill is structured around bilateral negotiations, rather than a competitive process, is what is needed for the SAF market at this stage, noting its immaturity. An auction process, such as that which we have for offshore wind, is not perhaps appropriate at this stage.

However, this Bill needs to be fit for the longer term. Competition is the way to drive down costs for consumers in the long term, as has been demonstrated in more mature markets such as offshore wind. So, in the longer term, we need that mechanism for auctions and competitions within the Bill but, looking through it, I cannot see a mechanism for setting up such a competitive process.

Other government legislation, such as the Energy Act 2013 for CfDs for renewable energy generation, clearly states that regulations made may include provision for,

“the determination of a matter on a competitive basis”.

We also have that in the Energy Act 2023 for low-carbon hydrogen, which clearly states:

“Provision falling within subsection (2) may include provision for … the determination of a matter on a competitive basis”.


This Bill makes no provision for regulations to cover the determination of a matter on a competitive basis, or indeed for allocation frameworks. I would be grateful if the Minister could state whether, in his view, a competitive framework is covered by the Bill as written and, if not, whether it should be. The Bill should be fit for the future to avoid the need for future legislation in this area, and it should be structured to minimise costs to consumers, which in the end will be enabled through competition.

Finally, this Bill will go a long way to realising second-generation and third-generation SAF production in the UK, but the Government need urgently to address broader challenges as well, not least our high industrial electricity prices. I have spoken to a number of companies that want to set up SAF plants and related infrastructure in the UK, but they simply cannot make the numbers stack up when our electricity is four times as expensive as competitors such as the USA. This is a very energy-intensive industry. Alongside the measures in this Bill, we need to address the fundamentals to ensure that we are being fair to consumers and minimising required subsidies. I hope the Government will think about the broader framework as well and not just see this as a problem to be addressed through subsidies.

Railway 200

Lord Ravensdale Excerpts

Thursday 31st October 2024 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

It is a great pleasure to see the noble Lord in front of me. He was material in moving this project on at an earlier stage, for which I thank him very much. I had not caught the issue that he raises and my best course of action is to go away, inform myself, and then see what can be done about it.

[Lord Ravensdale (CB)]

My Lords, I declare my interests as set out in the register. The Midlands Rail Hub project is eagerly awaited by stakeholders right across the region, not least in addressing those east-west links in the region that have been such a problem in the past. I heard no mention of the Midlands Rail Hub in yesterday’s Budget. Can the Minister update the House on progress within the department on this vital project?

[Lord Hendy of Richmond Hill (Lab)]

It is as with so many other projects; this Government found when they took office a very large list of projects with a much smaller funding envelope to deliver them. The Secretary of State for Transport has commissioned a full review of all transport infrastructure projects. This needs to be done properly. As I have said before here, everything you do with the railway lasts 150 years. When we have finished reviewing all those projects we will have a plan to go forward to invest in the best possible way.

Renewable Transport Fuel Obligations (Amendment) Order 2024

Lord Ravensdale Excerpts

Tuesday 26th March 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Davies of Gower) (Con)]

My Lords, this order would amend the Renewable Transport Fuel Obligations Order 2007 so that recycled carbon fuels, known as RCFs, are eligible for support under the renewable transport fuel obligation—RTFO—scheme.

The RTFO scheme establishes targets to drive the supply of renewable fuels. It does this by placing obligations on suppliers of transport fuel to ensure that renewable fuels make up a proportion of their overall supply. The amount of renewable fuel that should be supplied is calculated as a percentage of the volume of relevant fossil fuel supplied in a calendar year.

This obligation is met by acquiring certificates which are issued for the supply of sustainable renewable fuels. These certificates can be redeemed at the end of an obligation period, as well as traded between parties. The value of these certificates therefore provides a revenue stream for producers of renewable fuels and demand for their products in the fuel market. While the RTFO has operated successfully since 2008, it is important that it continues to evolve as new technologies and opportunities for emissions-reducing fuels are developed.

We committed to supporting RCFs in the Government’s transport decarbonisation plan and this statutory instrument delivers on that goal. It is the product of two consultations with industry and in-depth working with industry experts and across government departments. The instrument will help to maximise the greenhouse gas savings that can be achieved under the RTFO by broadening the available feedstocks for eligible fuels and encouraging the development of a new industry.

So what are these new fuels? RCFs are fuels produced from fossil wastes that cannot be avoided, reused or recycled, and have the potential to reduce greenhouse gas emissions relative to petrol, diesel or kerosene. To date, the RTFO scheme has supported only fuels produced from renewable feedstocks, such as biomass and renewable energy. However, emerging technologies and production methods mean it is possible for fuels produced from fossil wastes to contribute to emissions reductions to a similar degree to renewable fuels.

For example, wastes such as municipal solid waste—black binbag waste to most of us—can be processed using advanced techniques to form alternatives to fossil diesel and jet fuel. These fuels can provide significant greenhouse gas emissions savings compared with their alternative end-of-life fate, such as incineration in energy- from-waste plants.

Recent amendments to the Energy Act via last year’s Energy Bill permit RCFs to be included in the RTFO as well as other renewable transport support schemes, such as the forthcoming mandate for sustainable aviation fuels, provided they cause or contribute to a reduction in carbon emissions. The amendment to the Energy Act recognised that RCFs can play an important role in decarbonising different transport modes, including harder to electrify vehicles such as heavy goods vehicles and airliners.

Turning to the specific content of this SI, it amends the RTFO order to add wastes of fossil origin as an eligible feedstock for fuel production. Importantly, it also designates RCFs as a “development fuel”. These development fuels can be used to fill a sub-target in the RTFO designed to encourage the supply of novel and strategically important emerging technologies for fuel production. As a development fuel, qualifying RCFs also need to meet additional eligibility criteria in the order ensuring that only fuels that comply with existing fuel standards can qualify. This mitigates any air quality or compatibility concerns, as the fuels will in essence be chemically comparable with transport fuels already in use today.

This order will also allow RCFs to claim one development fuel certificate per litre of fuel supplied, which is half that of similar eligible renewable fuels. This is in recognition that truly renewable fuels remain more valuable, while still rewarding emissions savings from RCFs. To ensure that we mitigate any unintended consequences, the order also introduces detailed sustainability criteria. These ensure that support is provided only to fuels that are produced from genuine non-recyclable wastes and that they provide a saving on carbon emissions of at least 50% compared to traditional fossil fuels such as petrol and diesel. These criteria ensure that the policy complements the waste hierarchy and avoids incentivising the creation of wastes while still delivering emissions savings compared to the alternative likely end-of-life fate for different waste streams.

Why we are supporting RCFs? We expect that RCFs will have an important part to play in meeting our future emission reductions targets. Renewable fuels already contribute one-third of transport emissions reductions from the current carbon budget. Widening eligibility to include RCFs will ensure that such fuels can continue to make that important contribution as part of the transition to the electrification of road vehicles. Advanced fuels such as RCFs can generate significantly lower emissions compared to traditional fossil fuels.

The UK is leading the way in developing many of these technologies, supported by grant funding from the Department for Transport via the Future Fuels for Flight and Freight competition and, more recently, the Advanced Fuels Fund. Introducing RCFs into the RTFO now sets a helpful precedent for the forthcoming mandate for sustainable aviation fuel, which the Government have committed to introduce on 1 January 2025 and which will operate in a similar way, but for the aviation sector. Including RCFs in both schemes is important, as production processes mean that many facilities will produce both road fuel and SAF at the same time. Supporting RCFs under the RTFO will also increase the range of feedstocks eligible for support and encourage the innovation needed to increase the deployment of low-carbon fuels in harder to decarbonise vehicles such as heavy goods vehicles and airliners.

A further benefit of supporting RCFs is to provide a productive alternative for difficult to manage wastes. Examples of RCF feedstocks include unrecyclable, often contaminated plastics such as black bin bag waste. These wastes are currently mostly incinerated or sent to landfill. Processing them into fuels offers a more sustainable method of waste management. RCF production also utilises many of the same processes and technologies needed to be developed in order to increase the efficiency and capability of chemical recycling. Providing extra investment into these processes will therefore lead to wider waste management benefits in future.

In conclusion, as I have said, fuels supplied under the RTFO scheme currently deliver about one-third of all domestic transport carbon savings under current carbon budgets. However, it is vital that we expand the range of feedstocks we use if we are to continue to grow their contribution and meet our net-zero goal. RCFs have the potential to deliver emissions savings across the transport sector, while also supporting the efficient handling of wastes, and provide an opportunity for a valuable emerging UK industry, something I think we should all support. I beg to move.

[Lord Ravensdale (CB)]

My Lords, I declare my interests as set out in the register, particularly as a chief engineer working for AtkinsRéalis, an engineering consultancy, and as a co-chair of Legislators for Nuclear.

I very much welcome this statutory instrument, not least because I put forward and agreed with the Government the amendment to the Energy Act 2023 which gave them the primary powers to undertake this change. As the Minister said, recycled carbon fuels can provide significant carbon savings compared with traditional fossil fuels such as petrol, diesel and kerosene, and will save large quantities of carbon for hard-to-abate sectors. They will also enable RCFs as key near-term components of sustainable aviation fuels in the SAF mandate. Clearly, how these carbon savings are to be determined will be a key point in the implementation of these regulations, so can the Minister perhaps expand to the Committee on the detail of how this carbon savings process will be undertaken?

Secondly, the other part to my amendments to the Energy Act 2023 related to nuclear-derived fuels and enabling these to obtain support under the RTFO. These powers will be important in the near term for plans for hydrogen-powered construction vehicles and for hydrogen-powered buses at Sizewell, and in the medium term for the SAF mandate, given the unique characteristics of nuclear plants and their ability to produce hydrogen and synthetic fuels economically and at large volumes, leveraging the heat that they generate as well as electricity to generate large volumes of sustainable aviation fuel. Can the Minister perhaps update the Committee on when we will see a similar statutory instrument for nuclear-derived fuels, and indeed on the timescales of those associated consultations?

Finally, I highlight the need for cross-departmental working in this area, particularly on sustainable aviation fuels, which I know is already happening. There is a need for ministerial sponsorship of a senior-level, cross-Whitehall discussion, including the relevant departments, including the DESNZ, the DfT and the Treasury, to initiate those activities and dialogue on policy, funding and collaborations needed to unlock this SAF opportunity from recycled carbon fuels and from nuclear-derived fuels. This would really help break down those silos and move this area forward. Can the Minister also please state what plans there are for such cross-departmental work in the future?

[Baroness Randerson (LD)]

My Lords, I thank the Minister for his introduction. The noble Lord has just referred to the significance of this instrument. It is a very modest little piece of secondary legislation, but it could well usher in a whole new era in relation to fuels. This is about recycled carbon fuels, which are potentially a useful extension to the RTFO order. It increases the range of fuels, as the Minister has said, which can be rewarded under the order, and will therefore increase potential total carbon savings.

At the heart of this is the fact that this is not zero carbon but lower carbon: up to 50% lower than traditional fossil fuels. Of course, we are with various techniques moving away from our traditional fossil fuels: therefore, one would say that perhaps 50% lower might be more modest as a percentage later on, as the move away from fossil fuels is generated. That is very important, because it is based on waste of fossil fuel origin, such as municipal solid waste. So, in terms of providing a new fuel, this is also solving an old problem, and is therefore very welcome.

Renewable Transport Fuel Obligation

Lord Ravensdale Excerpts

Tuesday 13th June 2023 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The Government have incredibly high standards of sustainability for the fuels that we allow under the renewable transport fuel obligation. As I am sure the noble Baroness is aware, many of the crops grown for biofuels are not fit for human consumption. However, they are grown because they are useful not only for biofuels but for animal feedstock. There is a very careful balance to be struck. The Government are well aware of the land use issue and the need to be able to develop enough human-supporting crops. As I say, we keep all of this under review.

[Lord Ravensdale (CB)]

My Lords, I declare my interests in the register. I have two questions. First, what progress is being made with regulations to enable support for nuclear-derived fuels and recycled carbon fuels within the RTFO following the recent amendment to the Energy Bill? Secondly, quota-based systems such as the RTFO are being implemented in other countries for the purposes of decarbonising ammonia and fertiliser production. What plans do the Government have for similar schemes to clean up ammonia?

[Baroness Vere of Norbiton (Con)]

As the noble Lord will be aware, the Energy Bill is currently working its way through the other place. I am very pleased that we were able to get the amendment for recycled carbon and nuclear-derived fuels, as it goes into primary legislation. We are working concurrently on the secondary legislation to bring that into effect as it is needed and into the various schemes. On ammonia and various other renewable fuels, we are looking very carefully across the entire suite of low-carbon fuels. The Department for Transport will be publishing a low-carbon fuel strategy later this year.

Midlands Rail Hub

Lord Ravensdale Excerpts

Tuesday 15th November 2022 Lords Chamber

Asked by

[Lord Ravensdale]

To ask His Majesty’s Government what assessment they have made of the Outline Business Case of the Midlands Rail Hub.

[Lord Ravensdale (CB)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare my interests in the register and note that I am co-chair of the Midlands Engine.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, the Department for Transport received the outline business case for the Midlands Rail Hub on 14 November. We now need to assess the contribution of the scheme to the Government’s objectives, value for taxpayer money and affordability, considering the forthcoming Autumn Statement. I expect that decisions on how to proceed with the Midlands Rail Hub will be made in 2023.

[Lord Ravensdale (CB)]

I thank the Minister for that Answer. Aside from the clear economic benefits of the scheme, what struck me about the rail hub is that all stakeholders in the Midlands have come together to support it. What additional assurances can the Minister give me that the Government will give the project their full support, including Midlands Rail Hub east to Leicester? Can the Minister also give some assurance on funding the quick win in the business case of Snow Hill platform 4, which could be delivered by 2025, allowing us to take a new train from Birmingham’s business district direct to London?

[Baroness Vere of Norbiton (Con)]

My Lords, as I said, we received the outline business case yesterday, so I hope the noble Lord will forgive me in that, clearly, we need to review what it says and what quick wins or otherwise there may be. I am aware that the reinstatement of platform 4 at Snow Hill station in central Birmingham is a key part of the work. It could be a quick win but no funding decisions have been made, and we expect that works will be delivered within the RNEP.

Transport: Zero Carbon Target

Lord Ravensdale Excerpts

Tuesday 27th April 2021 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The Government are of course focusing on our supply lines from Asia, but also on what we can do domestically. Recent experiences have shown us that being overreliant on any particular country is possibly not the wisest idea. The Government are investing £318 million in the Faraday battery challenge. Part of that is the amount of money we are investing in the Faraday Institution, which within two years has become a world leader in electrochemical energy storage research. There are 400 researchers there, looking at batteries with longer range; they are lighter, faster charging, durable, safer and sustainable. Allied to that, we will look at the supply chain for the constituent elements that need to go into those batteries.

[Lord Ravensdale (CB)]

My Lords, I declare my interests as in the register. In my mind, the Question from the noble Lord, Lord Berkeley, is a good illustration of why a whole-systems approach is needed to tackle net zero. Can the Minister say what steps the Government are taking to address the problem of silos inherent in individual departmental responsibilities—for example, in BEIS and DfT? Does she agree with me that a cross-departmental delivery body sitting below the Cabinet committees is required to properly implement a systems approach to net zero?

[Baroness Vere of Norbiton (Con)]

It is probably above my pay grade to try to reorganise government from the Dispatch Box, but the noble Lord is absolutely right that numerous government departments have a very strong interest in what we are doing. For example, the Department for Transport will publish its transport decarbonisation plan in the coming weeks. As part of that, we will set out what we will do when it comes to hydrogen technology. Subsequent to that, BEIS will publish the UK hydrogen strategy, which will of course talk about how we can focus on the low-carbon production of hydrogen. We are capable of working together across departments and are doing so well so far, but the noble Lord may be right; something may be set up in future.

HS2: Phase 2B

Lord Ravensdale Excerpts

Monday 8th February 2021 Lords Chamber

Asked by

[Lord Ravensdale]

To ask Her Majesty’s Government what assessment they have made of the impact on (1) the East Midlands, and (2) Yorkshire, of not delivering the eastern leg of HS2 Phase 2B in full.

[Lord Ravensdale (CB) [V]]

I beg leave to ask the Question standing in my name on the Order Paper and declare my interests as co-chair of the Midlands Engine All-Party Parliamentary Group.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, the Government are committed to ensuring that the Midlands, Yorkshire and the north-east realise the benefits of high-speed services. The integrated rail plan will set out the best way of delivering the eastern leg of HS2 phase 2b and will consider how to sequence its delivery to ensure that benefits are realised sooner and that it is integrated with other major schemes such as Northern Powerhouse Rail and Midlands Engine Rail.

[Lord Ravensdale (CB) [V]]

I thank the Minister for her reply. Only the full HS2 eastern leg and Midlands Engine Rail—including the developments from regeneration around the HS2 East Midlands hub at Toton—would deliver the connectivity and ambition needed to revive the Midlands economy post Covid. Does the Minister agree that the HS2 East Midlands hub should remain at Toton? The scale of development at Toton, creating 84,000 jobs and adding £4.8 billion to the value of the regional economy, will be key to levelling up the Midlands region after years of underinvestment.

[Baroness Vere of Norbiton (Con)]

My Lords, we have been very impressed by the scale of the regeneration plans for the proposed HS2 station at Toton. In the IRP it is very important that we consider regeneration and economic impacts on local areas, as well as how to create the right kind of rail network.

Trains: East Midlands

Lord Ravensdale Excerpts

Monday 19th October 2020 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The integrated rail plan announced in February 2020 will look at the delivery of high-speed rail alongside all the other rail enhancements across the Midlands, including the Midlands rail hub. Network Rail is already developing work in this area, including connectivity improvements between Birmingham and Nottingham.

[Lord Ravensdale (CB)]

My Lords, I declare my interest as co-chair of the Midlands Engine All-Party Parliamentary Group. Rail is playing a vital role in levelling up the Midlands and capitalising regional developments. A dedicated ministerial champion to drive this key programme forward within government would be hugely beneficial. Is that something that the Government will consider?

[Baroness Vere of Norbiton (Con)]

The Government take their relationship with Midlands Engine and Midlands Connect extremely seriously, and I have had a number of meetings with them. On transport for the east Midlands, the Transport Secretary, Grant Shapps, announced on 3 September a new collaborative agreement between local leaders in the east Midlands and the department. We have created two new posts within the department specifically for the east Midlands to provide a more influential role when it comes to rail service enhancement decisions.