Sustainable Aviation Fuel Bill (Second sitting)

Debate between David Reed and Amanda Hack

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[David Reed (Exmouth and Exeter East) (Con)]

Q I think it is fair to say that the international supply chain is becoming more constrained and that there is a more protectionist international global economy. Can you give us a flavour of some of the economic and logistical challenges that you would face, importing SAF into the UK? As a follow on, if there is a requirement around energy security to set up shop in the UK, given the known knowns, would you look for subsidies from the current Government to set up production in the UK?

Ruben van Grinsven: I am afraid I cannot fully answer that question because it is not the part of the business that I am in. I am not importing SAF to the UK, so I do not know how trade limitations are currently impacting SAF supply. I would have to ask a colleague and come back to that question. It is also hard to predict what the future is going to bring for global trade and how protectionism will impact the global free trade of all types of fuels.

If you produce domestic fuels, that is, of course, going to be helpful if you want energy security. I must say, though, that if you look at the volumes that we are talking about today, the energy security element in the early days is going to be limited because of the volume of the fuels involved.

[Amanda Hack (North West Leicestershire) (Lab)]

Q I want to put on the record that I have an airport in my constituency, so many relevant companies are based there.

You are a global company in a global marketplace. The airlines I have spoken to want to source SAF from UK markets. How attractive is that to your organisation as a global business—responding to your customers’ wanting you to deliver locally? How much does that play a part in that investment?

Ruben van Grinsven: I am going to answer in a slightly similar way. My role is very much investigating and developing supply assets. I am really looking at building SAF plans. I am not very familiar with how customers demand locally produced fuel. In general, customers look for affordability and, therefore, at price and eligibility legislation. At this point, those are the more driving factors for people to buy certain fuels.

--- Later in debate ---

[David Reed]

Q If British money is being spent on British technologies, and if you are leveraging capital to go on those SAF programmes, where is that money coming from? Is the investment attitude right in this country toward green technologies and SAF? Which countries are quite front-footed in their approach to investing in these technologies?

Josh Garton: We are most active here in the UK and Europe with sustainable aviation fuel and the investors that are interested. We deal with commercial banks, private equity and other investors, and they are all very enthusiastic about the prospect. Unquestionably, they want to deploy capital into this space, but they will not be throwing out their investment rulebook when it comes to their risk-return profiles and the way that they assess risk. For that reason, we need things like this revenue certainty mechanism in place to provide confidence that investors, when they deploy capital in this space, will get the returns they need to justify their investments, or that lenders providing debt capital into this will get the returns they need within the regulatory frameworks in which they operate.

[Amanda Hack]

Q Obviously, when you are looking at green investment, there is a huge element of risk in new technologies. Are there other levers of Government that would de-risk them from an infrastructure point of view, or are there other things that we could do on top of the Bill to de-risk it?

Josh Garton: Yes, I think there are. As I said, the revenue certainty mechanism seeks to address price risk primarily. The mandate deals with volume, and it provides that volume certainty in the market. When we think of the second and third-generation fuels that we need to develop to meet the aviation decarbonisation targets, these are somewhat novel technologies—in fact, they are novel technologies—and there is no market for the fuel at the moment. That means the technologies themselves are not commercially mature yet, so even with a revenue certainty mechanism in place, there is still a level of technology risk that some investors are not willing to tolerate at this point in time.

We need further support to help the first-of-a-kind projects get through FID, even with the revenue certainty mechanism in place. That can include deploying things like first-loss guarantees, or other forms of Government involvement, such as being the first lender through something like the NWF taking a slightly more risk-on approach to the financing of these first-of-a-kind projects. That way we can prove that the technologies are commercially viable, and then help scale the sector.

--- Later in debate ---

[Amanda Hack]

Sorry.

Professor Maslin: No, no, I think it’s great. Forgetting schools, I think we need reinvigorate engineering in universities—and I say that not coming from an engineering background. The reason is that, at UCL, we have a huge faculty of engineering and some real areas of expertise, but we need to build those up. We need the chemical engineers who can train the next generation to go into SAFs. We need to energise that.

At the moment, the problem is that the university sector is creaking and underfunded, and top universities are doing things on a shoestring. It seems slightly ridiculous that I am going out to the middle east to get funding to support research into SAFs, but we are having to be entrepreneurial and sell our talent around the world.

[David Reed]

Q Professor Maslin, thank you for being with us today. You talked powerfully about the international nature of this technology set. If a country or business is not going through a good time, that technology might not come through the supply chain. From a UK perspective, where are the main weaknesses with the international supply chain? As a follow-on, are any hostile states actively trying to weaponise elements of that supply chain?

Professor Maslin: The first thing is that we have to work out a way of being self-sufficient in SAFs. If you want the mandate and the Bill to work, we have to have that self-reliance. The problem that is the quality, quantity and supply of SAFs around the world are highly variable. They are not as good as you think they are. We therefore need to be able to protect our own regulations by having a homegrown community.

On weaponisation, no, I have not seen any evidence that hostile states are going after SAFs at the moment, because they are a very small percentage of the aviation mix. At the international level, it would be helpful if the Chicago accords could be renegotiated so that you could tax aviation fuel internationally, even if the tax was small—$1 per tonne, or something like that—to shift the balance away from aviation fuel and towards SAFs being more accountable. I doubt that will be possible in these interesting political times, but that is the problem we have. We are able to tax aviation fuel internally but not internationally. Therefore, at the moment, there is no aviation fuel tax on international flights, which would be a really nice mechanism. Of course, you can see that as weaponising against the fossil fuel industry.