Sustainable Aviation Fuel Bill

Euan Stainbank Excerpts

2nd reading
Wednesday 11th June 2025 Commons Chamber

[Euan Stainbank (Falkirk) (Lab)]

I welcome this tremendous legislation, which comes not a minute too soon after the previous Government self-admittedly sat on their hands. The Bill will enable the essential move to the production of British sustainable aviation fuel, and I put on the record my thanks to the ministerial team and officials for bringing the Bill forward and for their answers to my extensive written questions.

Unless it is the will of the House to cry for the end of aviation as a practice, it is imperative that we back the sustainable use of biofuels, municipal waste, cover crops, ethanol, and even carbon dioxide straight out of the atmosphere, for aviation fuel. The mandate provides a modest progression for the aviation industry towards incorporating this fuel into its mix. We have genuinely world-leading research and development on Teesside, such as through Project Speedbird and Lighthouse Green Fuels. The green shoots of industry there must be supported by Government to enable their outcomes.

Both airlines and airports recognise the environmental and economic imperative of building a domestic SAF market. They understand that relying on imports to meet the mandate increases costs and introduces risk to our energy security, aviation resilience and national competitiveness, and there is the geopolitical risk of exposing ourselves to a cheap Chinese market. We shamefully saw the previous Government be willing to do that, as exposed by the hundreds of jobs now on the line at Alexander Dennis in my constituency due to aggressive state-subsidised Chinese industrial practices capturing an incrementally increasing share of the British bus manufacturing market. It is also in no small part thanks to the SNP Government recently buying four times as many Chinese buses as buses from Scotland, but I digress.

There is credible investment interest from traditional jet fuel producers and aviation operators, which have shown their willingness to put capital behind UK SAF projects. That investment is waiting for the RCM to be put in place, for private law contracts with manufacturers to be agreed, and for the industry to have complete certainty in investing in what is a nascent and uncertain technology.

The Bill must pass through the House as quickly as possible. One of the places that cannot afford to wait for investment is Grangemouth. The closure of the Grangemouth refinery has marked the end of over a century of oil refining on Falkirk’s doorstep, and jobs in the wider supply chain are at risk daily due to the loss of the economic anchor that the refinery provided the community. Petroineos’ conversion of the refinery into an import terminal compounds the concerns within the community that we will be reliant on cheap Chinese imports instead of growing our own SAF.

Grangemouth has the infrastructure, skills, logistics and the will to be a cornerstone of our domestic SAF industry and strategy in Scotland and across the United Kingdom, and it already has a commitment from the Government of £200 million from the national wealth fund. Organisations such as Scottish Enterprise and the team around Project Willow are already assessing investable proposals centred on SAF in Grangemouth. However, the dates for commencement of operations suggested in the report are still far too remote from the practical reality of workers who need to feed their kids and pay their mortgage.

With strategic support and the wise and expedient deployment of the £200 million dedicated by this UK Labour Government to Grangemouth, I firmly believe that we can rapidly transition Grangemouth from aviation fuel to SAF, serving as a model of industrial renewal. There are implications for fuel security in Scotland, for jobs in my constituency and the cost of heating and industrial fuel across the country. We cannot allow this to become another missed opportunity. For Grangemouth to have a chance of succeeding, we need acceleration.

With that in mind, I would like the Minister to answer the following questions. Considering that industry is raising concerns that we may have to wait up to nine months between the commencement of this legislation in quarter 4 of 2026 and the first private law contract being confirmed, what work can be done prior to the introduction of this legislation to bring the first of the contracts into effect as soon as humanly possible? How does the Bill intersect with Project Willow proposals for SAF at Grangemouth? Does the Minister understand the need to back and deliver that at pace? Would he like to touch on how the Project Willow report recommends delaying the HEFA cap? Does he consider the use of waste feedstocks for sustainable aviation fuel to be dirtier, cleaner or the same as waste incineration? What conversations has he had with colleagues at the Department for Environment, Food and Rural Affairs regarding the waste hierarchy implications?

In summary, we need the RCM rapidly, and we need to develop the industry at scale, and affordably. I hope that we can genuinely back British SAF, safeguard fuel security, protect skilled jobs and anchor the energy transition in communities such as Grangemouth, Teesside and all across the United Kingdom.

Sustainable Aviation Fuel Bill (First sitting)

Euan Stainbank Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[The Chair]

Because of the pressures of time, unusually, I will ask Euan and David to ask their questions together.

[Euan Stainbank (Falkirk) (Lab)]

Q Thank you, Mr Pritchard. Both Airlines UK and RTFA touch on this in their written submissions, but using municipal solid waste will give a substantially higher greenhouse gas saving than incinerating it, as is currently done. What do you think the Government could do further to incentivise use of the feedstock in that way, rather than seeing more energy go towards waste projects and incineration, or do you anticipate that the revenue certainty mechanism and the sub-mandate will be sufficient?

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

To pick up on Mr Greenwood’s point about unintended consequences, at a time of increased international instability, the need to produce things domestically in the coming years has become more and more apparent. Do you think this will impact our traditional ways of producing those fuels that we will probably need in the UK?

Paul Greenwood: First, from an energy security point of view, and as Gaynor rightly pointed out, a very significant amount of the road fuels in the UK are imported. They are imported rather than refined here, as it is not economic to refine them here, because of all the cost issues we face in energy, labour and carbon dioxide. That has effectively driven refineries to not invest or expand, and in some places, to go bust. That is the major driver here.

If you are prepared to import 70% of your jet fuel now, I do not see why you need to increase local production of SAF. There is a very good reason for doing that—the creation of jobs—but there are unintended consequences in the costs and how you are going to pay for that, which need to be thought through seriously. I do not think this is an energy security issue, given the amount of product that you are importing into the country now. By layering cost on to refiners and fuel suppliers as you are doing now, you actually risk precipitating the decline and demise of the refining sector even more, which will mean importing significantly more fuel across the piece. To my mind, that is a quid pro quo.

Gaynor Hartnell: We import about 85% of our road fuels. Lamentably, that figure is going to go up, because existing biofuel and renewable fuel production facilities are falling away. There was a Greenergy announcement last week about the closure of the Immingham plant, and two bioethanol producers are at risk of closure. They are linked into the UK in so many different ways, from CO₂ production to the market for grain that does not meet the required grade for milling, so it has to be used as feed wheat instead. We will suffer the consequences of not taking care of our domestic industry. We need production in the UK.

It is not just a question of saying, “We can simply buy it from overseas”. As Rob has pointed out, the SAF mandate creates a specific demand for waste-based SAF that is not specifically encouraged by any other mandate around the world, so we need this. If we are not going to make it, we cannot rely on other people making it, and the airlines and fuel suppliers ultimately rely on pulling that into the UK to avoid paying the buy-out for the mandate. Paying the buy-out for the mandate would be a really bad situation for everybody, so we need to safeguard against that happening.

You also asked about the waste hierarchy and what could be done to encourage residual municipal solid waste to find its way to the best carbon outcome, rather than being used to produce electricity, which is already going on to a largely decarbonised grid. Adjusting the waste hierarchy to recognise the carbon benefits of this route for residual solid waste would be really helpful. At the moment, local authorities are in a situation where they have a reliable route through just sending it off to an energy from waste project, against prospects of hopefully SAF projects coming down the line in future, if all else goes well, then RCM comes along and they win contracts. There is a lot more risk involved in choosing the SAF route. That has to be specifically encouraged, and the waste hierarchy would be a way of doing that.

--- Later in debate ---

[Chris Vince]

Q I will be very quick, Mr Pritchard. Thank you all for coming to give evidence. Graeme has stolen a little of my question, which was to understand what you see as the risks to your industry if the Bill does not go forward or, in fairness, if it does go forward. I want to understand the risks involved.

[Euan Stainbank]

We have talked about targeting. Would you support any further specific policy interventions to help to stimulate advanced 2G SAF technologies that might otherwise struggle to scale up?

[Luke Taylor]

I just have a pushback or challenge on the comments about SAF being popular. An earlier pushback, too, was on the £1.50 per passenger on top of tickets. Does that suggest that this might be easier to sell—easier to promote—to passengers than you might have suggested in the first place? I think the suggestion was that certain demographics and certain airline customer groups will be more or less in favour and able to pay it.

Lahiru Ranasinghe: To add to that, for us, the average leisure traveller would say—to put it in colloquial terms—“It’s your problem to solve. We want you to do it, but we’re not going to pay for it.” With corporates, they have their own corporate targets, so from a B2B—business to business—perspective, they want to hit those.

Jonathon Counsell: I will answer the risk question. Yes, without the policy, we have no 2G SAF, so we would be dependent on the 1G market, which will cap out in the early 2030s. We are not going to achieve our decarbonisation targets without 2G SAF. That is the biggest risk without the Bill.

The biggest risk with the Bill is buy-out. If the incentive does not produce enough SAF—we understand the buy-out is there to manage short-term supply shortages, but if we have long-term buy-out, which we have seen in the ground transport fuels market—that is policy failure. Essentially, that huge cost is £6,000 per tonne of SAF, and if that cost comes straight back to the airline, it will go on air fares, but you do not get any decarbonisation—you get huge cost and no decarbonisation. That is our biggest risk.

Luke Ervine: Some of the risks of the RCM that we need to be cognisant of include covering too much of the mandate with the RCM. We do not want to lock ourselves into high prices forever and a day. Obviously we want that to stimulate the part of the market that needs that support, so we want to leave enough room for competition.

The other thing we need to think about is how suppliers might bear some of the risk that is presented in the RCM—how some of the cost of capitalising the fund, or any cost of compliance failures that they may face, might be passed through to airlines and consumers. That key area of transparency is therefore important. This needs to be well thought through, but we also need to do it quickly because we are reaching a pivotal point in terms of buy-out where we will have to just pay for no decarb.

Lahiru Ranasinghe: Ultimately, the RCM is a derisking measure. It is a stepping stone towards what we want, which is a functioning SAF market. It is a complicated challenge. There is a lot of work to be done over the coming stages and throughout the process to make sure that we end up with a competitive UK SAF market so that producers can compete on a global scale, and, crucially, we as airlines can compete on a global and European scale by keeping flying affordable and continuing to grow in the UK. On an environmental level, if there is x amount of growth coming through the UK, which is supporting an environmentally robust SAF mandate, and production in the UK, as opposed to that going elsewhere in the world, that is driving sustainable growth on a global scale.

Jonathon Counsell: On the amendment question, I do not think we need to look at any amendments at this stage. On the targeting of the scheme, we should make it an opt-in scheme for the projects that need it. We do not want a blanket scheme to cover all 2G SAF because that is not needed, but we could have projects opt in with some qualifying criteria—for example, projects that are early stage, first of a kind or high risk, and that cannot get funding without the scheme.

I would not say SAF is popular—that is probably going a step too far. It is fair to say there is greater acceptance of SAF as a solution, but let us be clear: nobody wants to pay for it. However, we accept that there is a cost to the net zero transition, and our job is to minimise that cost as far as possible.

[The Chair]

Euan, do you want to follow up on that?

[Euan Stainbank]

No.

[The Chair]

We have two minutes left. Do the other witnesses have any final comments or do Members have any further questions? No. I thank the witnesses for their evidence. We will move on to the next panel.

Examination of Witnesses

Sophia Haywood and Noaman Al Adhami gave evidence.

--- Later in debate ---

[Luke Taylor]

Q Thank you both. A lot of the criticism and cynicism over the value of SAF and its environmental benefits are around the fuel source or feedstuff—you have alluded to it. The Bill concentrates on second and third generation SAF. Do you see that as enabling a lot of the potential greenwashing of SAF that may have been behind all that cynicism? Does it address some of those challenges?

As a follow-up question, similar to one that I asked the previous panel, what do you see as some of the challenges across Government that will hold back your ability to produce more SAF? You referred to the ability to use some of the feedstuff to produce second generation SAF mixing, but I think planning and energy will be among the responses as well.

Sophia Haywood: On sustainability and fraud, I have been working on sustainability certification over a number of different fuel types. We have ISCC, which is like an auditing process that we generally have to go through—there are other providers out there—to be able to prove the sustainability of our fuel. This is a very complicated and rigorous process, and I have gone through it many times on different types of fuels.

On the sustainability piece, the guidance that has been put out already in the SAF mandate is very high, and we have to go through a lot of that auditing process. To your point about the risk of fraud and other challenges around greenwashing that potentially could have happened in the past, I think the UK has done a good thing there with how it has approached this, so I support the approach that we are taking. That is not necessarily in this Bill; I would say that that has more already been laid out in the mandate rules.

On what else we would like to see, potentially, through this, as I said before, there is a piece around the SAF allowances—this is a scheme currently in Europe that is funded through ETS revenues. Obviously, you are always taking from somewhere with funding, but you are trying to take at least from a funding source that is coming directly from industry, and using that to then fund the industry back with SAF. I think that has good bones and good structure, and I would love to see that being fleshed out.

On a more practical level, for sure, there is planning. We have just had a recent example that some of my engineers have told me about: waiting two months for an answer on a very small question. It is not because of the quality of the planning teams; they are fantastic. It is the fact that they are quite constrained and there are not enough of them. I suppose there is a potential short-to-medium-term fix there, but also a longer-term fix in terms of thinking of the skills that we need moving forward. We automatically think of more engineering and STEM roles, but we also need the rest of the value chain to be adequate in terms of workforce and other things.

I alluded earlier to the details of the mandate being really good on the sustainability piece, but there are some very complex rules that we are still consistently trying to navigate six months on. There are different interpretations to different questions—for example, in the nitty gritty of how hydrogen is treated or the rules around electricity and displacement. They are more in the detail, but we end up spending quite a lot of time on them as a company trying to break through into this market.

Equally, it is a learning experience for my colleagues doing these projects all across the world. We have other projects going on in India and Australia. As a Brit, I want the UK to be our flagship and our first, and I am working hard to make sure that it is, but as I always say to people, I am competing with my colleagues in Australia and all over because lots of people want SAF. It is about how we can make it as efficient and easy as possible, keeping in mind all the good sustainability criteria, to get steel in the ground here in the UK.

Noaman Al Adhami: From our perspective, the route we are using—the Fischer-Tropsch synthetic paraffinic kerosene route—is an American Society for Testing and Materials route that is approved already. On sustainability, the feedstock criteria are well defined in the SAF mandate. All the types of feedstock that are eligible to produce SAF are well defined. We are complying with that. The greenhouse gas and carbon intensity are other factors for measuring sustainability. For our project, without carbon capture, we are at minus 80% or minus 85% from the fossil equivalent. With carbon capture, we will go negative—we will go to even more than minus 200%. That is key for us.

On what could be done better, planning is always an area where we need improvement in terms of time. There is also connection to the grid, for example—grid connections take a very long time. We decided to produce our own power on site using a biomass boiler rather than waiting for a grid connection because the answer we got was that we will get it by the end of the 2030s—2039—and we cannot wait until then.

Another requirement, which is very specific to us, is to get connected as early as possible to the carbon network once we start producing SAF by the end of 2029, especially when there is a unique benefit for the UK. By the way, that is very unique to the UK. No other country has a SAF mandate that is about carbon scaling and at the same time has the capability to capture CO₂. That is also unique in Europe because the UK and Norway together have 75% of the carbon capture capacity in Europe. It is really very unique to the UK. Our ask is to get connected to reduce carbon intensity, provide a better price per certificate, and also pay, because we do not need subsidy for carbon capture. We are ready to pay the transport and storage costs to the Government for carbon capture. Those are the three main points.

[Euan Stainbank]

Q What effect has anticipation of the RCM and the corresponding timetable, which I imagine your companies are now working to, had on your ability to make a final investment decision? Can you give us as much detail as possible about your current plans, spades in the ground and such?

Noaman Al Adhami: Our project is a £2 billion investment. We need the RCM to be able to reach FID. We already have lenders on board, and that is the requirement they have asked us to secure before reaching FID. Our project was part of the windows of the advanced fuels fund. The original plan was to start construction by 2025—this year. We were planning all our development activities to be ready to start construction this year. Unfortunately, that is now not possible, because the RCM is now pushed to the end of 2026.

Yes, immediately after I sign the contract—the day after—I will start constructing the site and reach FID. I will technically be ready by the end of this year. I am finishing FEED. We have invested more than £70 million in this project so far and we will finish FEED by the end of this year, so technically I am ready to start construction after the end of this year.

If there are delays, we are worried. We are broadly very supportive of the Bill; our issue is timing. If I do not get the RCM by the end of 2026, then the project will be delayed, and then I will not be able to produce SAF as planned starting from the end of 2029, and then provide the market with the SAF quantities by 2030, when it is required, as per the mandate. The second-generation SAF is required in 2030. I will not be able to do that if there are delays.

Sophia Haywood: We are currently in the FEED phase, which is front-end engineering and design—we are really good at acronyms in this space. Basically, what that means is that we are looking at the facility specific to the site and designing everything up with the site. It is a really important stage, before we then go to a final investment decision. We are expected to go to a final investment decision next year. That is what we came out publicly and said. Any policy uncertainty in this space, even if it is for a good thing, creates questions, but at the moment we are still working towards that timeframe.

One of the things we are hearing at the moment on access to finance is a lot of positivity towards when you get to that final investment decision space. But again, who knows the full impact that this will have on the broader markets in the financial space as well? All eyes are on the UK; they have been, first with the SAF mandate, and now with the RCM. Also in Europe, there is a lot of looking to what the UK is doing.

This is undoubtedly going to have an impact, but in all honesty it is very difficult to say right now what that impact could be until more details are available. From our perspective, the development of the scheme as swiftly as possible and, as Jonathon Counsell said, the competitivity within that, is important. It is about as much swiftness as possible. We are very supportive at the moment of what is happening.

[David Reed]

Q Following on from the shadow Minister’s questions about scalability and production, Ms Haywood, you talked about the globally distributed nature of this technology sector. With international supply chains becoming more contested and the view that traditional production methods will be scaled down and SAF will be increased, where do you see the biggest blockers to growth and scalability, and how do you balance that against energy security?

Sophia Haywood: That is a great question. In terms of the international value chains, as I said before, all eyes are on the UK. For a lot of projects that are developing globally, even if they are being developed in countries significantly further away from here and Europe, we are going to see a lot of opportunity for product to be moved over to the UK, at least until other mandates in other countries are put in place, and then we will start seeing shifts in where this goes.

Instead of a blocker, perhaps, I would phrase it more as an opportunity about things that we could maybe do slightly differently. One example that we have just had is a project in Japan that we have done. We had a large amount of funding. It is quite similar to the advanced fuels fund principle, but a lot larger in terms of the quantity of funding that is available, albeit with a smaller number of participants. That has enabled a much larger-scale project in partnership with one of Japan’s largest oil companies to develop a SAF project. This is a transition, and they are going to move at the same pace as one another.

As much as we can support investments on existing sites with existing infrastructure, such as both of our projects in Teesside in terms of the regeneration, I think more activities like that could be a great opportunity for the UK. The steps that have been taken so far with Project Willow are a good example of how that could be taken to the next level. The project is looking at opportunities on the site of the former refinery at Grangemouth; maybe this could be a similar example, where you could take it to the next level. However, we will see increasing competition globally.

Coming back to the points around planning and electricity connections, anything that could help us to bring investments to the UK, where we have some of the highest energy costs, would be welcome. We saw a commitment in the industrial strategy to reducing electricity costs, which is fantastic. We would welcome greater clarity as to whether SAF can definitely be included in that. I saw that it is an extension to an existing scheme, which is why I am asking that question. These are some of the things that help us to compete better globally.

Sustainable Aviation Fuel Bill (Second sitting)

Euan Stainbank Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Graeme Downie]

Q This question has come up in some of the other discussions today, but do you think there is enough in the Bill to properly incentivise the move beyond first and second generation SAFs, into what I think some of the witnesses described as the ultimate place we want to end up in—and where there is probably the most opportunity for UK IP, UK innovation and subsequently UK jobs and growth—such that the UK is where SAF happens and is created, as well as where it is developed in future? Do you think there is enough in the Bill for that? How do you see the Bill, and the next steps after that, as making sure that we can really achieve that and ensure that proper added value for the economy, while meeting climate targets?

Mike Kane: First, you are a great champion for Edinburgh airport in your constituency. You know the value of aviation to local communities in particular and you have championed that since you have been here.

Does the Bill give you innovation? I am not sure it does. I think it gives you a platform for what you want to do, in terms of the contracts that we will let going forward, which are about going from HEFA and first generation, to second and third generation. This gives you the substructure to build that capacity for intellectual property, inviting bids for various ways of doing things, and then protecting and supporting that, and bringing new entrants into the market. I think that is what the Bill does.

[Euan Stainbank]

Q We have heard quite a lot about what we can do to enable second-generation fuel from municipal solid waste, large volumes of which are currently going, and have been for a while, to electricity generation through waste incineration. Has the Department held any preliminary discussions with other Departments or external stakeholders about what local authorities need in order to have the confidence to send more of their municipal solid waste to make SAF?

Mike Kane: This will depend, again, on the contracts. I know that you are a neighbour to the Grangemouth refinery, where there could be potential in the future. We know that SAF can be made from a wide range of feedstock, including household waste. The SAF pathways are developing rapidly, and will do even in the weeks and months while the Bill goes through. We just need to make sure that this legislation adapts to the technology and pathways that are coming forward, which will involve further discussions with DBT, other parts of Government and possibly local authorities.

[Euan Stainbank]

Q To follow up on that, the Government have been quite consistent in their response to this question, but I just want to reconfirm: are the Government committed to maintaining their current position on the HEFA cap?

Mike Kane: The requirements to support specific technologies’ feedstock today may be out of date. Again, if we were to pass this legislation and get to Third Reading, that gives us flexibility, as the Secretary of State has ability to change it. If we feel that the HEFA cap needs to change, we will be able to change it. If we want to move up the gradients of the types of SAF that we use, it gives us the ability to do that through the letting of the contracts.

Sustainable Aviation Fuel Bill (Fourth sitting)

Euan Stainbank Excerpts

Committee stage
Thursday 17th July 2025 Public Bill Committees

[Mr Kohler]

I am saddened by the Minister’s response. We cannot just leave it to the invisible hand of the market to make sure that sensible decisions are made regarding old oil refinery sites.

[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.