Sustainable Aviation Fuel Bill

Graeme Downie Excerpts

2nd reading
Wednesday 11th June 2025 Commons Chamber

[Graeme Downie (Dunfermline and Dollar) (Lab)]

Like my hon. Friend the Member for Harlow (Chris Vince) said, the hon. Member for Sutton and Cheam (Luke Taylor) should never be ashamed of being a geek of any kind. I definitely do not have his knowledge of formulas or anything like that, but I certainly am a self-professed aviation geek who has spent probably far too long sitting at the end of runways watching planes land for hours on end. When I was in high school, I used to cycle with one of my friends who lived close to the end of Edinburgh airport runway to just sit and watch aircraft come in—to the point that one time, the police came along and asked why these two 14-year-olds were sitting at the end of the runway watching aircraft land. I can assure everyone that nothing untoward or illegal was happening—we were just being that sad and geeky. I think that was the problem the police had; they did not believe that that was what two 14-year-olds were intending to do.

[Luke Taylor]

I would challenge the hon. Member’s commitment to aviation spotting if, during university, he did not take a date to the final approach at Heathrow airport and have her observing the flights coming in for a good two hours. He may be a geek, but he is not quite there yet.

--- Later in debate ---

[Graeme Downie]

I thank the hon. Member for that intervention. I will not ask for a second intervention on how that relationship progressed.

Aviation is a critical part of our national story and our economy, as others have said. As an island nation, we rely on the maritime and aviation sectors to get goods and people in and out of our country, so it is clear that aviation must continue to play a role in our future. In Scotland and in my constituency, that includes the movement of products like salmon and whisky, as well as tourists, to and from Dunfermline and the rest of Scotland. However, with aviation expected to become the largest transport sector emitter of carbon by 2040, it is clear that a range of transformational, long-term changes are needed in the sector to make it sustainable.

I recently had the privilege of hosting a sustainable aviation technology showcase in Parliament with companies such as Airbus, Boeing, easyJet, International Airlines Group and others, including some of the ones that have been mentioned. There I saw technological solutions ranging from radical changes to aircraft design to hydrogen-powered aircraft, as well as a number of SAF producers. I have also heard from Edinburgh airport, one of the largest employers in my constituency, of the importance of airspace reorganisation and regulatory changes, all of which will have a role in modernising aviation and reducing the environmental impact. I know that the Minister has been relentless in pursuing all these avenues to improve aviation in the UK, and we should thank him, his officials and the ministerial team for that work and commitment.

For all those people from different parts of the aviation ecosystem, the issue of SAF has been prime. On taking office, this Government took action much faster than many expected with the introduction of the SAF mandate. It obligates companies supplying fuel to airlines operating out of the UK to either incrementally increase the amount of SAF in use or pay a buy-out fee. That mandate started at 2% and will rise to 10% in 2030 and to 22% in 2040. That is the kind of direction and steer that the industry needed, but it will mean nothing if we do not produce SAF in the UK and invest now in the much longer-term plans for third generation SAF to make that a reality here and to make the UK a world leader in this technology, as well as playing a part in the future of our fledgling hydrogen sector.

Developing a strong SAF industry is a major industrial opportunity for the UK, as others have said. The UK can lead the SAF industry with job creation and innovation. At the event I mentioned, Airbus told me that it is committed to enabling 100% SAF capability across its aircraft production by 2030. According to the Back British SAF campaign, there is potential for over 10,000 jobs in the UK by 2030 and 60,000 jobs by 2050, a number of which would be in Scotland and in my constituency, as well as in the constituencies of other Members across the country. In due course, I hope that some of that might include investment in different parts of the SAF infrastructure in Fife, with proximity to Edinburgh airport and excellent sea, road and rail links.

For these and other reasons, I am delighted to see the Bill come forward. It clearly sets out the revenue certainty mechanism and the framework for setting a strike price that will support businesses and investment cases to make SAF a reality in the UK. It also establishes the route for funding via a levy on suppliers, along with enforcement and oversight.

I hope the Minister might respond in his summing up to a few specific points, some of which have been mentioned by colleagues. Under clause 1, what process does he intend to use to shape precise price points for producers and to calculate the market reference price? Clause 11, on financial penalties, contains provision to amend amounts in the light of inflation. Are those the only circumstances in which penalty amounts can change? Under clause 14, what oversight does he envisage if financial assistance is required to ensure value for money?

Clear and stable policy frameworks like this SAF Bill will be essential to unlocking private investment, accelerating SAF supply chains and positioning the UK as a global leader in the net zero transition, but the pace at which the legislation is introduced will be key, so will the Minister consider what steps he can take to accelerate the creation of a successful SAF industry here in the UK? As my hon. Friend the Member for Falkirk (Euan Stainbank) asked earlier, will the Minister begin work to create strike price contracts so that they are ready as quickly as possible when the legislation is passed? Will he consider moving the start date for the revenue mechanism forward to allow projects to get started as quickly as possible?

The Bill will be a significant part of the future of British aviation, British industry and British growth. I look forward to seeing its progress through the House.

Sustainable Aviation Fuel Bill (First sitting)

Graeme Downie Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Greg Smith]

Q That is very helpful. Before we move on to the next witness, may I probe two elements of what you said? On your last point about costs ultimately being passed to the consumer, the Government stated clearly—the Minister said it from the Dispatch Box on Second Reading—that the Department for Transport believes that any addition to, or indeed subtraction from, airfares as a result of the Bill will be no more than £1.50. Do you agree with that point?

Secondly, you have talked about advanced SAF. Does the Bill do enough to safeguard any state involvement in encouraging the right long-term technology, rather than standing up earlier technologies that we can all see might well need to be stood down in 10 or 20 years when something better has come along?

Rob Griggs: We recognise the £1.50, and we absolutely welcome the commitment through the mandate that if there were price spikes as a result of SAF policy, steps would be taken to address that. For us, it is probably a little too early to say definitively what the price impact of the RCM will be. A lot of it depends on its ultimate scope and design, as well as the costs in the 2G market and the strike price.

We have to bear in mind that ultimately it is the market price of SAF that will drive the biggest impact on ticket prices and the costs borne by the sector. With the RCM, the costs relate essentially either to paying the difference between the cost of SAF and production or to the fact that money can come back the other way. Relatively speaking, although the RCM costs are very important and we need to do everything we can to make sure that they are kept as low and as efficient as possible, they are part of a bigger picture. There are a number of factors that will determine the cost of SAF for the UK. We need to get everything right; the RCM is just one part.

You asked whether the Bill will support the advanced 2G SAFs. The UK has taken a fairly unique route with SAF and the mandate. We have the sub-mandate for advanced SAF, which is about 300,000 tonnes by 2030. We think that it could be a pretty smart move for the UK to do that, because at some point 1G SAF will become feedstock-constrained. That could happen sooner rather than later. We could put ourselves in a really good position by having a domestic advanced SAF industry producing the scalable SAFs that will play an increasingly big role.

The Bill, as written, is technology-neutral. There a number of ways in which you can do advanced SAF. When we come to the design and how projects are chosen, allocated and prioritised, we think it will be really important that this RCM supports projects that are quickly deliverable, scalable and commercially viable to help us to meet the volumes that we will need come 2030. There is nothing in the Bill that says that that cannot happen, but the design stage and how we get into the detail will matter.

Gaynor Hartnell: I agree that no amendments are necessary for the Bill. It has a fairly discrete job, which is basically to get the counterparty established and engaged and to get the levy in place. All the detail on how the revenue certainty mechanism works will come through in secondary legislation. We are very engaged with the thinking and the development on that, as we have been in the lead-up to the RCM becoming a policy of both the former Government and this Government.

It is important to get the design right. Broadly, we are happy with this. The fuel producers are agnostic as to who pays the levy. It is good to hear you note that the cost is going to be small; indeed, it could go either way. There is quite a bit of confusion between the costs of the mandate and the costs of the revenue certainty mechanism. We are keen to make sure that the differences are understood.

Paul Greenwood: I fear I may be a slightly dissenting voice, after you have just heard some comments about how everybody is very supportive. I will start with our perspective at FIUK; I will talk very much as ExxonMobil, but please feel free to challenge me on how there may be some differences in view across the members of FIUK.

Let me start by saying that ExxonMobil owns and runs a very large refinery and petrochemical complex, the Fawley refinery in Southampton, which is actually the largest producer of jet fuel in the UK. We supply about 13% of the UK’s jet market and have recently invested $300 million in a new larger pipeline from Southampton to London. I say that just to highlight the fact that we take the aviation business and the supply of jet fuel very seriously.

One thing is absolutely clear: this is very well-intentioned. We all wish to decarbonise, but I think we have to call out some fundamental flaws in the Bill. I do so with the aim of saying, “Let’s make sure that we can be really clear about what this is doing and what some of the potential unintended consequences are.”

First, I think it is important to say—this might sound slightly controversial, but I do not wish it to be—that this is not a step that will decarbonise. It is a step that will increase the production of sustainable aviation fuel. The way you decarbonise is effectively by incentivising consumption of sustainable aviation fuel, which we already do through the SAF mandate. The SAF mandate is a reasonably well-developed tool that sets a volume threshold and a buy-out price. That is a major lever that you pull as a Government to incentivise consumption. Let us be clear that this is around incentivising production.

My question is not necessarily whether the Bill is right or wrong; I just do not think it is necessary. What you want is a market that functions and sends a signal, and then production will meet that demand signal and the sustainable aviation fuel will be supplied. My question is whether the Bill is necessary.

Let us look at some of the unintended consequences. The first is that there will potentially be an incremental cost, which will be put on the fuel supplier and then, in theory, passed over to the consumer. It is important to say that although that has been put under the principle of the polluter pays, the fuel supplier in this scenario is not the polluter; it is clearly the passenger on the aeroplane or the person who is booking freight on a cargo plane. They are the ones who are causing the flight to happen and creating the consumption. Our principle should therefore be that the cost of the levy goes directly to those entities, but the way we look at it now, it is structured in such a way that it is based on the market share of the fuel supplier.

That gives us two issues. First, it is not really on the polluter; it is on the fuel supplier. Secondly, we are very concerned about whether we will have the absolute transparency necessary to be able to pass 100% of the cost through to the ultimate consumer: either the passenger on the plane or the person who books the freight. We strongly urge you to look at that mechanism and perhaps look at something like the contracts for difference supplier obligation levy that exists in the electricity sector. That is one way of asking, “What are the actual costs? What are we going to impose as a levy?” It is published, it is transparent, the supplier knows what we are going to charge, and what we charge the supplier is 100% passed through. There are a lot of mechanics I think we really need to be clear on.

It is also worth saying clearly that if we have a mechanism that we do not believe is necessary, but which is going to incur incremental costs, we will be passing incremental costs to British consumers and to an area in the UK that is clearly a global market. Having a potentially higher jet fuel cost because of the levy will have some unintended consequences. First, it makes the UK less competitive. Secondly, planes can tanker in fuel, as we all know, so if fuel is more expensive in the UK than elsewhere, people will fill up with more fuel in France, for example, before they fly into the UK, thereby decreasing demand in the UK, decreasing revenues and ironically increasing consumption because more jet fuel is being hauled around the world. I think that those are important unintended consequences that we need to take into account.

[Graeme Downie (Dunfermline and Dollar) (Lab)]

Q To pick up on an item raised by Mr Greenwood, we have heard the Government talking about how this is the first legislation of its kind in the world. What impact do the other members of the panel feel it will have on the global market for SAF, and for airlines more generally?

Rob Griggs: One of the key reasons why we support the RCM and see it as necessary is that we have a mandate that—unlike the EU mandate, for example—has an advanced subsection. We therefore require advanced SAF. At the moment, something like 85% of all the SAFs produced in the world are first-generation HEFA—hydro-processed esters and fatty acids. That is used cooking oil-type SAF; it is perfectly legitimate, but it is ultimately feedstock-constrained. The world will be drawing on more and more SAF, and at some point we will be likely to reach what people are calling a HEFA tipping point, where there just will not be enough of it.

The UK, through its policies, is focusing on second-generation advanced SAFs, which are technically more challenging and more expensive, but also more scalable. As airlines, the absolute worst-case scenario that we are trying to avoid, and that we think the RCM is really important in helping us avoid, is a situation whereby in 2030 the suppliers who are the mandated party simply cannot access through the market the advanced SAF they need to fulfil their mandate obligations. It is not being made anywhere at the moment. A lot of HEFA is being made, but not advanced SAF.

We need advanced SAF here in the UK. The US is making some advanced SAFs, but they have feedstocks that are not for our mandate—they are often crop-based. Without the RCM driving the production of advanced SAFs, we are concerned that we simply will not be able to access it. If that happens, the buy-out price kicks in for the suppliers, which is likely to be passed on to airlines.

The worst case scenario is that, in 2030, the mandate essentially fails because there is high buy-out, all the cost gets passed on to airlines, there are no SAFs, which means no decarbonisation, and then we are unable to claim our SAF against the emissions trading scheme obligations, for example. To be clear, we do not think that the RCM should cover all mandated volumes of advanced SAF; there needs to be competition. It should be there to get those first plants built, and to provide a quantity of that mandate—potentially a substantial quantity, but part, not all, of it.

If we can get a competitive scheme, where the market for advanced SAF is becoming competitive, and the RCM helps to get some of those first difficult plants built, the UK could be in an advantage position, because the global market for SAF, at some point, will need to expand into the advanced SAF area, and the UK could have got a head start on that through our approach. That is the upside of what we are doing, notwithstanding the challenges of getting it right.

Gaynor Hartnell: The question was about the impact on global supply. I think Rob is absolutely right that the UK’s policy is unique. It is very much envied. I have been at many conferences where the greenhouse gas basis, versus it being volumetric, was lauded. The existence of the RCM is envied by SAF developers in other jurisdictions. It is already having an influence globally by being visible in doing this special seeking-out of waste-based SAFs, which are incredibly challenging to develop. These projects are very complicated, which is why the RCM is totally necessary; I disagree with Paul Greenwood about that.

Paul Greenwood: Let me build on the question of necessity. To be clear, I know that everyone is trying to do the right thing here, but the reason this is being called for, for entities in the marketplace, is because it is very difficult to manufacture things in the UK, and that is because energy costs, carbon dioxide costs and labour costs are incredibly high. It is very difficult. Not very long ago, we used to have six refineries in the UK; one of them was shut down for operations and another has gone insolvent. There are four refineries left, so it is very difficult to manufacture things effectively in the UK at a profitable level.

What the Bill does is say, “Because of that problem, we’re going to incur more costs in a niche, new business, and we’re going to input that cost on to the existing fuel suppliers, which are already struggling to survive.” We need to be clear about what problem we are trying to solve. Effectively, I think this is a distraction. We need to look at the core fundamentals that are impacting our manufacturing base in the UK, because that is the primary struggle that we have.

[Luke Taylor]

Q Thank you for joining us. I think we are in a slightly unusual position, in that we are all competing to try to make slight improvements to legislation that we all agree is necessary and positive. My question is about the source of the funding for the RCM. The Government made it clear that their preference is that it comes from a levy on users. An alternative, which we see in other jurisdictions, is that it comes from ETS sources, which would slightly more directly couple the emissions component to the consumption. The intention to not predicate the source of funding on the money being provided is clear. Do any of the panellists have an opinion on those two options and the path that the Government have taken for the funding source?

Gaynor Hartnell: There are really only two options for the levy: airlines or aviation fuel suppliers. A large part of why aviation fuel suppliers were chosen may have been because, administratively, they are the obligated party when it comes to the mandate. They are expected to pass the cost of the mandate through to airlines—their fuel customers. They would be expected to pass the cost of the levy to airlines, or indeed, if the levy actually brings in money—these are very small balances of money in comparison with the balances to do with the mandate—they would be expected to pass those costs back to the customers. The aim is to deal fairly with a fairly small amount of money. It is not the additional cost of the sustainable aviation fuel; it is just the cost of levelising and stabilising it, which is a sliver in comparison.

Rob Griggs: For us as airlines, the funding is a critical issue about fairness and accountability. As Gaynor said, the understanding is that the levy will be on the supplier. The issue for us is that we understand that the costs are likely to be passed through to airlines. We just want to make sure that that is transparent. We have seen through the early stages of the mandate that there is some concern that excessive compliance fees are perhaps being put on to the SAF. Voluntary SAF seems to be a lot cheaper than mandated SAF and there is not necessarily a clear reason for that. We want transparency in terms of how the levy is passed through.

As Gaynor said, in theory, if the market price for SAF is high—if there is relatively little of it—it is likely that the suppliers will actually pay into the counterparty. We want to make sure that if money is essentially being paid back to the counterparty from the producers, that money does not just go to the suppliers and sit there. There should be a transparent mechanism, however it works, through which that money then comes back to airlines and airline customers. It has to work both ways, essentially.

How do you do that? We have looked at ETS for a long time. You are right that in the European Union, the emissions trading scheme funds are used: for example, to help to close the price gap on SAF. We are not doing that, which has competitiveness implications for UK SAF, separate to the RCM. Of course there are ways to make sure that it is a two-way street.

Paul Greenwood: We have to recognise that if the desire is to pass the cost on to the passengers, the airlines and the people who are shipping freight around the world by plane, then we should put the charge on them. That is the most direct way of doing it. There are charges now that are put on airlines and on freight directly. There is no reason why you cannot do this as well. I do not buy the argument that it is a relatively small amount of money, therefore we should just put it on to the fuel suppliers and they should deal with it. I do not think that is right. I certainly do not agree with the idea that this is because “the polluter pays”—that is erroneous and a false statement.

We do not know how much this will be, because we do not know how many projects there will be, what the costs will be, or how the CFD mechanism will go. We do not know what the cost of this will be. I support what Rob is saying: if this is something imposed upon us, I do not wish to profit from it but I do want to pass 100% of it on to the consumer of my fuel. The only way I can do that is if I know what it is ahead of time, so that I can bill them the exact amount of money so they pay the exact amount. At the moment, this legislation talks about market share, but market share moves and changes. Therefore it is a very imprecise way of doing that.

Ours is a very fine margin business. If you get this wrong, you will make the UK a less attractive market. We have to understand that fundamentally people will do different things around their molecules. One data point worth remembering is that about 70% of the jet fuel consumed in the UK at the moment is imported. Effectively, we rely on people bringing jet to market to sell it profitably. If they are uncertain around the cost of that jet fuel, they will potentially look to sell it into different markets, which can lead to energy security and market dynamic issues. There are unintended consequences here that need to be thought through very carefully.

--- Later in debate ---

[Luke Taylor]

Q Thank you all for joining us. The evidence that you have given so far has been very helpful. There was a question earlier about waste hierarchy and the availability of waste feedstocks as one source of raw fuel or raw material for some of the second-generation SAF. Is enough being done across Government, in a holistic way, to ensure that the goals of the SAF mandate, the RCM and this Bill are achieved? Is enough being done to ensure that the things that are needed—waste feedstocks, the reforms to planning and energy production for eSAFs—are in place? What is going to hold back what we are trying to achieve in this Bill, and what needs to be done elsewhere?

Jonathon Counsell: That is a really strong point. There is a key question about the waste hierarchy, which Gaynor spoke to. Currently, waste going to SAF is treated the same way as incineration or energy from waste, but the analysis is clear that we can get twice as much energy capture from producing SAF than from producing energy from waste. We feel that you are getting a lot more bang for your buck from using waste to produce SAF than from other things, which we think should be reflected in aviation being prioritised in the waste hierarchy.

On renewable energy, last year the Sustainable Aviation road map made it quite clear that 3G SAF—where you basically electrolyse water to get hydrogen and you capture CO₂ from the atmosphere—is going to take a lot of renewable electricity. We are going to need a lot more of that within the UK if we are going to support a domestic power-to-liquid market.

Luke Ervine: In addition to that, we need to think about other areas of SAF, when we talk about SAF having a nominal value associated with its ability to reduce greenhouse gases. We are working alongside the Department for Energy Security and Net Zero and the Department for Business and Trade to understand how carbon can form part of the solution, and decarbonising the SAF that we are producing is also key. We are also working side by side with the Treasury to understand what the revenues from the ETS look like.

That has been quite successful in the last few years, especially since the advent of the jet zero taskforce, which was a really key turning point. I think we are going to continue in that vein to work cross-departmentally and across industry to work through some of these finer details. I think it has been very useful to be part of the Jet Zero Council; we are actually a co-chair, alongside Mike Kane, of the jet zero taskforce. Carrying on in that vein is very important and useful.

Lahiru Ranasinghe: This also enables us to reduce our dependence on used cooking oil imported from elsewhere in the world as a feedstock for first generation SAF. A strategic move towards 2G and 3G also gives more flexibility and capability for the market to scale up in the long-term, and allows it to use waste products from the UK, as opposed to having to ship it in from China or south-east Asia.

[Graeme Downie]

Q You alluded to this earlier, but have you done any work with your customers—either passenger or freight—on how much they care about SAF specifically, or sustainability more generally? If you were not working towards the kind of targets that you are, do you think that would impact customer choice? Do you see this as a competitive advantage between yourselves, or globally as well? Also, to pick up on something that Jonathon mentioned earlier, do you think there is enough in this legislation on what needs to happen after, if it is passed, to encourage the necessary investments, particularly in third-generation SAF and beyond that?

Jonathon Counsell: On the customer perspective, we did a lot of surveying of our customers, and it is no surprise that there was a bit of scepticism about offsets and all the history with those. When it comes to SAF, I think there is general recognition and support: people think, “You burn a lot of fuel, so it just makes sense that you are trying to find a lower carbon fuel.” There is a lot more acceptance of that. We have always offered voluntary schemes for our customers to offset their emissions. We provide offsets, carbon removals and SAF. The uptake is very low, but SAF is proving quite popular, so I think there is greater acceptance of SAF as a solution for aviation than some of the others.

What I will say is that corporates have gone gangbusters—if I can use that technical term—on SAF, and we do something called SAF Scope 3. A lot of the big corporates set very ambitious net zero targets by 2030, particularly professional services firms such as consulting firms, banks and law firms. When they do their carbon footprinting, a huge proportion is from their flying activity, so they come to us and say, “I want to address my carbon emissions”, and we can offer them SAF. We can sell the carbon attributes as what they call a Scope 3, and that has literally taken off. Most of the SAF that we bought last year came with a SAF Scope 3 deal from a corporate. That is fantastic, because we can use that revenue to reinvest and buy more SAF. From a corporate market, there is definitely very good acceptance of the power of SAF to reduce our emissions.

[The Chair]

May I say that we want full answers, but we have three other Members who want to ask questions? We have 11 minutes left.

Luke Ervine: I agree with Jonathon; the corporate world is where we see most support for SAF, particularly in cargo companies. They are very mature in the way that they think about SAF, largely because they have clients—as freight forwarders, they have clients—that demand CO₂ reductions. That is corporates and cargo.

We recently undertook a survey. I cannot remember, off the top of my head, what the split was, but a large proportion of our passengers really valued the ability to buy SAF—less so carbon credits; they relished the ability to buy SAF. In terms of competitive advantage, we are all working with the same levers, and there are not many of them in the aviation industry. We have invested in those fleet transitions to cleaner, more efficient aircraft. We are 82% transitioned into new NEO—new engine option—fleets at the moment, and we will be 100% by 2028. There are competitive advantages in this space, but we are all dealing with the same basic levers in order to drive our customer base and attract customers in.

Lahiru Ranasinghe: We probably have a slightly different customer base from the two airlines here. A large proportion of our travellers are people who travel once a year, or once every couple of years, on their holidays.

Generally speaking, we have asked customers, and they care about sustainability, and about easyJet and the airline becoming sustainable, but it is not something that those who travel infrequently engage with frequently enough for it to be a consideration. Also the question about SAF, for example, is a complicated one. I completely agree on the corporate side, but on the average customer side, it does not feel like a competitive advantage right now.

Sustainable Aviation Fuel Bill (Second sitting)

Graeme Downie Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Greg Smith]

Q It does. I have one brief additional question, mindful that we have only 20 minutes with you. Off the back of that protection of UK IP, do you think the Bill could be strengthened to bring in greater protection of technologies such as those that have been developed by Zero and other companies in the UK, so that when the strike price is set it does not end up with foreign-owned technology being incentivised in the United Kingdom? Do you believe that you, along with others that have similar technologies, can scale fast enough to meet the other side of the coin of this Bill, the SAF mandate?

Doug McKiernan: That is a very good question. I think we are in a race. At the moment we need the Bill to give confidence to investors. That will help us to scale. That is the main benefit in the short term. With regard to the IP, there needs to be a mandate somewhere in Government to support core e-fuels development. A lot of small companies at the moment are not getting that, so we are at risk of going abroad with the technology. The Aerospace Technology Institute heavily sponsors hydrogen and electric, but does not really support the core technology of e-fuels. Although we have this mandate, which we think is great, there is a bit of a gap there that could do with addressing.

[Graeme Downie (Dunfermline and Dollar) (Lab)]

Q This morning, we had a witness say that they did not believe the revenue certainty mechanism was required, that the market would essentially take care of the solution itself, and that the mandate was all that was needed. What is your response to that, and how would it affect your company in particular?

Doug McKiernan: Without this Bill and the mandate and quotas that have been set, I think the investment industry will step back from that, which would hurt us as a company. We would not be able to scale up. It would make things extremely difficult and would push the pace at which we could get to net zero to the right.

[Luke Taylor (Sutton and Cheam) (LD)]

Q You have given a really helpful view of the long-term solution. I do not think many would argue with PtL being the solution for the industry. This question is similar to one I have asked other panel members: how do other parts of Government, other levers and other enablers need to be brought in place to enable you to do what you need to do? What conditions does the Bill need to set? What do you see as the main challenges for the Government to act? You have spoken about skills. What else needs to be done in the Bill to enable you to be successful and for the Bill to achieve what it needs to achieve?

Doug McKiernan: Coming back to the IP, there needs to be some sort of support for e-fuels core technology development. That is very important. If you want e-fuels to be part of the future, we need to make sure that that research is supported in the UK and that when it is supported in the UK there is proper IP regulation of that. That needs to be mandated as part of the support from the Government.

What is happening in the aviation area is clearer cut, because you cannot get the energy density into an aircraft with hydrogen or electric, so it is kind of obvious, but I think it is a solution for a lot of the fossil-based fuels, including gasoline and diesel. I think what we will end up doing is that, if we can develop that core technology, it is then transferable to other sectors, and with that we will be able to deal with the real problem, which is the end-to-end solution of getting renewable energy to the consumer. That is the real challenge.

At the moment, we are talking about sustainable aviation fuel, but actually there is a lot of energy in the North sea that is not getting used because of the challenge of the cost of getting it from there to the consumer. This is where e-fuels come in. The Bill would help to move us in the right direction to start to tackle that problem, because you would have these companies with the new tech working out how to make that viable. There is a very good, well researched paper by the National Renewable Energy Laboratory in the US and the Department of Energy. It was done back in 2021.

I had a conversation with our CEO and the board one day and realised, “We’re not actually a fuels company, although we’re called Zero Petroleum and we’re making jet fuel and gasoline. We’re actually an energy transmission company, because all the problems we have with renewable energy are solved by liquid hydrocarbons”. If you look at the paper I referred to, done back in 2021, the cost of getting energy from the North sea in a cable to the consumer is probably forty to fiftyfold what it is if you wanted to do it with a liquid hydrocarbon. That is the fundamental problem that we are going to struggle with going forward. We are slowly going to morph as technology and engineering rather than policy dictate what the solution is.

--- Later in debate ---

[Greg Smith]

Q That is very helpful. On one last point of clarity, when you talk about the long term for e-fuels, we can all put a different definition on “long term”. What do you mean by that—10, 20, 50 years?

Ruben van Grinsven: I do not know. I do not know exactly what the price projections are for renewable power in the UK. It is hard to guesstimate that, so I do not know.

[Graeme Downie]

Q Sitting in the audience, you will have heard me ask this question of the last person. We had a witness this morning who said they did not believe the revenue certainty mechanism was required, and that the market would essentially take care of this on its own. You described it there as “compelling”. Do you agree that the RCM is required in the Bill, or do you think the market could take care of itself?

Ruben van Grinsven: Ideally, you want the market to take care of it. As evidenced by a lack of investment to date and by a lot of feedback from industry, it is difficult for investors now, without the revenue certainty mechanism, to invest. Is it essential? That is a very black-and-white question. I think it is going to be extremely helpful to convince people to invest.

We absolutely support the Bill because additional SAF production in the UK is going to be helpful for decarbonising the aviation sector, and we very much support that. Additional supply projects in the UK are going to be very helpful to meet the targets and help decarbonise the aviation industry. Yes, we very much support the Bill.

[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.

--- Later in debate ---

[The Chair]

I am sure Hansard will pick it up, but just for the record, Minister, you have mentioned Mark twice. I believe it is Professor Mark Maslin you are referencing, rather than the Chair, who of course remains neutral—and is not in a seesaw chair.

Mike Kane: You are always Mr Pritchard to me.

[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.

Sustainable Aviation Fuel Bill (Third sitting)

Graeme Downie Excerpts

Committee stage
Thursday 17th July 2025 Public Bill Committees

[Greg Smith]

I apologise, Mr Western, for getting ahead of myself. I went slightly cross-eyed as I looked down at my notes, and have two amendments back to back. I stand by what I said, and maybe we can save some time later as I have already made my comments on amendment 5. We all make mistakes; we are all human.

Turning to amendment 4, then, much has been made of the cost to the end user. We had a good debate on Second Reading in which all agreed, across the House and all political parties, that the challenge, as we decarbonise and move to net zero, is that everyone must still be able to do the things that they want to do—to fly and move goods around—but in a cleaner, decarbonised, and net zero way. We have been the first in the western world to legislate for that by 2050.

When I heard the Minister say—in both the private briefings that he gave before the Bill was introduced to the House, for which I am grateful, and then on the Floor of the House on Second Reading—that the net impact would be only plus or minus £1.50 on an ultimate airfare, I was delighted. I took him at his word. I thought, “Fantastic. That is something that consumers will surely be happy with”—particularly if it is on the minus £1.50 side of the equation. Yet, in the evidence sessions on Tuesday, I am not sure that a single witness was willing to put their own name to that plus or minus £1.50 fluctuation. Some witnesses went even further by saying they thought that was—I hesitate to use this word—a conservative estimate.

The point of amendment 4 is to try to ensure that we get something baked into the Bill that acknowledges the ultimate potential cost to the end user: the consumer, the person, any of our constituents who wish to book a flight to go on holiday or on a business trip.

[Graeme Downie (Dunfermline and Dollar) (Lab)]

The hon. Member reflects the concern that we all have to make sure that our constituents can continue to go on holiday, and that trade can continue to happen, but does he agree that, in addition to some of the information that we heard, there was also a concern about the cost of doing nothing? That could actually cause costs to go much higher than any estimate given by anyone in the evidence sessions, therefore we should proceed as quickly as we can.

[Greg Smith]

I am grateful to the hon. Gentleman for that point; I do not think that we are misaligned on that argument. Yes, we need to move to sustainable aviation fuel, preferably at the better end of that technology. It is this very Bill that will ensure that we can, as a country, move faster towards that aim with—I have used the phrase before—the other side of the coin of the Bill, which is the SAF mandate. When the Conservatives were in government, we were heading towards that, but I fully acknowledge that it is the new Government who have introduced it to the House. I totally agree with the hon. Gentleman that there is a cost to doing nothing, but it is incumbent on all of us on behalf of our constituents, and the businesses that operate within our constituencies and require the use of air freight, to ensure that we are not legislating for something that will put an undue additional financial burden on them.

The point of the amendment is to embrace the Minister’s commitments at the Dispatch Box on Second Reading, and in the briefings beforehand—which, I repeat, I was grateful to him for putting on—and to ensure that as the Committee potentially allows the Bill to go on to Report, and further through the parliamentary process, we are confident in those numbers, and about the impact that we, collectively, as a Committee and ultimately as Members of Parliament, are putting on the statute book. It is in that spirit that the amendment has been put forward. I ask the Minister to ensure that the projections he has reported from the Dispatch Box come to fruition, so we do not end up looking back in probably a few years’ time, as opposed to a few months’ time, and discovering that the plus or minus £1.50 was much worse than that, as some of the witnesses we heard from on Tuesday suggested.