Transport

Greg Smith Excerpts

Monday 9th September 2024 Commons Chamber

[Greg Smith (Mid Buckinghamshire) (Con)]

In responding to this debate on the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024, may I say at the outset that the transition to sustainable fuel is a topic that has had my interest for many years? Some may even say that I am very capable of becoming a complete bore on the subject, but I will not push the limits too far this evening. [Interruption.] The hon. Member for Easington (Grahame Morris) knows that all too well; we both served on the Transport Committee in the last Parliament. Our “Fuelling the Future” report championed sustainable and synthetic fuel, and I have put it into practice—in my case, on the road, rather than in the air, in a classic Land Rover powered by synthetic fuel—during my past two summer surgery tours. I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

There is a clear and undeniable role for such fuels across all transport modes in our path to 2050. Aviation is possibly the most difficult to de-fossilise and decarbonise, but it is also ahead of the curve, because sustainable and wholly synthetic fuels are an innovation that enables everyone to continue doing what they want to do—flying off on holiday or to see family, going on a business trip or general motoring—in a cleaner and eventually de-fossilised, carbon-neutral way. We are not reinventing the wheel, but reinventing the fuel.

I assure the House that the Opposition are not looking to oppose this statutory instrument or divide the House on it—quite the opposite, as it is a continuation of plans set out by the previous Government. The development of sustainable aviation fuel was one of six key measures in the last Government’s jet zero strategy, which supported the growth of sustainable aviation fuel in our United Kingdom. The cost-benefit analysis produced by the Department for Transport before the general election suggested that the SAF industry could add more than £1.8 billion to the economy and create over 10,000 jobs in the country. A gradual transition to SAF is the correct way to go; we should require 2% of UK jet fuel to be made from sustainable sources in 2025, 10% in 2030 and 22% in 2040, and that should be incentivised through the award of tradeable certificates with a cash value. That said—it is rare that I make this comparison—the UK target for 2040 falls short of that set by the European Union, which is 34%.

The Conservative Government recognised that SAF may be more expensive than traditional jet fuel in the intermediate term. Our plan included a review mechanism to help manage prices and minimise the impact on ticket fares for passengers. My first question to the Minister is: can the Government reassure the House that the impact on passengers will be kept to a minimum, and can we ensure that they are not footing the bill? Provided that sufficient SAF is available, any increases in air fares as a result of SAF will fall well within the range of the usual fluctuations in prices that we see every year, and the previous Government had plans in place to prevent any major hikes. Can the Government confirm that they too will guarantee that there will be no major hikes in prices, so that we can transition to net zero in an affordable way, taking people along with us?

The Conservatives kick-started the UK SAF industry by allocating £135 million through our advanced fuels fund, which was funding 13 projects to reach completion and supporting our ambition to ensure that five plants were under construction by 2025. Will the Government provide an update on those projects, as they will be vital in helping us to move towards using sustainable fuel?

I urge the Minister to focus thoughts on how to ensure that the UK is a power hub for eSAF—to clarify, that is 100% synthetic aviation fuel—and to gently kick the tyres on whether we are progressing the technology as quickly as is humanly, financially and scientifically possible. We have significant players in this space in the UK, such as Zero Petroleum, which sits on the jet zero council and, indeed, holds a 2021 Guinness world record for “first aircraft powered by synthetic fuel”. Over the summer, I visited Zero Petroleum’s plant, where it produces engineering-level synthetic fuel, including aviation fuel, to hear about its progress and to better understand the obstacles in its way. It is essential that such innovators be empowered to grow, develop their fuels and provide green solutions and value to our economy.

Power-to-liquid SAF has a sub-mandate starting in 2028. We will reach 0.5% SAF by 2030 and 3.5% by 2040; that is slower and less ambitious than the European Union’s figure of 10% by 2040. Some experts have said that this suggests that the UK has a more cautious approach to power-to-liquid, and that the United Kingdom’s strategy focuses on monitoring progress under the mandate, and on us having the potential to revise targets depending on technological advances.

Where the SAF mandate, and the statutory instrument, could go further in future iterations is clear. According to the explanatory memorandum, if subsidised hydrogen is used to make eSAF, under the hydrogen production business model support scheme, SAF certificates cannot be claimed against the mandate. Without HPBM support, there is the risk that the cost of green hydrogen will be far too high for eSAF to be produced at a competitive price in the UK. Indeed, there is even the risk that the eSAF production cost will be above the eSAF mandate buy-out price. If the cost is above the buy-out price, that will mean that no UK eSAF plants will get built, so all the UK’s eSAF demand will be fulfilled by foreign producers.

The HPBM is needed to bring down the cost below the buy-out price under the SAF mandate. Both support under the HPBM and the revenue certainty mechanism are needed for UK eSAF projects to be bankable—for example, credit or potentially subsidy stacking needs to be explicitly allowed. This SI is clearly supportive of the power-to-liquid pathway. However, it would be prudent for the Government to express an intent to financially support domestic eSAF technology developers, such as Zero Petroleum or OXCCU—as opposed to project integrators—in order to give a boost to this much needed industry in the UK, as well as helping the country to benefit from the vast export potential of the technology. That could be through dedicated power-to-liquid technology grants, such as fuel synthesis, direct air capture specifically for fuel, and/or equity funding—for example, through the UK Infrastructure Bank. A further anomaly is that the Aerospace Technology Institute, which is UK Government-funded, is not permitted to deploy funds to power-to-liquid technologies. I put it to the Minister that that should be corrected.

We can be a powerhouse in the United Kingdom for SAF. The new Government are right to continue with the path set by the previous Conservative Government, so we support the motion, but the potential for the future is huge, and in the spirit of getting this right, I urge the Minister to consider the points that I have outlined, and to supercharge our great country’s role in this technology.

[Several hon. Members rose—]

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Mike Kane)]

My goodness, it is a pleasure to see you in the Chair, Madam Deputy Speaker. Congratulations on your election.

It has been a collegiate debate and I am grateful to all the hon. Members who have attended. I am grateful to the Opposition for their support. I say to the hon. Member for Mid Buckinghamshire (Greg Smith) that I am looking forward to a picture on his social media of his SAF-powered Land Rover as he goes canvassing in his constituency—that is a must-see for us all.

[Greg Smith]

It is on its way.

[Mike Kane]

That is good news. The issue has had good cross-party support: when I was in opposition, I supported the Government on it.

In his maiden speech, the hon. Member for Witney (Charlie Maynard), who is no longer in his place, thanked his predecessor, and I put on record my own tribute to the former Member for Witney; he undertook my current role with diligence, care and good humour and I wish him the best for the future.

Really, this legislation was set out by the Labour Government in 2003 in the aviation White Paper, “The Future of Air Transport”, in which we talked about the future of decarbonising aviation for the first time and about bringing in new sustainable fuels.

The shadow Minister had some specific questions. He asked about ticket prices. The Government recognise that SAF will be more expensive than traditional jet fuel, and it is right that the costs, as we have agreed in the past, are borne by the polluters—they will not be borne by the Government. I think the figures are that, by 2030, we expect tickets to be £4 more, which will be a 2% increase, and by 2040, we expect them to be £10 more, which will be a 5.5% increase. Before Mayor Burnham re-regulated the buses in Greater Manchester, a person could fly from Manchester airport to Dublin for £12.99 but they could not cross my conurbation on a bus and change transport providers for that amount of money. The shadow Minister was right to raise that point, but the increase is negligible.

The shadow Minister asked about the future fuel funds. We have seen some great things going on in private industry. In the north-west of England, we see Fulcrum BioEnergy producing sustainable aviation fuel at Ellesmere Port; we see Velocys in the north-east doing it at Immingham—I will come to my hon. Friend the Member for Easington (Grahame Morris) in a minute—and Alpha Air doing it in Teesside. That is really good for the regeneration of post-industrial areas in parts of the north of England.

The shadow Minister talked about power to liquid. Yes, that is the future. In my speech, I set out some ambitious targets that we will have to meet to reduce the HEFA and improve power to liquid. He asked about our ambition. The UK does not want to be at a competitive disadvantage, which is why we have carefully balanced the HEFA cap in a way that recognises that HEFA is, currently, the only commercially available type of SAF, but that does not mean that we cannot go further and faster. I mentioned in my speech that there will be reviews every five years, starting in 2030, so I hope that that satisfies the Opposition. I am grateful for their support in this area.

Let me turn now to my hon. Friend the Member for Easington. I always like to thank him for his contribution to transport debates; he is always in these debates. He is a stalwart when it comes to transport issues and he is really considered. He is right that there are too many anagrams in the field of sustainable aviation fuel. When the Conservatives were in power, they always talked about the bonfire of regulations. Perhaps we should start the bonfire of anagrams. My hon. Friend is not wrong, but we will have to see. He did say that these are good, sustainable industrial jobs in parts of the country where we need them. That is what SAF brings us and that is what the Government are trying to achieve.

I also thank the Liberal Democrats for their support on this issue. We are working with suppliers. I have had roundtable discussions with suppliers, particularly in opposition, and there is more to come in government. I have mentioned some of the companies that we were working with. This is an ambition, but I think that we can go further and faster. The figures that I gave are not set in stone. We should be promoting new technologies, because there are new technologies beyond this area. There is hydrogen battery power. When it comes to UK emissions, would it not be a great day when a Minister can say that there will be no carbon burned in any planes flying internally within the UK? That would be a great place to be.

As a north of England Member, however, I have to disagree with the idea that we should stop people flying because there is a train. That might be fine in an area where there are great, reliable train services, but I invite the hon. Member for Bath (Wera Hobhouse) to come on my Avanti train occasionally to see how unreliable and how poor that service is. We have to keep it in mind that, one day in the future, we will improve the rail services through our great British rail Bill, but at the moment we have absolutely no plans as a Government to stop people flying.