Sustainable Aviation Fuel Bill

Jim Shannon Excerpts

2nd reading
Wednesday 11th June 2025 Commons Chamber

[Mike Kane]

I thank the hon. Member for his contribution and join him in thanking James Hygate OBE for his work in this area. On the serious point about waste, I sit on the small ministerial group for the circular economy. It is a big part of what this Government are trying to do, and we will see how that work progresses.

The UK stands at the forefront of global efforts to decarbonise aviation. When this Government came into power, we acted immediately by laying the statutory instrument for the SAF mandate, which has been in place since 1 January. We have established the UK airspace design service, a programme of work that will modernise the airspace above us by decarbonising and supporting cleaner flights with fewer delays. We are now the first legislature on the planet to introduce a revenue certainty mechanism, and the world is looking to us. I hope that this House can get behind us.

[Jim Shannon (Strangford) (DUP)]

We cannot help but be excited about the Bill because of its potential to deliver. The Minister is a good friend of us in Northern Ireland, and a good friend of all of us in this Chamber and across this great nation. There are innovative people in Northern Ireland who have the technology, and they wish to play their part. Is it the Minister’s intention to ensure that everyone across this great United Kingdom of Great Britain and Northern Ireland has the opportunity to feed into SAF and to gain the benefit from it?

[Mike Kane]

I am always delighted to answer questions from the hon. Gentleman, who represents a place that I love dearly. I have responsibility for maritime travel, and we see Artemis Technologies decarbonising our maritime sector. We have refineries in Belfast. I spoke to a major chief executive whose family emigrated to Canada from Belfast and who is very fond of the city. We expect him to talk to his companies about applying for the contracts when we eventually let them do so, and that will be key.

I have a lot of questions to get through. The £1.50 that the hon. Member for Orpington (Gareth Bacon) mentioned could be £1.50 more or £1.50 less, but I am happy to hand over £1.50 to him now, if he wishes. That is not going to have an impact on people’s ability to fly to destinations, as he rightly said. I think people flying for their annual holiday is key to the British way of life, and I do not want to damage that whatsoever. That analysis comes from Department for Transport business team itself.

Many of the questions were about going faster. I must gently point out that we were promised four plants by 2025 by the last Government, but I am not going to get into that. We could not go any faster—this is still the first Session—and we had to introduce the mandate and we are now introducing part 2, which is the RCM. So I would say we are going at as fast a pace as humanly possible.

We are neutral on when the contracts are bid for, so I say to those worried about waste or HEFA streams that these contracts change over time, and we will see what bids come in. The hon. Member for Orpington also mentioned large plants, and he will have seen Members—mainly those Government Members behind me—from our industrial north, south Wales and other places queuing up to get advanced, high-manufacturing facilities with well-paid, trade-unionised jobs. As we advance this, we are working with the industry on the strike price.

The Chair of the Transport Committee, my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), said this is not a silver bullet, and it is not, but it is part of the package—airspace modernisation, sustainable aviation fuels, carbon pricing, carbon capture technology and zero emission flight—that this Government are pursuing to decarbonise aviation in our country, and we are investing £1 billion in the Aerospace Technology Institute to do that.

My hon. Friend also mentioned Heathrow, and my right hon. Friend the Secretary of State, who has shown great leadership in this space—along with other Members, officials and the industry—has pointed out that the expansion of Heathrow is accounted for in the sixth carbon budget. I thank the hon. Member for Wimbledon (Mr Kohler) for his thanks to me for getting on with what is part of a package of decarbonisation, as he rightly pointed out.

My hon. Friend the Member for North Somerset (Sadik Al-Hassan) is a doughty champion for Bristol airport—he mentions it every time I meet him in the Tea Room—and a champion for hydrogen. I look forward to visiting his airport and to replying to his Westminster Hall debate on Tuesday.

The hon. Member for Mid Bedfordshire (Blake Stephenson) takes any opportunity he has to plug the Universal theme park. He spoke about his support for Luton airport, and how it will be a gateway for regeneration in his area. On how the approach differs from those of other markets, we are the first ones to do it. If we get this done in the next few weeks, we will be the only legislature on the planet to have done so, and the world is looking to us to move this forward.

Coming to my hon. Friend the Member for Derby South (Baggy Shanker), there was a bit of an arms race between Members, if they do not mind my saying so, about who loves their airport the most—Teesside, Norwich, East Midlands and on it went. I think we should have an independent competition for who loves their airport—

Sustainable Aviation Fuel Bill

Jim Shannon Excerpts

Report stage
Wednesday 15th October 2025 Commons Chamber

[Keir Mather]

No piece of legislation can deal with all the emissions that we are facing through challenges in the aviation sector. That is why we have this comprehensive package of measures to make decarbonising aviation while allowing passengers to fly at an affordable rate a reality.

The hon. Member for Alloa and Grangemouth (Brian Leishman) spoke with his usual fervent passion in support of his constituents. The National Wealth Fund stands ready to encourage investors to join us in finding a long-term industrial future for Grangemouth, standing ready to invest £200 million once an investable proposition has been identified.

The hon. Member for Richmond Park (Sarah Olney) raised the unfortunate closure of Vivergo. The Government have been working with the plant to understand the financial challenges that it has faced over the last decade, but I would like to reassure her that we do not anticipate supply issues in bioethanol provision. I also thank my hon. Friend the Member for Worcester for his decided and confident support for the measures in the Bill.

The hon. Member for Dumfries and Galloway (John Cooper) said that the market was too nascent, but I encourage him to look at the detail of the Bill. He will see that that is exactly the problem we are seeking to solve through this legislation, by allowing SAF producers to scale at pace and pursue those innovative technologies. He also spoke about Britain as an aviation leader. The RCM is a first-of-its-kind global initiative to allow SAF producers to produce the fuels we so desperately need. He also encouraged me to sort out decarbonisation challenges in maritime. I draw his attention to the fact that the UK Government announced £448 million of funding to decarbonise the maritime sector only a fortnight ago.

My hon. Friend the Member for Derby South (Baggy Shanker) has Jaguar Land Rover within his constituency and is a passionate advocate for both the automotive and aviation sectors there. He spoke about the urgent need to encourage people to fly—to enable them to access the rest of the world, to see their families and to pursue business opportunities. That is something that we are passionate about championing through the Bill.

The hon. Member for Sutton and Cheam (Luke Taylor) was pleased to see that the Bill was supported across the House. I can only hope that he is correct in his prediction. We shall see. I note that there are no representatives from the Green party here today to focus on these important measures to decarbonise aviation. Hon. Members from across the House can take from that what they will. The hon. Gentleman was right to outline the broader work that is required to decarbonise aviation, including airspace modernisation, but also to talk up our fantastic UK aviation sector and the hard work that it is undertaking to pursue decarbonisation.

My hon. Friend the Member for North Somerset (Sadik Al-Hassan) pointed to the very important fact that we are endowed with key infrastructure, such as pipelines, pioneered by firms like Exolum, the research facilities in his constituency to which he pointed and the pioneering work of Bristol airport. We need to develop a market to facilitate that infrastructure further. The 70% cut in emissions through SAF is an exciting proposition indeed.

There are a number of Government amendments that I would like hon. Members to consider. Government amendment 6 allows for levy regulations to require the Secretary of State to assist the designated counterparty by collecting information and sharing it with the designated counterparty. It will also allow for the regulations to be used to impose requirements on a person to provide information to the Secretary of State. It is a technical amendment that will ensure that the information required to calculate individual levy contributions is provided at sufficient frequency, while not creating additional administrative burdens for industry.

Government amendment 1 allows the Secretary of State to direct a Government-owned company to provide assistance for the purpose of identifying to whom revenue certainty contracts should be allocated. The allocation process for RCM contracts will be fair and transparent to give confidence to any applicants. In other renewable schemes, contract allocation is often carried out through an auction process. The allocation process for contracts for difference for renewable electricity is carried out through the National Energy System Operator, or NESO, which is an operationally independent, publicly owned body.

That type of approach to allocation may also be suitable for RCM contracts, so the amendment will allow the Secretary of State to direct a body like NESO to support in the allocation process. The final decision on allocation, however, remains with the Secretary of State. Without the amendment, the same allocation process could be pursued, but that would need to be done on a contractual basis through a procurement process, which would add unnecessary cost and complexity to the process. The amendment avoids those unnecessary impacts. I therefore commend it and all other Government amendments to the House.

I would ask that new clauses 1 to 3, which were tabled by the Liberal Democrats, be withdrawn. They were introduced in identical form in Committee, and my remarks will closely reflect the points my predecessor made then. The amendments seek a review of the impact of the revenue certainty mechanism within the next 12 months. I am afraid that that is not reasonable, as the revenue certainty mechanism triggers only once SAF is being produced, and even at pace, that is some years off. It will take time to build SAF plants, initially starting with a contract allocation round with SAF producers. Therefore, we will not see sufficient developments in the next 12 months to warrant a review of the impact of the revenue certainty mechanism. I agree, however, that it is important to have parliamentary scrutiny to measure the impact of the Act and to propose actions if necessary. The SAF mandate already includes a review clause to assess the impact of the statutory instrument, with the first review scheduled within five years. That is in line with comparable schemes.

With regard to new clause 1, I can reassure the House that work is being carried out at pace across Government on the future of our refineries. Commissioning a separate report, as the new clause proposes, risks a delay to future decisions and any subsequent benefits that may be realised. Overall, we expect low-carbon fuel production to support up to 15,000 jobs across the country and to make a contribution to the economy of up to £5 billion by 2050.

[Jim Shannon (Strangford) (DUP)]

I commend the Minister, and wish him well in his new role and in all that he does. The legislation extends to Scotland, Wales and Northern Ireland, so what discussions have been taking place with the Northern Ireland Assembly to ensure that we can see its benefits—to both employment and the wider economy—in Northern Ireland?

[Keir Mather]

The hon. Member raises a very important point. We need to ensure that the benefits of the Act are felt across the length and breadth of our United Kingdom, and that includes engaging with our colleagues in the Northern Ireland Assembly.

I turn to new clause 2. We do not anticipate a substantial impact on SAF production in the event of a decline in UK bioethanol production. The bioethanol market is a global one, and we do not currently foresee any supply issues. Furthermore, the recommendations in new clause 2 are already under way and duplicate measures can already be found in the SAF mandate. In July, a total of £63 million was awarded to 17 projects via the advanced fuels fund. That includes projects that use bioethanol, municipal solid waste and green hydrogen as feedstocks, among other sources. The Chancellor also announced in the spending review 2025 that we will continue to support SAF production throughout the spending review period. The SAF mandate also includes a formal review mechanism embedded in its legislation, with the first review scheduled to take place within five years.

New clause 3 would also duplicate measures that already exist in the SAF mandate. The mandate awards more certificates per litre to SAF with higher greenhouse gas savings, which will encourage SAF developers to continuously improve on their greenhouse gas savings. This will be monitored through the formal review mechanism, with the possibility to update legislation as required.

I hope that this reassures the hon. Member for Didcot and Wantage that, in many respects, the concerns he outlines are allayed by existing measures in the Bill. I therefore urge him not to push his new clauses.

New clause 6, tabled by the right hon. Member for Basildon and Billericay (Mr Holden), would require the Secretary of State to lay before Parliament a report on the economic impact of the legislation within a year of it being passed. Such a report would not show the full economic impact of these measures. Contracts will need to be negotiated, signed, plants built and SAF produced and sold before economic impacts are released. Transparency on reporting in relation to the Act’s economic impact can be achieved through regular updates to the House. Therefore, I do not see the new clause as being effectual, if he wishes to evaluate the economic impact of the RCM. I therefore ask him not to move his new clause.

New clause 5, tabled by the hon. Member for West Dorset (Edward Morello), would require the Secretary of State to introduce a regulation requiring airlines to make an annual report on their use of SAF, both in absolute volumes and as a percentage of overall fuel used. I welcome transparency on carbon emissions to help consumers make informed choices. However, we will be providing data on the supply of SAF under the mandate, including what proportion of the total aviation fuel supply is SAF. Furthermore, many airlines already provide public information on their decarbonisation efforts, and I therefore do not believe this new clause is necessary and ask the hon. Member not to move it.

New clauses 4 and 7, tabled by the hon. Member for West Dorset and the hon. Member for Dewsbury and Batley (Iqbal Mohamed) respectively, relate to power-to-liquid obligations. On new clause 4, the Government have already committed to keep mandate targets under review. The existing legislation enables the Secretary of State to amend obligations under the SAF mandate, subject to consultation with those affected and scrutiny by Parliament. Allowing amendments to the obligations without consulting appropriate parties could be detrimental to our shared ambition of increasing the use of SAF. On new clause 7, the legislation that gave effect to the SAF mandate already makes provision for a review no later than 2030. Given that the mandate has been in place for less than 12 months and the PtL obligation does not come into effect until 2028, it would not be helpful to review earlier than planned. I therefore ask the hon. Members not to move their new clauses.

Amendment 8, tabled by the right hon. Member for Basildon and Billericay, would put a requirement on the counterparty to report on the effect of the introduction of the RCM on air travel prices. This was spoken to by the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith). The Government are committed to delivering value for money in the RCM scheme by controlling the scale and number of contracts entered into, and through the prices negotiated in each contract. The impact on air fares are likely to rise or fall by less than the cost of a cup of coffee. The costs of the scheme and the impact on ticket prices will be kept under continual review. Passengers should also benefit from the lower prices generated from the lower project risk and reduced cost of capital for SAF producers. Therefore, the Bill and the measures in it will not limit people’s ability to fly. Given that, I ask the right hon. Member not to move the amendment.

I turn to amendments 9 and 10, tabled by the right hon. Member for Basildon and Billericay, and to amendment 12, tabled by the hon. Member for Dewsbury and Batley. The decisions on the specifics of contract allocation will be made during the contract allocation process. There will be a fair and transparent allocation process that evaluates the key costs, benefits and risks of each project. That will be developed over the coming months and will be subject to consultation with stakeholders. These amendments would reduce the Government leverage in negotiations by setting criteria in advance and would likely reduce value for money in the contracts signed, which I am sure all of us would seek to avoid. I therefore ask that these amendments are not moved.

Finally, I turn to amendment 11, tabled by the right hon. Member for Basildon and Billericay. In May 2025, the Government published the response to the consultation on funding the SAF revenue certainty mechanism. It confirmed that a variable levy on aviation fuel suppliers would be introduced, and this was included in the contents of the Bill. The Government plan to consult imminently on the detailed design of the levy, but this amendment would pre-empt stakeholder responses, which will be considered in any design decisions. I therefore ask the right hon. Member not to press the amendment.

I hope that my responses have provided the explanations and reassurances that colleagues were seeking. The Bill is a crucial step towards establishing a SAF industry in the UK and driving investment, growth and jobs across our great country. Once again, I urge the House to give the Bill its full support.