Sustainable Aviation Fuel Bill

Keir Mather Excerpts

Tuesday 3rd March 2026 Commons Chamber

[The Parliamentary Under-Secretary of State for Transport (Keir Mather)]

I beg to move, That this House agrees with Lords amendment 1.

[Madam Deputy Speaker]

With this it will be convenient to discuss Lords amendments 2 to 6.

[Keir Mather]

I am pleased that the Sustainable Aviation Fuel Bill has returned to this House with only a small number of Government amendments. I am grateful to Members of both Houses for their engagement and constructive approach throughout the Bill’s passage. I wish to thank my predecessor, my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane), for his skilful steering of this Bill through its initial stages. I also thank Lord Hendy of Richmond Hill for his valuable support, and for leading the Bill so effectively through the other place. The Government brought forward six amendments, which were agreed to, and we are considering them today.

Lords amendments 1 to 3 ensure that the Secretary of State can enter into revenue certainty contracts only when the supported SAF is produced at a facility in the United Kingdom. Throughout the passage of the Bill in the Lords, peers provided thoughtful and collaborative suggestions on this topic, and I am grateful to them. The amendments to clause 1 provide that sustainable aviation fuel is to be regarded as “UK-produced” where any part of the process for converting feedstocks into fuel occurs within the UK. These amendments give the industry a clear and confident signal of support, and align with our intended objective for this Bill: the objective of supporting the UK’s sustainable aviation fuel industry.

Lords amendments 4 to 6 require the Secretary of State to consult the devolved Governments before making regulations under the powers in clauses 1, 3, 10 or 11. This ensures that devolved Governments are fully engaged on matters in their areas of competence.

[Mr Toby Perkins (Chesterfield) (Lab)]

I very much welcome the leadership that the Government are taking on this important industry. How much sustainable aviation fuel does my hon. Friend anticipate that the UK will be able to provide, and after his amendments have gone through, is it still likely that we will depend on imports of sustainable aviation fuel, alongside the stocks we have in the UK?

[Keir Mather]

To meet the provisions of the SAF mandate, we believe it will be necessary to have a mixture of sustainable aviation fuel produced in the United Kingdom and SAF imported from overseas. However, the Bill creates a revenue certainty mechanism—the first of its kind—to drive this nascent market to increase SAF production. We believe that the mechanism will demonstrably increase the amount of UK-produced SAF in the system, and will have an impact on the production of the good, skilled jobs in our energy industry that we all care about so much. I hope that reassures my hon. Friend that we believe that the Bill is the right process to go through to stimulate this industry, and to give investors the certainty that they need that the UK Government stand four-square behind the creation of sustainable aviation fuel in this country.

Clause 1(8) allows the Secretary of State to make regulations extending the period in which they can direct the counterparty to enter into contracts by up to five years at a time. Clause 3(1) gives the Secretary of State the power to make regulations requiring the counterparty to maintain a register of information on revenue certainty contracts, and to publish details about the contracts. Clause 10(1) gives the Secretary of State the power to make regulations that require the counterparty to pay a surplus to levy payers, and require levy payers to pass on the benefits of that surplus to their customers. Clause 11(4) gives the Secretary of State the power to make regulations amending financial penalties to reflect inflation, and to specify the basis on which a company’s turnover is to be determined for the purpose of those penalties. The amendments do not affect the delivery of the Bill or its underlying policy intent, and final decisions in relation to the regulation-making powers in the Bill will continue to rest with the Secretary of State for Transport.

The Government’s objective is to implement the revenue certainty mechanism for the SAF industry effectively across the whole of the United Kingdom and to work collaboratively with the devolved Governments to do so. I am grateful for the engagement on the Bill from across the devolved Governments and pleased to confirm that we have obtained legislative consent from all three devolved Governments. I therefore commend all six amendments to the House and urge Members to support them.

[Madam Deputy Speaker]

I call the shadow Minister, Greg Smith. I believe it is your birthday. [Hon. Members: “Aw!”] Happy birthday!

--- Later in debate ---

[Tom Collins (Worcester) (Lab)]

A few of my colleagues have been offering jokes. I was not able to prepare detailed remarks, so I hope they will forgive me if I just wing it. [Laughter.]

Although we have discussed decarbonisation a number of times in this debate, it has not been said yet that the Bill is about addressing the climate crisis. That incredibly important and urgent piece of work demands the utmost urgency and ambition. For that reason, I naturally support it and what it is trying to achieve. Similar mechanisms have been incredibly successful in developing the thriving renewables industry that we now see in the UK, which provides a lot of our energy.

It is worth while recognising that the Bill is part of a much longer journey to decarbonising aviation. I declare an interest early in my remarks: I am the chair of the all-party parliamentary group on hydrogen. In a very long timeframe, we can potentially see aviation using cryogenic hydrogen as a fuel source, so we should keep that in view.

Similarly, SAF has various generations of development, with different feedstocks and mechanisms of production. The fuels also have different characteristics and ways of interacting with gas turbine technology. Therefore, the devil will absolutely be in the detail of the mechanisms that the Government are putting forward to build a market for the various generations of SAF. I hope we will see more detail about that strategic approach as this legislation goes forward.

It is important, as the amendments make clear, that the UK benefits from what we are doing in the Bill. I am passionate about seeing the whole UK low-carbon energy supply chain building and scaling rapidly. That includes electrons—the Government already have very ambitious goals around decarbonising electricity—as well as molecules and hydrogen. We are still awaiting the hydrogen strategy. I recently spoke to the Minister about that, and I understand that it is close. It is incredibly important that we have an ambitious and comprehensive strategy for the development of the hydrogen economy in the UK that does not just serve a small number of industrial clusters but underpins our decarbonisation of electricity, provides dispatchable power and provides an opportunity for industrial renewal as we move forward.

Hydrogen is an important feedstock for producing SAF by any route. We need a hydrogen economy, and for that we need a price. For a price, we need storage and transmission. As we fulfil our desires for SAF to be ambitious, bold and effective in decarbonising, we must also do the work as a Government to build a hydrogen economy to establish that anchoring price, as well as demand and production, so that we can see a thriving, decarbonising aviation sector, the renewal and regeneration of the whole UK industrial sector, and an absolute renaissance underpinned by low-carbon energy—both electrons and molecules.

[Keir Mather]

Madam Deputy Speaker, it would be remiss of me not to start by asking for the leave of the House to speak again, and then wish a very happy birthday to the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith). I was so keen to wish him a happy birthday, I nearly put a foot wrong when it came to parliamentary protocol. I had the pleasure of celebrating my birthday during consideration of the Railways Bill with the hon. Member for Broadland and Fakenham (Jerome Mayhew). May I say, it was raucous, as I am sure the right hon. Member for Melton and Syston (Edward Argar) will attest?

I thank the shadow Minister for his support for the Lords amendments and for his strong support for the principle of decarbonisation of aviation. I am starting to receive slightly mixed signals from the shadow Transport team as to how passionately they stand behind this prospect across different modes of transport. Perhaps that is one to be hashed out over a beer at his birthday celebrations. I am glad that the shadow Minister agrees with the Government amendments. He is right to point to the economic value of decarbonisation across the United Kingdom and the need to focus on value for money for taxpayers. We are committed to delivering that in the revenue certainty mechanism by controlling the scale and the number of contracts that are entered into, as well as the prices that are negotiated in each contract. I assure him that the cost of the scheme and the impact on passenger ticket prices will be kept under continual review. I do not just acknowledge his commitment to be vigilant on this issue; I actively welcome it, and I thank him for his contributions.

May I also acknowledge the presence of my predecessor, my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane)? I have already thanked him for his work on the Bill, but he was not in the Chamber, so I would like to take the opportunity to restate my thanks to him for getting this crucial legislation to where it needed to be.

I turn to the remarks of my hon. Friends the Members for Great Grimsby and Cleethorpes (Melanie Onn), for Doncaster East and the Isle of Axholme (Lee Pitcher) and for Doncaster Central (Sally Jameson). They were right to focus on and say that the benefits of SAF production must be felt in my home of Yorkshire as well as in Lincolnshire and across the United Kingdom. The point about Doncaster Sheffield airport is important, because the consumers who use our airports and seek to use aviation travel to connect themselves to the world also care that they can do so in a form of technology that the Government are doing their utmost to try to decarbonise. I am glad that they feel that that level of ambition is reflected both in these amendments and in the Bill as a whole. My hon. Friend the Member for Harlow (Chris Vince) also pointed to that.

The Lib Dem spokesman, the hon. Member for Didcot and Wantage (Olly Glover), was right to say that SAF is only one piece of the puzzle in aviation decarbonisation. Hydrogen flight, greenhouse gas removals and airspace modernisation all require focus. Those points were also made by my hon. Friends the Members for Chesterfield (Mr Perkins) and for Worcester (Tom Collins).

My hon. Friend the Member for Chesterfield asked me about the concerns about crop use in SAF. Currently, crop-based SAF will not be eligible for the SAF mandate, but a call for evidence on the subject is open and will close on 16 March. More broadly, he asked me a range of questions that were quite detailed, some of which lie outside the exact scope of the Lords amendments. I would therefore be grateful if he would write to me and set them out so that I can give him the full response that he requires.

I thank my hon. Friend the Member for Harlow for his contribution. He is right to point to the skills benefit that the generation of a thriving UK SAF industry can bring to his constituents and to support the work in Stansted airport. My hon. Friend the Member for Falkirk (Euan Stainbank) also raised the important point of ongoing questions surrounding the Grangemouth refinery. I reiterate, as he asked me to, that we are calling on investors to come forward and join us in the major opportunity to secure the long-term industrial future of Grangemouth as a hub for our clean energy future. With Government backing, we believe that now is the time for private sector partners to step forward and help shape the next chapter for Grangemouth. The National Wealth Fund stands ready to invest £200 million to support those new opportunities. I encourage my hon. Friend to keep working with us, and we are ready to engage with investors on that point.