Sustainable Aviation Fuel Bill

Lord Harper Excerpts

Thursday 20th November 2025 Lords Chamber

[Lord Harper (Con)]

My Lords, I declare my interest as a non-executive chair of RVL Aviation.

I too congratulate the right reverend Prelate on his excellent maiden speech. Before he started speaking, I wondered whether he was going to set out the Church of England’s policy on sustainable aviation. I was pleasantly surprised by the excellent content of his speech and look forward to his further contributions in the House. The bit I will particularly remember is his injunction to be “kindly present”, which we should all strive to do. If I ever require someone to provide a reference for me, I will think of the noble Lord, Lord Raval, who spent most of his speech, rather than talking about the Bill, saying fantastic things that the right reverend Prelate would have been too humble to have said himself. He painted a rich picture of the right reverend Prelate’s skills, and I look forward to his future contributions.

The noble Baroness, Lady Jones, will not be surprised to learn that I disagreed with almost every word of her speech. On flying, she referred to the ability of people to go on holiday. We had a very interesting test case during the pandemic, when, in effect, we told people—albeit not for this reason—that they could not fly. Listening to constituents then as a Member of Parliament made clear to me the breadth of reasons why people value aviation. The right reverend Prelate the Bishop of Chester touched on some of them, including aviation bringing people together and enabling people to see friends and family around the world. It is not just about holidays; it is about bringing people together.

I also do not share the noble Baroness’s distaste for frequent flyers. Most of the people who do frequent flying are those involved in business, in global investment and in growing both the British and the global economy, which is essential to generate the wealth that we will need to green the economy and to make it more sustainable. We will get public acceptance for a lot of this only if we also make people better off, so it is incredibly important that we support flying and enable more people to fly. I want people who currently do not have the opportunity to fly, both in the United Kingdom and globally, to have the chance to do so.

Where I do agree with the noble Baroness is that we absolutely need to do that sustainably. It will be done by the use of technology. Before I move on to the subject of the Bill, it is worth me saying that a range of technologies are available. When I was Secretary of State, I was surprised by the unanimity across the aviation industry—airlines, airports and the aerospace sector involved in developing technology and manufacturing planes—on the importance of sustainability and decarbonisation. We never had any arguments with the industry or had to push it in this direction; it was already there and moving at pace. I found that incredibly encouraging.

Innovative companies based in the United Kingdom, such as ZeroAvia, are working on the technology around hydrogen fuel cells, which will be available in the future. I will discuss SAF in a moment, but there are also companies working on electric planes. There is also the important work that the Government are doing on airspace modernisation, which we kicked off when I was Secretary of State; that will also make a contribution. To get to net-zero aviation, we will also need to use—for the bit you cannot abate with plane technology—carbon capture and storage, and I know that a great deal of work is going on in that space, too.

I was very pleased to see the Government carry on our Jet Zero Council, which they now call the Jet Zero Taskforce—the renaming is a minor detail. That brings together industry, government, academia and, importantly, representatives from the Climate Change Committee, who provide helpful advice. They therefore learn about where the technology has got to, to inform the advice that the Climate Change Committee then provides to the Government. That is very welcome.

On sustainable aviation fuel, my noble friend Lord Grayling referred to the VS100 flight that Virgin Atlantic put on; it was funded by Virgin Atlantic but also supported by a contribution from the taxpayer because of a competition run by my predecessor. That flight took place in November 2023 and captured enormous public interest and attention. It was one of the rare occasions that I was able to do the morning broadcast round standing in front of a plane at Heathrow Airport—a great backdrop. It also had a good response from broadcasters, who found the whole thing very interesting and who did great explainers for the public on some of this technology; they wished us well with the endeavour, which is not something that broadcasters usually did to Ministers doing the morning broadcast round. It captured attention not just in Britain but around the world. When I went, shortly afterwards, to the climate change conference, COP 28, I was able to speak about that flight, which was a very good example of Britain leading the way in this area and demonstrating the value of technology.

We then started developing and consulting on the SAF mandate, which, in effect, provides the demand side of the equation for sustainable aviation fuel. I am very pleased again that, with the present Government, there has been enormous continuity in policy in this area.

On the supply side, the Minister referred to the excellent work being done by the Aerospace Technology Institute, which I also support. As has been mentioned, including by my noble friend Lord Davies of Gower, the capital cost of the domestic production of sustainable aviation fuel has been supported from the advanced fuels fund. I think the third round of that took place recently; the first round happened when we were in government. I would be interested if, in his winding-up speech, the Minister could provide us with an update on where the development of those plants has got to and when we might see more. My noble friend Lord Grayling suggested one timeframe for that, as did my noble friend Lord Davies. If the Minister gives us an update on progress in this area, it would be helpful if he also sets out something that my noble friend Lord Grayling also touched on, which is the value that the Government place on domestic production of sustainable aviation fuel.

There is a national resilience case for that, because again we saw during the pandemic that countries, regardless of the contractual obligations that businesses had, very much protected their domestic supply of this sort of fuel. We can quickly find that our reliance on getting this from overseas rapidly dries up. Having some domestic resilience is very important, and I would be grateful if the Minister could set out the Government’s view.

The specific purpose of the Bill is the revenue certainty mechanism. My noble friend Lord Grayling touched on this, and I clearly remember what I might term his rebel amendment to force the pace. It was good that he provoked that debate. I must confess that, when I was Secretary of State, I took quite a bit of persuading about the need for the revenue certainty mechanism. I will say a few words about that, because it will be helpful in posing some questions to the Minister, both here and when we are in Committee.

When the industry and my noble friend were lobbying for this, I was clear that I wanted to understand what the market failure was that we were trying to fix with the revenue support mechanism. We have ended up with a clear enunciation of it in the Explanatory Notes for the Bill. In his opening remarks, the Minister touched on this and talked about how the need to develop first-of-a-kind technology, which is not currently in existence, requires a significant amount of capital and is very high risk.

The caveat is that, when I had some round-table discussions with some of the investors, both here and in the United States, they understandably quite liked the idea of some guaranteed demand through a mandate. They also quite liked the idea of guaranteed pricing through a revenue certainty mechanism. I gently pointed out to them that they have to take some risk in this process in order to justify the return. The trick here is not to remove all risk, but to get the risk to the level of comparable investment projects, so that we make sure that we get appropriate levels of investment. But we must guard against what has happened in some of the rest of the energy sector, with very long-run contracts guaranteeing returns to investors that are higher than are strictly necessary, with the costs being paid by the consumer.

It is important that, when the detailed work is done, we get the balance right between securing the investment in domestic SAF production, minimising the cost to the consumer and getting the length of the contractual terms right. I do not pretend that that is easy, but it will be important to do it. In Committee, I think we will be discussing how to design the levy obligations on the fuel suppliers. My noble friend Lord Grayling touched on some of the detailed questions, such as how the levy interacts with the UK’s emissions trading scheme, the CORSIA scheme that has been set up internationally and the EU scheme, particularly as the free allocations for aviation under the emissions trading scheme expire.

Some argue that payments under the emissions trading scheme should be used to fund sustainable aviation fuel plants, rather than creating yet another obligation. I would be interested if the Minister set out how he and the Government see those schemes interacting with each other to ensure that consumers do not pay more than once.

My final point, which was also touched on by my noble friend Lord Grayling, is about the composition of sustainable aviation fuel and the international dimension to this. It is quite right—I agree in principle with what my noble friend Lord Grayling said—that we should not be using land that could be used for food crops to produce SAF. But there is one thing that we need to be realistic about, which maybe we should not have to but we do.

There is a big lobby in the US, which my noble friend touched on, that wants to use corn ethanol for SAF. Normally, I would be very much against that. The only argument in favour of it is whether it may be necessary to engage the United States Administration, who are not enormously well disposed towards sustainability and net zero, about what international agreements we may need to have with them, because it is really important in this area to keep the United States Administration broadly aligned. Given that aviation is by definition an international industry, it will be quite difficult to decarbonise the industry if the United States is heading in a different direction. Therefore, I would be interested to know what discussions the British Government are having with the United States Government about trying to keep them in this space and what sorts of discussions are going on with fuel providers. The only argument for using food crops for this would be that if by doing so we could keep the United States in this space.

However, in summary, I strongly support aviation and strongly support making it more sustainable. That will be done not by stopping people flying but by using technology—all the technology. Sustainable aviation fuel is the technology solution that is going to be available first—it is available now. The Virgin flight that I referred to demonstrated that you can have a 100% sustainable aviation fuel flight that works. It is a drop-in fuel with existing technology, and the revenue certainty mechanism that is enabled by the Bill, if the design of it is correct—we will test some of that in Committee—will help get that domestic production up and running. With those caveats, I support the Bill and look forward to further debate in Committee with the Minister and, I suspect, a number of the noble Lords who are here today.