Sustainable Aviation Fuel Bill

Nusrat Ghani Excerpts

Tuesday 3rd March 2026 Commons Chamber

Consideration of Lords amendments

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I inform the House that nothing in the Lords amendments engages Commons financial privilege.

Clause 1

Direction to offer revenue certainty contract

[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.

[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!

[Greg Smith (Mid Buckinghamshire) (Con)]

Thank you, Madam Deputy Speaker. I could not have asked for a better birthday treat than to debate this issue with the Minister and with everyone else who has shown such a huge interest in the Bill this afternoon.

When the Bill first came before the House, the Conservatives were clear that we support the innovation that underpins sustainable aviation fuel. Aviation matters enormously to this country: for families, for trade, for connectivity and for our standing as a global hub. The challenge has never been whether to decarbonise aviation, but how we do so without damaging competitiveness or pricing ordinary passengers out of flying.

From the very beginning, we set a clear test. If the British public are underwriting a revenue certainty mechanism, whether directly or through levies that will inevitably feed into ticket prices, the economic benefit must remain here in the United Kingdom. That was not an afterthought. It was not something we discovered halfway through the Bill’s passage; it was one of the central arguments we advanced from day one. Throughout Committee and on Report, I pressed Ministers on how the contracts would work in practice. How would domestic production be prioritised? How would we prevent a scenario where fuel was largely produced overseas, given minimal processing here and then rebadged as British simply to qualify for support? Without clarity, that risk was real.

My noble Friend Lord Grayling brought that concern into sharp focus in the other place. His amendment made the principle explicit: if sustainable aviation fuel is to receive support under a revenue certainty contract, it must genuinely be British. He made the point clearly: we cannot design a system that can be gamed. We cannot allow mostly complete fuel to be shipped here, polished up a bit, and then presented as a domestic product. That would not be an industrial strategy; it would be box-ticking with a Union Jack on it.

What has happened since? The Government tabled Lords amendments 1, 2 and 4, restricting revenue certainty contracts to UK-produced sustainable aviation fuel. That principle was not explicit in the Bill, as introduced. It is explicit now and I genuinely welcome that. That change, however, did not appear out of thin air. It followed sustained pressure from those of us on the Conservative Benches here and in the other place. It was Conservatives who identified the gap, made the case and tabled the original amendments. I am grateful that the Government have now listened and moved.

Of course, the detail matters. The definition of “UK-produced” refers to any part of the process of converting feedstock into fuel taking place in the United Kingdom. That must not become a loophole wide enough to taxi an A380 through. The intention is clear: real production, real value added and real jobs here. We will ensure that the practical application reflects that intention.

There is also a broader point to the amendments, which speaks to capability. The United Kingdom has genuine strengths in synthetic fuel and e-SAF. We have companies demonstrating 100% synthetic flight, developed right here in the United Kingdom. We have world-class engineers and researchers. We have the technical expertise to lead. What we should not have are British passengers ultimately bearing the costs while overseas producers capture the opportunity.

Now is not the time to relitigate the plus or minus £1.50 on fares argument we had in previous stages, but for the record I say that the Opposition are watching closely. Will the Minister confirm that the Government are assured that the non-HEFA—non-hydroprocessed esters and fatty acids—requirements contained in the mandate will be met by industry at no more than the same cost to the passenger?

[Greg Smith]

I am grateful to the hon. Gentleman, not least for his kind birthday wishes. We do support the SAF mandate. We do support the decarbonisation of air travel, as well as other means of travel, but it has to be done in a way that is economically viable not just to the industry but to all of us who ultimately pay to fly—or to go on a train or a ship, or whatever it might be—through the fares we pay. That is why the Opposition have been so laser-focused on the direct impacts on fare payers, as well as on the wider industry.

The wider point, to return to the Lords amendments we are debating, is to ensure that the economic value of decarbonisation, which the British state is mandating through the legislation we pass in this Parliament, actually benefits British producers, British researchers, British engineers, and the incredible array of innovators and talent we have here in this country.

With these amendments, the Bill is closer to meeting the test we established at the beginning of the first debate: that the sustainable aviation fuel policy the Government are pushing should reduce emissions while reinforcing the UK’s industrial base, safeguarding competitiveness and supporting high-skilled employment across the country. Indeed, our position remains clear: environmental responsibility, along with economic realism. That will be what protects competitiveness. We will continue to scrutinise the framework carefully as it develops, but on the fundamental point that British passengers’ money should back British production, the Government have adopted the Conservative position. Perhaps if they listen to us a little more often, they might find the turbulence a great deal lighter.

[Madam Deputy Speaker]

Follow that, Lee Pitcher.

[Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)]

Thank you, Madam Deputy Speaker. I wish the hon. Member for Mid Buckinghamshire (Greg Smith) a very happy birthday. I am sure the rest of the Conservative Members are waiting for him at the party—I know they like those. How was that, Madam Deputy Speaker?

Current events in the middle east have once again demonstrated the volatility and vulnerability of global fuel supplies. A cleaner aviation sector should also be a more resilient one. Producing sustainable aviation fuel at home reduces exposure to geopolitical shocks, while giving airlines and passengers greater long-term certainty. It is for that reason that I believe the Lords amendments are vital. This is about our home and our circular economy.

Before Parliament, I worked in the water industry for 30 years. One of the projects I led was working with farmers on practical measures to prevent flooding, including planting winter cover crops in between pea harvests to protect soil and reduce run-off. Those same winter cover crops, or similar ones, can also play a role as a feedstock for sustainable aviation fuel. That is why I see a real opportunity here to line up environmental improvement and the economic benefits that come from SAF. Better soil structure and less erosion mean better outcomes for our local waterways and a healthier local environment, while farmers and rural communities can gain an additional income stream from doing the right thing for their land.

Since coming to Parliament, one of my biggest goals has been the reopening of Doncaster Sheffield airport, which is essential to local jobs, growth and prosperity. But I want to go further still: I want Doncaster Sheffield airport to become a beacon of cleaner, greener aviation, and sustainable aviation fuel is a huge part of that transition.

[Lee Pitcher]

I certainly do agree. In the business case for Doncaster Sheffield airport, the South Yorkshire mayoral combined authority says that around 5,000 jobs will be created directly, with the creation of many more jobs indirectly. When I visit schools, as my hon. Friend does, I see our future pilots, engineers, manufacturers and aircrew. You know what, Madam Deputy Speaker? I want people to live in Doncaster, work in Doncaster, have their careers in Doncaster, spend their leisure time in Doncaster and basically have the passion for the place that I do. I know that my hon. Friend does, too.

DSA is ideally placed to lead on how we become a cleaner, greener aviation economy locally. It is surrounded by agricultural land and is close to the Humber, the UK’s leading hub for green energy and fuel. A domestic SAF industry means more UK manufacturing, more skilled work and more investment in the kind of modern facilities that can power regional growth. We know how important that is right now.

Taken together, the benefits are absolutely clear: for our countryside, we can improve soil and water outcomes, support more resilient farming and restore nature; for our rural communities, we can open up new opportunities, diversify incomes and improve productivity; for industry, we can build manufacturing capability and secure supply chains here at home; and for aviation, we can reduce dependence on volatile foreign oil and give the sector a credible route by which to decarbonise. Globally, we can reduce the carbon impact of air travel, which is exactly what we need to do if we are to meet our climate goals in a way that supports jobs and prosperity and secures the planet for our children and future generations. This is the right approach for an industrial strategy that is serious about delivery and an environmental strategy that is serious about our future.

If we are asking the public to help to de-risk and scale up a strategic fuel, the jobs, investment, apprenticeships and manufacturing capacity should be created right here, right now in the UK. These amendments keep the value chain onshore, strengthen British supply chains and ensure that decarbonisation supports growth in our communities, not just demand somewhere else.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Olly Glover (Didcot and Wantage) (LD)]

Even taking into account the Lords amendments, we continue to welcome steps to decarbonise our aviation industry, including investment in sustainable aviation fuels. I repeat the Liberal Democrat point from Second Reading that SAF is just one step in that direction; in the longer term, it needs to complement rather than detract from investment in zero-carbon flight technology.

I thank the Government for their engagement in the other place and for bringing forward these amendments, and I thank the noble Baroness Pidgeon for her work and advocacy to strengthen the Bill. To that end, the Liberal Democrats support all the amendments. We support Lords amendments 1, 2 and 3, which will help to provide revenue certainty that can relate only to UK-produced aviation fuel, and Lords amendments 4 and 5, which will simplify industry consultation requirements, while noting the way in which Lords amendment 6 will bring in an overarching consultation requirement. We support the duty placed on the Secretary of State through Lords amendment 6 to consult before making regulations under the Act, including its focus on consultation and engagement with the devolved Administrations, which, of course, is always important.

With that, Madam Deputy Speaker, I conclude my remarks. I only regret that I lack the skill of the shadow Minister in making aviation puns.

--- Later in debate ---

[Mr Perkins]

The hon. Gentleman makes an interesting point—it is definitely something worth considering.

The Government have given an important commitment to meet their climate change and environmental targets at the same time as expanding airports and growing the economy, and I welcome that commitment. It is a hugely important promise, but it is also a huge challenge. Sustainable aviation fuel can deliver emissions savings compared with traditional kerosene fuel. Increasing its use is a vital piece of the puzzle in decarbonising aviation.

The revenue certainty mechanism introduced in the Bill will provide the minimum price guarantee for producers of SAF in the UK, so whoever was responsible for it, I welcome these amendments. The price certainty will encourage investor confidence in bringing commercial-scale SAF plans to the UK and bringing SAF production and jobs. Alongside that revenue certainty mechanism, the Government have introduced a SAF mandate: a legal obligation on fuel suppliers to the UK to provide an increasing proportion of SAF to airlines. That policy is also essential to driving the uptake of SAF.

What assessment has the Minister made of when these SAF mandates will be achieved? Does he think that they will be achieved in the next year? If not, at what point does he expect those mandates to be met? The Government do not believe that we need to follow the advice of the Climate Change Committee and see demand management alongside a suite of other measures as one of the approaches. Instead, they believe that we can get greater amounts of sustainable aviation fuel. Will my hon. Friend tell me how important it is to see the industry achieving these early mandates if we want to give confidence that they will be achieved in much greater numbers in the future?

Despite these welcome policies, the Environmental Audit Committee heard evidence—I think the Minister confirmed that today—that the UK would not be able to provide sufficient SAF to service the level that the Government expect the industry to use. We know that imported SAF is not currently recognised in UK carbon budgets as being a genuine reduction in emissions. Although I understand the Government have plans to include international aviation emissions within their carbon calculations, the UK has yet to formally legislate to include those emissions within the carbon budgets, despite both this and the previous Government agreeing to do so. Will the Minister confirm that the Government will prioritise parliamentary time to introduce the necessary legislation to formally include international aviation emissions within the UK carbon budgets?

The Environmental Audit Committee also heard evidence from the Whittle Laboratory at Cambridge University that, while moving to 25% of fuel usage to SAF would offer substantial emissions reductions, the reductions become much less certain beyond that point, because moving towards SAF could push up its price when compared with other sectors. That could lead to the potential of reduced availability of feedstocks for other sectors and a move beyond utilising waste products towards having to grow and cut down crops purely to serve the aviation sector. Therefore, if we go beyond 25% and start aiming for 50%, 60% and 70%, the certainty of this being an environmental and carbon reduction becomes much less certain. I wonder what assessment my hon. Friend has made of that research and whether he has visited the Whittle Laboratory. I also had the opportunity to listen to its modelling on this, so I wonder what he made of it.

Finally, will the Minister reassure me that he will not allow SAF production from feedstocks, potentially undermining the environmental sustainability and the emissions savings of SAF? Has he had any discussions with the Secretary of State for Energy, Security and Net Zero around the likely needs for the very same stock as part of our energy production in the future, particularly given the potential growth of data centres? Does the Government have a collective approach on the need for both sustainable aviation fuel and biofuels servicing our energy sector? With that, Madam Deputy Speaker, I will bring my comments to a close.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Marvellous. I call Chris Vince.

[Chris Vince (Harlow) (Lab/Co-op)]

Thank you, Madam Deputy Speaker. You have taken me by surprise by not picking me last.

I thank the Minister for opening this debate. I also thank the shadow Minister for his comments and wish him a very happy birthday. Without wanting to get into any party political back and forth, I would like to say that we had a really productive Bill Committee, in which Members from all parts of the House came together collaboratively because we all wanted this to be a success. My hon. Friend the Member for Wythenshawe and Sale East (Mike Kane), who saw the Bill through Committee, was a huge driving force in ensuring that it will get on the statute book and that we will see the benefit of it.

I am being a little bit naughty, Madam Deputy Speaker, which is rare for me, but I particularly wanted to speak in this debate today because I was a member of the Bill Committee—one of my first in this place—and I saw the legislation through all its stages, from First Reading to Committee, only to miss Third Reading due to being on paternity leave. I think that on this occasion, Madam Deputy Speaker, you will agree that I did get my priorities right.

However, as the Bill returns to this Chamber for the consideration of Lords amendments, I want to say how genuinely excited I have been to be part of this process. I believe that the Bill will make a difference not only to the aviation industry, which is hugely important to my constituency of Harlow, but also to Harlow itself. As I have mentioned previously in this place, my constituency starts at the end of Stansted airport’s runway. If my hon. Friend the Member for Wythenshawe and Sale East was in his place today, he would point out that Stansted airport is part of the Manchester Airports Group, so I am doing him a service by mentioning that.

This Bill will make a huge difference to people in my constituency. Hundreds of people are employed at Stansted airport, but Stansted airport college also has huge links with Harlow college. An earlier speaker mentioned how, when he goes into schools, he sees the younger people as the cabin crew, the pilot and the ground staff of the future. I have had the pleasure of visiting Stansted college—I did let the Leader of the Opposition know that I was visiting her constituency—to see the huge difference that that made to young people. We are not just talking about jobs; we are talking about careers and high-level occupations. I am really pleased that we will see 4,100 more jobs at Stansted airport because of its expansion. I am not expecting all of those 4,000 people to come from Harlow—although I have put in a request to the Manchester Airports Group—but that would be nice to see. We also know the difference that this Bill will make to the environment.

Naysayers will say that the increase of SAF production is not the answer, and that we need to decrease the number of people who fly, but we must be realistic about that. As I have said before, the expansion of Stansted airport will mean an additional 4,000 jobs for my area of the country. Aviation supports business travel and freight for millions, but SAF will also help to deliver on the green, clean energy and growth that has been so important to this Government. We know that, over its lifetime of usage, the use of SAF will reduce greenhouse gases by 70%, which is something that we can all get behind.

I know that I am expected to speak about the amendments, so I will briefly touch on Lords amendment 6. I am confident that the Secretary of State and the Minister will continue to consult those they consider appropriate ahead of any legislation. I am very reassured to hear the Minister say that he has already engaged with and got support from the devolved nations on this matter, but will he reflect on the comments by my hon. Friend the Member for Chesterfield (Mr Perkins) about how SAF production could be part of the Government’s wider aims and the conversations he has with Energy Ministers about getting to net zero? Decreasing our carbon usage and green energy are so important to that. When I go into schools and meet the pilots, cabin crew and ground staff of the future, the No. 1 thing they bring up are their concerns about climate change.

Finally, it has been a pleasure to be part of this process and see this Bill through Parliament. The Bill is a clear sign that this Labour Government recognise the importance of our aviation sector for the future of young people and for business and international trade. It is also clear that the Government recognise the importance of green energy solutions to ensure that this country and the world have a positive future. Although I missed Third Reading—this is the joke coming—I am glad to be here for the Bill’s final descent towards Royal Assent.