The King’s road map for Sustainable Aviation Fuel
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The UK aviation industry has long voiced its commitment to achieve net zero carbon emissions by 2050, and one of the measures contained in the King’s Speech on 17 July 2024 supports this commitment.
The previous UK government’s Sustainable Aviation Fuel Mandate was published on 25 April 2024. Under the SAF Mandate, from 2030, 10% of all jet fuel supplied in the UK must come from sustainable resources with the obligation rising to 22% by 2040. The SAF Mandate remains subject to parliamentary approval but is expected to come into force in January 2025 by means of secondary legislation made under powers in the Energy Act 2004. This is expected to be a significant step for the UK in establishing one of the world’s first binding regulations compelling fuel producers to ensure a certain proportion of their fuel meets SAF criteria.
Many have noted the challenges in securing sufficient investment in SAF production and the SAF Mandate itself does not address this. One of the key takeaways for the aviation sector from the King’s Speech was the introduction of the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill. The Bill is intended to support and incentivise SAF production by introducing a revenue certainty mechanism for SAF producers and, in doing so, attract investment to UK SAF projects to increase the UK’s domestic SAF production. Unlike the SAF Mandate, this revenue certainty mechanism needs to be introduced through primary legislation.
The hope and expectation is that the Bill will not only provide investors with more certainty and confidence in investing in new SAF production plants but will also create jobs and growth opportunities in the UK.
The previous government’s consultation also suggested that a Guaranteed Strike Price mechanism is its favoured approach. While we have not seen results of the latest consultation which closed in June 2024, neither the King’s Speech nor the accompanying briefing notes expanded on this point but, given that the consultation noted that primary legislation is necessary for a Guaranteed Strike Price mechanism, the introduction of a Bill strongly suggests that this is the likely way forward.
With other technologies, such as hydrogen and electric powered aircraft, still subject to substantial testing and investment, SAF remains one of the most important ways for the aviation industry to reach its net zero target by 2050. For that reason, the introduction of the Bill, coupled with the forthcoming SAF Mandate more widely, is an encouraging step to again focus the industry’s attention on tackling climate change. We are certain that it will be the subject of much discussion at this week’s Farnborough International Airshow.
Many have noted the challenges in securing sufficient investment in SAF production and the SAF Mandate itself does not address this. One of the key takeaways for the aviation sector from the King’s Speech was the introduction of the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill. The Bill is intended to support and incentivise SAF production by introducing a revenue certainty mechanism for SAF producers and, in doing so, attract investment to UK SAF projects to increase the UK’s domestic SAF production. Unlike the SAF Mandate, this revenue certainty mechanism needs to be introduced through primary legislation.
The hope and expectation is that the Bill will not only provide investors with more certainty and confidence in investing in new SAF production plants but will also create jobs and growth opportunities in the UK.
The previous government’s consultation also suggested that a Guaranteed Strike Price mechanism is its favoured approach. While we have not seen results of the latest consultation which closed in June 2024, neither the King’s Speech nor the accompanying briefing notes expanded on this point but, given that the consultation noted that primary legislation is necessary for a Guaranteed Strike Price mechanism, the introduction of a Bill strongly suggests that this is the likely way forward.
With other technologies, such as hydrogen and electric powered aircraft, still subject to substantial testing and investment, SAF remains one of the most important ways for the aviation industry to reach its net zero target by 2050. For that reason, the introduction of the Bill, coupled with the forthcoming SAF Mandate more widely, is an encouraging step to again focus the industry’s attention on tackling climate change. We are certain that it will be the subject of much discussion at this week’s Farnborough International Airshow.
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