Sustainable Aviation Fuel Bill

Lord Hendy of Richmond Hill Excerpts

Committee stage
Wednesday 10th December 2025 Lords Chamber

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I thank noble Lords for this group of amendments. Amendments 1 and 6 would require the Secretary of State to enter into at least one revenue certainty contract with a SAF producer that is using power-to-liquid technology. The Government recognise the potential that power-to-liquid fuel may have. These fuels will have high greenhouse gas emissions reduction potential, with a low risk of environmental issues such as land use change.

However, adopting these amendments would limit the Government’s allocation flexibility by setting criteria in advance, which could ultimately reduce value for money in the contracts agreed. It is important that the allocation strategy is able to reflect different technologies as they develop. The Government will establish a fair and transparent process to assess each project’s key costs, benefits and risks. This process will be developed over the coming months and will involve consultation with stakeholders.

The decisions on contract allocation will be determined during the contract allocation process. The noble Lord, Lord Moylan, is right that we do not want perpetual subsidy, but we have to establish over time the opportunity for different technologies to develop.

The noble Lord, Lord Moylan, is right in his remarks about contract lengths; there is no humiliation there at all. The length of contracts is not set out in the Bill, and the amendments other than his Amendment 2 would extend the time in which the contracts could be entered into, not the length of the contracts themselves. We are engaging a range of stakeholders on contract length because it obviously makes sense to talk to the market about that. No final decisions have yet been made.

Contracts issued under similar schemes are generally for a period of 10 to 15 years, which reflects a standard debt repayment period. Limiting the contract to 10 years may not be sufficient to attract the investment necessary to construct these plants, and I contend that it is premature to decide the contract length until the market has advised what it would need to construct the plants that would make the fuel.

The Bill allows the Secretary of State crucial flexibility to adjust any standard contract length in between allocation rounds in the light of emerging market evidence. It also preserves optionality for the potential needs of emerging pathways—for example, nuclear-derived SAF. The addition of a no-fault break clause would, of course, undermine the certainty provided by the contract and seriously risks losing the investor confidence that the Bill aims to increase.

In respect of the point made by the noble Lord, Lord Harper, the learning from the energy market is that the contracts need to be long enough to secure the investment that we are talking about. The noble Baroness, Lady Pidgeon, asked what the right contract length is. I think we have to establish that by talking to the market, so it is premature to determine it now.

On the contrary, Amendment 3 seeks to extend the time in which revenue certainty contracts can be allocated from 10 years to 20 years. The purpose of the Bill is to kick-start the industry in this country. The revenue certainty mechanism is intended to be a time-limited measure and to stimulate the early market. Once investors have confidence in the market price and the first-of-a-kind technology has proved itself at commercial scale—to the point made by the noble Lord, Lord Moylan—the mechanism should no longer be needed.

The Government contend that Amendment 3 is not the right way to go. However, if the Government find in due course that it is necessary to extend the provision, Clause 1(8) will allow the Secretary of State to extend the period by which contracts can be allocated in five-year increments by making regulations by the affirmative resolution, so that Parliament can take a view about the applicability of that extension at the time that it is proposed.

Amendment 5 from the noble Lord, Lord Ravensdale, seeks to include a contract allocation framework in the Bill. The Government will need to carefully consider and work with industry on the specifics of contract allocation. This will ensure that there will be a fair and transparent allocation process that evaluates the key costs, benefits and risks of each project. This will be developed over the coming months and will be rightly subject to consultation with stakeholders. The amendment as it stands would reduce the Government’s leverage in negotiations by setting criteria in advance and limit the ability to secure the best value for money in the contract signed.

The noble Lord, Lord Ravensdale, referred to the Energy Act 2023. The allocation framework was included in the Energy Act 2013 and the Energy Act 2023 to ensure that the Secretary of State could effectively regulate the activities of an allocation body where one is appointed under that legislation. In this Bill, the Secretary of State will carry out the allocation process, so it is not necessary to set out an allocation framework to govern the activities of an allocation body.

I hope that my explanations have answered the concerns and that noble Lords feel able not to press their amendments.

[Lord Ravensdale (CB)]

The Minister’s response to Amendment 6 is appreciated, but there is a risk that if the amount of third generation SAF or power-to-liquid that needs to be produced is not set out, then the Bill would not, in effect, align with the SAF mandates, which have clear percentages on power-to-liquid fuel requirements. Does he accept that there is a bit of a gap between this legislation and delivering the SAF mandates, in that one does not support the other?

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for his intervention. If he is willing, I will take that point away and contemplate it further.

[Lord Ravensdale (CB)]

I thank the Minister. This has been an excellent short debate and the noble Lord, Lord Moylan, and the Minister, certainly provided the clarity on contract length that we were missing. I was pleased to hear that the allocation process will be fleshed out through a consultation. For now, I beg leave to withdraw my amendment.

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[Lord Ravensdale (CB)]

My Lords, I rise briefly to support Amendment 18, to which I have added my name, and the other amendment in this group. As has been said, it is important for the Government to consider setting out the definitions in the amendments of what manufacture means and how it is going to be supported in making sure that this is all UK-based. As the noble Lord, Lord Harper, said, that is the point of the Bill.

[Lord Hendy of Richmond Hill (Lab)]

I join the noble Earl, Lord Russell, in sending the noble Lord, Lord Grayling, our good wishes for him and his family. I congratulate the noble Earl on his recent nomination for a life peerage. That is an odd sentence to say, but there you go. The noble Baroness, Lady Jones, has got lucky by signing this amendment, as she will shortly hear.

The revenue certainty mechanism is intended to support only eligible SAF plants in the UK, and this will be ensured through the allocation process. This Government are committed to supporting the UK SAF sector through our advanced fuels fund, which is supporting projects across the UK, and through the revenue certainty mechanism. The UK SAF sector will create jobs and growth opportunities in the UK, help secure a supply of SAF for UK airlines and enhance energy security.

On Amendment 4, SAF projects that use imported precursors still offer significant economic benefits to the UK because of the investment needed to construct them and the employment that they would provide. I fully recognise the strong points made by noble Lords this evening around UK production being in the Bill, and I will seriously consider this point ahead of the next stage of the Bill. I will invite noble Lords who have spoken tonight—or rather those who tabled the amendments—to meet me and my officials ahead of the next stage. I therefore invite the noble Lord to withdraw the amendment.

[Lord Moylan (Con)]

My Lords, I beg leave to withdraw Amendment 4 in the name of my noble friend Lord Grayling.

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[Earl Russell (LD)]

My Lords, my Amendment 10 and my consequential Amendment 12 are in this group. This amendment to Clause 6 would replace subsection (3) with a requirement for a standardised levy on aviation fuel, uniform across suppliers, publicly displayed on invoices and expressed in pence per litre.

At the outset I want to make two quick points. First, on these Benches we support this Bill and the principle of the revenue certainty mechanism. Our concern is in relation not to the levy but the method of its deployment and use. As drafted, our worry and the worry of industry is that it is not clear and, in some cases, it creates burdens and frictions in this process for industry, which it would be useful to find a way to avoid. Secondly, my amendment comes from conversations I have had with Valero Energy, one of the UK’s major aviation fuel suppliers. I have no connection with the company. It came to me after the amendment from the noble Lord, Lord Moylan, was tabled. It believes that the proposed text that I have tabled here offers the most effective remedy to the Bill’s flaws.

Having said that, I support the noble Lord’s amendment, and my amendment is very similar. I do not want to repeat the arguments that have already been made here, but I will just reinforce a couple of them. Industry is concerned about this. It feels that it creates fiction, is an inefficient way of doing these things and could slow down investment in the market. It will discourage new entrants, and suppliers will have difficulty planning as they will not have certainty and will need to settle bills at later dates. The department says that this is administratively simple. It might be for government, but industry feels that the opposite is the case and that disincentive is enough that some companies are thinking about the levels of investment they want to make. That, I know, is an outcome that we do not want and the Government do not want either.

I am extremely grateful to the Minister and his officials for having a quick meeting with us. I am fully aware that consultations on this matter are ongoing and was greatly reassured by the conversations we had with Ministers. I know that officials are working extremely hard to find a way forward. I am hopeful that between now and Report, with this amendment, a government amendment or some fresh thinking, these issues can be looked at again. This is genuinely to help make sure that the Bill works not just for the Government but for industry and does so in a way that does not create unnecessary friction.

I turn to the other amendments in this group. We are generally supportive of Amendments 7 to 9 tabled by the noble Lord, Lord Grayling, and would be interested in the Minister’s response to them.

However, we have concerns with Amendments 24 and 26, which were spoken to by the noble Lord, Lord Harper. As he said, they would include a sunrise clause in the Bill. These are very large investments that we seek these companies to make in large and substantial plant in this country. I do not think that I would make that level of investment with such conditions attached. I would worry that delaying the payments will create uncertainty and fear for those who want to invest in the jobs and growth we need in this country. It could create a downward, damaging spiral for the investment we need.

However, there may be a need for the Government to have a bit of a further think about how the early days of the levy will operate, and how to talk about reporting back on those processes of early investment—we have already discussed reporting—to show that investment is happening and is on track. That could show that that investment is being monitored and going towards the end process that we all want, with the plants being set up and running, and producing the fuel.

Before I sit down, I point out that we support the Government’s own amendments that have been tabled. If the Minister could just give an update in relation to Scotland, we would welcome that.

[Lord Hendy of Richmond Hill (Lab)]

I thank all noble Lords for the brief debate on this group of amendments.

Amendments 7, 8, 9, 24 and 26 seek to address how funds from the levy are used. I first reassure noble Lords that moneys raised through the levy will be used only to support eligible SAF plants in the United Kingdom. The purpose of Clause 6 is to provide a power to place a levy on aviation fuel suppliers to meet the costs of payments made by the counterparty to SAF producers and to cover the counterparty’s administrative costs.

Clause 6 restricts the costs incurred by the counterparty in carrying out its functions under the Bill and, under this clause, the levy funds will be used only to meet the costs of the RCM scheme. The majority of the costs will be incurred only once SAF is being produced and sold by producers who have entered into RCM contracts. It is important that the counterparty be able to recover its costs, which include the costs of administering the contracts, the levy and the payment of surpluses. I hope noble Lords will agree that the counterparty should be self-sustainable.

Amendment 9 intends to ensure that there is a specific mandatory point at which the supplier becomes liable to pay the levy. However, the Government’s view is that it is unnecessary, because the Bill already provides that a person becomes liable to pay the levy at the same point when they become liable to an obligation under the SAF mandate. This aligns the levy to the point at which aviation fuel is eligible for certification under the SAF mandate. The Government think that this simplifies the process for fuel suppliers. I remind noble Lords that the regulations made under Clause 6(1) to set out how the levy will work will be subject to scrutiny under the affirmative procedure, which will give Parliament the opportunity to continue to consider the approach.

On Amendments 10, 11 and 12, as has been noted this evening, we are currently consulting on the detailed design of the levy, including the length of time—it certainly will not be years—which will help inform the drafting of levy regulations. The current levy design consultation will conclude on 8 January 2026, which is of course before any levy regulations are laid in Parliament. Final decisions on the levy design will be informed by this consultation and, to be clear, the Bill as drafted does not specify a particular mechanism and allows the Secretary of State to consider a range of options for calculating the levy paid by individual companies.

To reassure the Committee, the Government are alive to the potential impacts of different levy designs. We are working closely with stakeholders to develop a levy design and engage with them regularly to understand their concerns. We recognise industry’s desire for certainty and transparency. We are looking to design the levy in a way that ensures this, while also ensuring fairness and affordability for the consumer. We recognise that the levy must be dynamic and responsive to the changing market, while also ensuring that the counterparty has funds to make payments under the scheme.

The Government are clear that the levy will not be used to generate unnecessary funds and will raise only sufficient moneys to cover the counterparty’s costs under the revenue certainty scheme. While final decisions will be informed by the open consultation, we are exploring options that deliver this. Many of the proposals and options set out in that consultation could help provide greater certainty and transparency. As I have said, the secondary legislation will be laid by affirmative procedure, allowing both Houses to scrutinise its contents.

In addition, as a consequence of the short debate we have just had, I commit to noble Lords that I will brief them before then on what the levy is and how we currently believe it will work. That is in advance of the consultation closing and the noble Earl, Lord Russell, is right: it will have closed by Report. I think we will then be clearer on how it will work. I hope that I have provided sufficient reassurance on these points for noble Lords not to press their amendments.

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Moved by

[Lord Hendy of Richmond Hill]

13: Clause 6, page 4, line 38, leave out subsection (7)
Member's explanatory statement
This leaves out the duty to consult about levy regulations under clause 6 since I am proposing a new clause that brings together (and extends) consultation requirements under the Bill. See my new clause to be inserted before clause 15.

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[Baroness Pidgeon (LD)]

My Lords, this stand part notice is interesting, and the point made by the noble Lord, Lord Moylan, explains why it is tabled. It seems to be almost wrecking the Bill if you are trying to remove the mechanism. The purpose of this Committee is to look at the concerns and issues, and to try to find the best system in this complex area. I will be interested to hear the Minister’s response to this, because our view is that it is important to keep the mechanism in the Bill. Clearly, a committee has expressed some concerns, and it will be useful to hear from the Minister.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I also congratulate the noble Lord, Lord Addington, on his forthcoming appointment as a life Peer.

The noble Lord, Lord Moylan, raises the correspondence from the Constitution Committee. I did in fact reply; the copy of my reply does not have a date on it, but I did reply because it has been reprinted. A full reply was sent to the Constitution Committee, and it referred to what we were just talking about—the current levy design consultation, concluding on 8 January 2026. As the noble Baroness, Lady Pidgeon, says, without a levy we would not be able to deliver the revenue certainty mechanism. We continue to work closely with industry on the details of the levy’s operation. The current levy design consultation will conclude on 8 January 2026, before any levy regulations will be laid in Parliament. Final decisions on the levy design will be informed by this consultation.

It is appropriate that the levy provisions are set out in regulations made by the Secretary of State, so that there is flexibility to respond to changes in the sector. Flexibility is required so that the levy is set at the appropriate level to ensure that the RCM can be delivered effectively and the counterparty’s costs are recovered. The Government have set out the potential costs and benefits that may arise from the RCM scheme, including the levy and the cost-benefit analysis published in May 2025. The Government will actively monitor and control scheme costs, including through the setting of strike prices and by controlling the scale and number of contracts awarded. I assure noble Lords that the regulation under this clause will be subject to the affirmative procedure, so there will be further opportunities for scrutiny as to how this power is used.

We have engaged with the Constitution Committee; I now have the date of my letter, which was sent on 17 November. Following this debate, I will ensure that copies of both the Constitution Committee’s letter to me and my reply are sent to all noble Lords who participate in this debate.

Clause 6, as amended, agreed.

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Moved by

[Lord Hendy of Richmond Hill]

14: Clause 10, page 6, line 13, leave out subsection (4)
Member’s explanatory statement
This leaves out the duty to consult about regulations under clause 10 since I am proposing a new clause that brings together (and extends) consultation requirements under the Bill. See my new clause to be inserted before clause 15.

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[Lord Hendy of Richmond Hill (Lab)]

My Lords, the Government contend that Amendments 15 and 16 are unnecessary as they duplicate measures that already exist in the SAF mandate.

There are existing statutory powers in Sections 124 to 132 of the Energy Act 2004 that enable the Secretary of State to amend obligations under the SAF mandate, subject to consultation with those affected and scrutiny by Parliament. Maintaining certainty throughout each obligation period is vital so that suppliers can properly prepare to meet their requirements. It is essential that those impacted by any changes to the mandate are given the chance to be involved and have adequate time to adapt, especially considering the early stage of the sector. This would need to be taken into account when considering any amendments to the obligations under the SAF mandate. The Government already publish annual SAF figures, with a comprehensive report for each year typically released in the winter following the reporting year. A formal review of the SAF mandate legislation is required, with the initial review scheduled to occur by 2030.

The Government also consider Amendment 17 to be unnecessary. Many airlines already publicly disclose information on their decarbonisation initiatives, and we will continue to encourage them to do so. The Government will publish data on the supply of SAF under the mandate, including information on the proportion of SAF relative to the total aviation fuel supply.

In answer to the point made by the noble Lord, Lord Harper, about an update on plants in the UK, I will certainly write to noble Lords who have taken part in this debate on where we have currently got to. I apologise to the noble Lord for not having included that in my previous letter.

On Amendment 19A, I certainly recognise the concern of the noble Baroness, Lady Jones, about land use and deforestation. However, the amendment duplicates existing measures in the SAF mandate. SAF supplied under the SAF mandate cannot be derived from crops and must adhere to strict sustainability criteria. Sustainability criteria in the RCM will align with the criteria in the SAF mandate. The SAF mandate already makes provision for the publication of detailed statistics on the supply of SAF, including feedstock, country of origin and carbon and sustainability data.

We will continue to review the evidence and update the eligibility and sustainability criteria on a regular basis. In line with this commitment, this Government recently published a consultation on the development of a common biomass sustainability framework, which includes proposals for strengthening existing biomass sustainability criteria, including those for woody biomass, in line with the latest evidence. The SAF mandate will be subject to regular reviews to help ensure that it is delivering on sustainability outcomes, with the initial review scheduled to occur by 2030. I hope my explanations are sufficient for the noble Earl to withdraw his amendment.

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[Baroness Pidgeon (LD)]

My Lords, I shall talk about Amendment 19 and the impact on airline tickets, which I think is really important. At Second Reading, a number of noble Lords raised the impact on passengers, and it goes to the whole theme of our discussion this evening, which has been about transparency at every level of the Bill.

We should talk, maybe outside the Chamber, about what sort of comprehensive report we could produce on the impact of this legislation, whether that is the direct impact on the passenger, through the price of their ticket, or in all these other areas we have been discussing today. There is a cost as we transition to the greater use of SAF through the revenue certainty mechanism, and it is really important that passengers and the whole industry understand the true cost of the Bill, so I will be interested in the Minister’s response to the points that have been raised.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, the Government want to ensure that flying will remain affordable for UK holidaymakers and travellers while supporting a United Kingdom sustainable aviation fuel industry. A report on the impact of the Act on ticket prices within a year of its enactment would be premature. Costs need to be negotiated and signed, plants built and SAF produced and sold before any real impact on ticket prices can be measured, but the Government can control costs by controlling how many contracts are issued.

I cannot tell the noble Lord, Lord Berkeley, what the effect on ticket prices from other countries producing this will be, but the Government’s cost-benefit analysis of the revenue certainty mechanism, which noble Lords have referred to, published in May this year, will remain the best estimate of the Act’s impact on passenger air fares over the next period, pending the mechanism working and SAF being produced in some volumes here. The Government take reporting to Parliament seriously. Where appropriate to undertake it, we can present an assessment of costs and benefits reflecting the latest available evidence, but that evidence is not there yet.

Amendments 23 and 25 would require the Government to publish an assessment on the UK’s comparative advantage in the production of SAF. The Government believe that this would be counterproductive and would delay the good progress that we have made for decarbonising the aviation industry through the SAF mandate and the advanced fuels fund. The Government and other noble Lords, including someone on the same side as the noble Lord, Lord Moylan, are certainly more confident about the ability of UK industry to produce SAF than the noble Lord. The points from the noble Lord, Lord Harper, about security of supply are germane here.

The SAF industry has been calling for support to overcome the investment barriers. This Bill will help to drive our missions to kick-start economic growth and make Britain a clean energy superpower, delivering the Government’s manifesto commitment to secure the UK aviation industry’s long-term future. The Bill is a crucial step to establish a SAF industry in the United Kingdom and to drive investment, growth and jobs. I hope that the noble Lord is persuaded to withdraw his amendment.

[Lord Moylan (Con)]

My Lords, before I go any further, I just return to paragraph 4.23 of the cost-benefit analysis, where I read out something earlier thinking that I understood it, but now I do not think that I understand it at all. Perhaps it is a bit late procedurally for the noble Lord to explain it to me now; he might write to noble Lords. It says that

“the likely impact on ticket prices is between -£1.5 and £1.5, on average, per year”.

What is “per year” doing there? Surely, it is on average per ticket. Why does this say per year? That would assume that maybe you fly once a year. However, if you fly more than once a year, it would not be per year at all; it would still be per ticket, but it would not be per year. Explaining to me what that means would be extremely helpful.

What we wanted to hear—what the public wanted to hear—from the Minister on this particular question was that he put himself and the Government squarely behind £1.50 as the upper estimate of the cost of the measures in this Bill. He did not do that, and we have noticed it. It will get around. On this occasion when he had the chance, he could have said £1.50, as my noble friend Lord Harper said. Of course, it could be a bit more, it could be a bit less, but it is of the order of £1.50. He could have said, “That is what we the Government believe. I, Lord Hendy, on behalf of the Government, am putting myself behind that estimate: £1.50, not £10, not £15, but something of the order of £1.50 is what we are backing”. He did not, and we have noted that. We are not going to let that matter drop.

Concerning comparative advantage, the Minister made what I thought was an uncharacteristically sneering remark, implying that I did not think that Britain was capable of producing SAF. He was trying, I think, to draw a wholly false distinction between my views and the views of my noble friend Lord Harper. Britain can do anything—of course Britain can do anything. Britain can particularly do anything if we throw millions of pounds of subsidy at something. I think back to the day when Britain could produce vans at British Leyland because it was being given very large amounts of subsidy. That was until we found a way of producing cars in this country that did not require those subsidies and we became a leader in car production here under the flag of the Japanese, who invested in order to make a profit, not simply to farm subsidies. It is not a question of whether we can do something.

The whole point of comparative advantage is that you are comparing things. The question is whether this is the best thing we can be doing with the very limited money we have available, or are there other things that would be more productive and would bring greater prosperity to the country? What is the particular advantage we have in relation to this, which means that it is the thing that the Government should be backing?

Doing that does not need to hold up the Bill. It would if it were constructed as a commencement blocker, as it is at the moment, but we could of course all reach agreement around a table on a commitment for the Government to do this within six months of the commencement of the Act. It would not have to hold things up. It is a contrived objection. It is the complete lack of interest in the question on the part of the Government that is so depressing.

Despite those comments, I am grateful to the noble Lords who have contributed, and I beg leave to withdraw Amendment 19.

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Moved by

[Lord Hendy of Richmond Hill]

20: Before Clause 15, insert the following new Clause—
“Duty to consult about regulations(1) Before making regulations under this Act the Secretary of State must consult any persons the Secretary of State considers appropriate.(2) In the case of regulations under section 1, 3, 10 or 11, that must include—(a) the Welsh Ministers,(b) the Scottish Ministers, and(c) the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This requires the Secretary of State, before making regulations under the Bill, to consult any persons the Secretary of State considers appropriate. In the case of regulations under section 1, 3, 10 or 11 (which may contain devolved provision) the devolved authorities must be consulted in addition to anyone else.

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[Earl Russell (LD)]

My Lords, I thank both noble Lords for their amendments; this is one of the really interesting groups. In response to what the noble Lord, Lord Moylan, said about knocking out fuels, I can probably sum up my speech by saying that I am not certain that knocking out fuels is the best thing to do in the transition; we might need to limit the time the revenue certainty mechanism applies to certain fuels. That might be where I am coming from.

Amendment 21 in the name of the noble Lord, Lord Ravensdale, seeks to

“include nuclear-derived power-to-liquid fuels in the scope of sustainable aviation fuels for which Revenue Certainty Contracts can be offered, and remove food crops, using the same definition of ‘relevant crops’ as the Renewable Transport Fuel Obligations Order for surface transport”.

While we recognise and support the ambition behind this amendment—promoting nuclear-derived and more sustainably-derived stuff, thus reducing carbon emissions —we would welcome the Government’s response to the idea of including nuclear-derived power-to-liquid fuels. Our questions relate more to the complete removal of biomass from the revenue certainty mechanism.

I suspect the Minister might say that this technology in relation to the nuclear side is not ready, and we would not disagree. But my question back to the Minister would be: how do the Government plan—if they do indeed plan—to bring these into the revenue certainty mechanism? How will that be done, what is the timescale for doing that, and is it something that can be done by secondary legislation?

We recognise that biomass has some use as a SAF, particularly in the early stages of SAF use. At the same time, we recognise the limitations of biomass as a sustainable fuel and its impact on any use at scale. This amendment raises some fundamental questions about the plans for the revenue certainty mechanism, its role in relation to different technologies for SAF production and how it is best used to advance the aim of zero-carbon flight.

I will be honest: we have some difficult challenges and questions to answer, and this group has certainly raised those. It can certainly be argued, as the noble Lord has done, that crop-based biofuels should not be given long-term support under the revenue certainty mechanism, as production pathways for these fuels are already commercialised at scale, as has been said. It can also be argued that crop-based biofuels offer relatively small CO₂ carbon savings compared with fossil fuels, that they compete with food and can create biodiversity loss in other countries. However, crop-based fuels offer some CO₂ savings when there are very few other options available today at scale.

However, with very few alternatives to reduce carbon emissions from aviation today, the revenue certainty mechanism could also be an important intermediate step in this continuous journey of decarbonisation. So, while we support nuclear derived power-to-liquid, and we share a desire to limit the use of the RCM to support bio crops, this amendment opens some complex policy decisions which need a lot of careful thought. What we are doing here is planning a journey. On that road, we will have different fuels that will jump in and out as we move along it. A lot of the questions that are being asked in this group are around how the Government plan to have those fuels come in and drop out, how that that be done and scrutinised and how the mechanisms will change. The same is true in relation to Amendment 22, on HEFA. The arguments I would make around that are the same.

This is a really important group of amendments, and there is a lot to think about in this space.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, the noble Lord, Lord Moylan, asked some questions in relation to Amendment 19 in his closing remarks. I will write to him and provide a copy to all noble Lords about standing by the cost-benefit analysis on ticket prices and how we can control the cost to passengers by controlling costs through the allocation process. For good measure, I will also clarify the phrase “per year”.

On Amendment 21, I understand the desire of the noble Lord, Lord Ravensdale, to exclude crops from the revenue certainty mechanism. Several other noble Lords also spoke about their concerns on growing crops for purposes other than food at Second Reading. The noble Earl, Lord Russell, just now, was realistic about some of the practicalities of doing so. The sustainability criteria in the revenue certainty mechanism will align with the criteria in the SAF mandate.

As I mentioned before, there will be a call for evidence shortly, focusing on the potential benefits, risks and trade-offs of using crops in SAF production. The scope of the call for evidence will include different types of crops, including feed crops, dedicated energy crops and cover crops. While this call for evidence will neither propose any changes to the SAF mandate nor signal the future direction of the mandate, we would not want to expressly exclude SAF derived from relevant crops from the scope of the RCM if they might be included in the SAF mandate in the future.

We will, of course, continue to engage with industry on these issues. I echo the words of the noble Earl, Lord Russell, that this is developing and things will change over time. We need to understand it, and that call for evidence is part of that process.

The noble Lord, Lord Ravensdale, and the noble Earl, Lord Russell, referred to nuclear eligibility. We will match that in the SAF mandate. We are already supporting nuclear through the advanced fuels fund, which we believe to be right.

Turning to Amendment 22, I agree with the noble Lord, Lord Moylan, that HEFA SAF—I hate these acronyms—has already overcome many of the barriers to investment. For that reason, in our response to the first consultation on RCM, we announced that HEFA SAF projects will be excluded from the first round of contract allocation. I hope what I have said is sufficient to persuade the noble Lord to withdraw his amendment.

[Lord Ravensdale (CB)]

Just to clarify what he said, could the Minister just confirm that nuclear-derived fuels are eligible under the SAF mandate and that they are also eligible under the revenue certainty mechanism, please?

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[Lord Hendy of Richmond Hill (Lab)]

Yes, that is what I meant to say in answer to the noble Lord. I do clarify that.

[Lord Moylan (Con)]

I was hoping that the Minister would simply and explicitly state that the Government do not intend to see the mechanism used to support all the fuels that appear in the Energy Act 2004 that are currently in scope and that he would look to an amendment to eliminate some of those to give assurance that this mechanism is going to be directed at the fuels we have been discussing and not at that broader list. Would he take advantage of this last moment of Committee to give that assurance that he will be happy with such an amendment and contribute to drafting it?

[Lord Hendy of Richmond Hill (Lab)]

In answer to the noble Lord, I will not do that at this stage, but I will consider what he has just said.

[Lord Ravensdale (CB)]

I thank noble Lords for this short debate. In terms of eligibility of crop-based biofuels, as the noble Earl, Lord Russell, said, this is a journey we are going on and, absolutely, crop-based biofuels are part of that journey. The noble Lord, Lord Moylan said, and made the case quite strongly, that we have not heard any rationale for why those fuels should specifically get support under the revenue certainty mechanism, but I look forward to those further conversations. We have had the clarification on nuclear-derived fuels. On that basis, I beg leave to withdraw the amendment.