Sustainable Aviation Fuel Bill

Debate between Lord Hendy of Richmond Hill and Earl Russell

Committee stage
Wednesday 10th December 2025 Lords Chamber

[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.

--- Later in debate ---

[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.

International Maritime Organization: Net-Zero Framework

Debate between Lord Hendy of Richmond Hill and Earl Russell

Wednesday 22nd October 2025 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

I recognise that the noble Lord has extensive experience. However, I think he must agree that the subject under discussion—last week’s decision to defer—is far from the only thing that the International Maritime Organization does. Some of the things he has listed are, of course, very important. I have no doubt that we will press the IMO not only to move forward with the decarbonisation agenda but to deal with the things on his list.

[Earl Russell (LD)]

My Lords, these really important negotiations were effectively torpedoed by the Trump Administration using quite unpleasant tactics at the last moment. What reassessment are the UK Government making of how we can further our international climate objectives, with those who support us, in the wake of a more hostile American Administration?

[Lord Hendy of Richmond Hill (Lab)]

If we are to play the role in the IMO that we should, we have to respect the policy positions of other IMO member states. That means working with people who support our position and trying to persuade those who do not that they are wrong and that they should change. Following last week’s decision, this is precisely what we will continue to do with new vigour.

Motor Vehicles (Driving Licences) (Amendment) (No. 2) Regulations 2025

Debate between Lord Hendy of Richmond Hill and Earl Russell

Monday 19th May 2025 Lords Chamber

[Earl Russell (LD)]

I apologise—the amendment. This seeks to broaden the scope of these regulations to include alternatively fuelled vehicles that are not zero-emission.

I question the perceived need for such a change, to be honest, and what benefits would flow were it to be passed. The Government’s policy, which we support, is rightly focused on promoting zero-emission vehicles in line with our climate targets. Diluting this focus to extend the weight uplift flexibility to vehicles that still produce CO₂ emissions would undermine the clear objectives of supporting the transition to the cleanest vehicles.

Furthermore, alternative fuel vehicles are not subject to the inherent weight disadvantages as they have no need for heavier battery packs, so are not caught out by the previous regulations. They do not have the same excess weight. Gas-powered vehicles such as vans are the main type of alternative fuel vehicles which were in scope of the old regulations but not in scope of the new ones. But, as the Minister has said, the Government’s impact assessment found that as of December last year there were only 28 of these vehicles on our roads in the whole of the UK. Presumably, those drivers have already undergone all their training needs.

The Government’s impact assessment also highlighted that manufacturers do not have provisions to manufacture great numbers more of these vehicles. Therefore, the Liberal Democrats will support the government regulations, but we call for a full safety review to be completed in the next two years. If the noble Lord, Lord Moylan, calls a Division, we will not support it—we will abstain.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I thank all noble Lords for their consideration of these draft regulations. Having listened closely to the concerns expressed, I will respond to the points raised.

The noble Lord, Lord Moylan, started with the state of the roads and potholes. I admire his brave actions in driving around the roads of Oxfordshire at the weekend. He says the Government are doing nothing about it. That is far from true. The Government announced a £1.6 billion investment in the state of the roads and remedying potholes only in April. Incidentally, the damage to the roads is an exponential function of vehicle weight. A heavy lorry does far more damage to a road surface than an electric car, or indeed one of these vehicles at 4.25 tonnes rather than 3.5 tonnes. The noble Lord noted that he accepts the principle of these regulations on safety grounds.

The message to synthetic and alternative fuel manufacturers is not that they do not matter—what they are doing is valuable. The noble Lord knows, and he quoted paragraph 5.6, that it reduces carbon emissions, but in the end does not eliminate them.

The noble Lord is—or his party and the previous Government were—committed to decarbonising transport. Earlier this afternoon my noble friend Lord Katz answered the noble Lord’s question with the quotation:

“I believe that the struggle for decarbonised transport, clean development and clean air is as important as the struggle for clean water was in the 19th century”.


They are the words of Grant Shapps, the former Conservative Transport Secretary, and were as apposite a response to the earlier question as they are now to this debate. Decarbonisation is really important and prioritising vehicles that have zero emissions is really important for this Government.

The noble Lord also referred to driving tests, and he is right that the position that this Government inherited was dreadful—there were many, many people waiting for them. I have already answered questions in this House about reducing waiting times and recruiting more instructors, but it will take time to do that because remedying this position is not immediate. The Government’s aim is to reduce waiting times to seven weeks by summer 2026, and we will achieve that.

The noble Viscount, Lord Goschen, referred to the effects of kinetic energy. He is right that mass matters in road accidents, but the Government have looked into this quite seriously and the available data suggests that 3.5 tonne to 4.25 tonne electric vehicles are no more likely than their 3.5 tonne petrol and diesel equivalents to be involved in collisions.

Disruption at Heathrow

Debate between Lord Hendy of Richmond Hill and Earl Russell

Tuesday 25th March 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I thank the Minister for the Statement and join him in paying tribute to the firefighters, all the emergency services and everyone who worked to extinguish a significant fire and return services to normal. This incident not only affected Heathrow but cut power to 63,000 homes, and 100 residents were evacuated.

The Minister is correct that this is an unprecedented incident. I welcome the intention to learn all and any lessons that arise from it and from the Heathrow internal inquiry and the NESO six-week initial investigation that have been announced. A single incident should not have been able to shut an airport. The mere fact that the cascade was not prevented offers us wider opportunities to ask serious questions about our preparedness, the resilience of our energy infrastructure and the urgent need to make new risk assessments with fresh minds.

The fire was the result of 25,000 litres of an oil-based cooling system overheating and catching fire at North Hyde substation. The significant fire required 70 fire- fighters to get it under control and resulted in a series of events that ultimately meant that more than 1,300 flights were cancelled, a further 670 flights impacted, and some 200,000 passengers suffered. We need to understand, at the point of ignition, what caused the fire. Are there flaws in substation design? Was this substation being overused, causing it to overheat? Why does it appear that there was no prior knowledge of the overheating while it was taking place? Could it be that something as simple as a few pounds spent on a remote temperature sensor could have alerted system operations to the problem and perhaps prevented the fire?

I welcome the involvement of the counterterrorism police, who have the skills to make rapid assessments of the causes. I note that in the last few hours the Metropolitan Police has confirmed that this incident is no longer being treated as a “potentially criminal matter”.

There is some confusion over the interpretation of events, and that concerns me. The Government and NESO say that while one of the main substations went offline, two alternatives remained available to provide the power required and additional reserve generation capacity at the airport gave some further limited capacity. Heathrow meanwhile argues that energy supply was insufficient to ensure the safe and secure ongoing operations and proceeded

“to reconfigure its internal electricity network”.

This meant, in effect, that every computer and safety system had to be turned off and on again. It is this act that caused the impacts. I ask the Minister: did Heathrow game plan and stress test the falling offline of the whole of this substation and, if so, what were the predicted impacts and consequences. If not, why not? When is the Heathrow inquiry expected to give initial findings? Will the NESO inquiry work with and have some access to the findings of the Heathrow inquiry? How will fundamental disagreements between the findings of the two inquiries, if they exist, be addressed? When will the Government respond to the National Infrastructure Commission’s report Developing Resilience Standards in UK Infrastructure?

To conclude, wider systemic and broader national risks to our national grid and critical energy infrastructure must be considered. Considering known terrorism-related attacks on other western countries’ energy infrastructure, including undersea cables, I call on the Government to undertake a full review, with the inclusion of the National Security Adviser, of our critical energy infrastructure—its susceptibility, resilience and levels of redundancy—including vital transport services and other services such as hospitals, key computer systems and telecommunications.

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

My Lords, I share the sentiments expressed by the noble Lords who have just spoken about the firefighters and other emergency responders who went to the site of the substation fire when it first broke out and brought it under control. They are undoubtedly very brave and I agree with the noble Lord, Lord Moylan, that when they arrived it was not clear what they were facing, so they were all the braver for tackling it directly. I also share the thanks of the noble Lord, Lord Moylan, to the many workers at Heathrow Airport and, indeed, those who work for airlines, who not only had to work hard to get the airport back online but have dealt with the further disruption caused to flights, not only in Heathrow but across the globe.

I must express great sympathy for all those whose flights were delayed as a consequence of this incident. They are the passengers—the noble Lord, Lord Moylan, referred to them—and many people’s personal and business activities will have been delayed and disrupted due to this very extraordinary outage. I am happy to express sympathy for those people. I hope that, now, as Heathrow is returning to normal, their travels have resumed.

Both noble Lords referred to the two inquiries. My noble friend Lord Hunt, who is sitting beside me, is the Minister of State for Energy Security and Net Zero. He has commissioned the National Energy System Operator to investigate the power outage. That will deal with understanding wider lessons from the power outage. Noble Lords will know that Heathrow Airport Ltd, which owns and operates the airport, has asked Ruth Kelly, former Secretary of State for Transport and an independent member of its board, to undertake a review of its internal resilience. That review will analyse the robustness and execution of Heathrow’s crisis management plans, the airport’s response and how it recovered the operation. The first report, from NESO, will be made to the Energy Secretary, and the Secretary of State for Transport has asked to see a copy of the second report. Heathrow has agreed to that, and we will report back to the House in due course.

The noble Lord, Lord Moylan, asked whether I thought compensation was adequate and whether passengers needed an apology. They certainly need an apology. Everybody’s reasons for flying are different, but all of them expect to fly at the time on their ticket. Clearly, they deserve an apology, even though this was an extraordinary event. Do I think the compensation is adequate? The compensation for airline delays is set out, and it depends, in part, on which airline it is. Not only are people legally entitled to a choice between a refund within seven days or to be rerouted to their destination, including on flights operated by another airline, but they are entitled to care and support, such as refreshment or, if necessary, overnight accommodation, while waiting for a delayed or rerouted flight.

The questions about the reliability of the supply, security and the judgments that have to be made by the airport operator will undoubtedly be addressed by the two reviews that have been spoken about. Both noble Lords asked about timelines. We do not yet know what they are, but it would be better for both reviews to be thorough than it would for them to be quick. I know from some experience of this in different transport modes that, very often, you have to dig deeply to find out the root causes and understand what can be done. There is no doubt that the number of systems in a modern airport is huge, and they are very sophisticated. It will take some time to discover whether or not you can get them restarted any better.

The noble Lord, Lord Moylan, asked about the expansion plans for Heathrow—not merely the projected third runway but the expansion of terminals. There will of course be a relationship with this. We would expect Heathrow Airport Ltd to have resilience plans, which will scale up to whatever capacity the airport has. I would expect the Kelly review to look at how any expansion would be dealt with and whether or not expansion might make it easier to invest in such systems and resilience in order to obviate such a thing happening again.

The noble Earl, Lord Russell, is absolutely right to refer to the 63,000 people affected by the power outage. Many of them were not affected for long, but, nevertheless, even in the middle of the night there will be people who need power for various reasons, including medical reasons. Our sympathy goes to them as well.

On the confusion about capacity and the airport’s ability to recover, and the downtime when the power supply was cut off, we are expecting the two reviews to interact on this to a degree where there is no gap between them. There should be no question about whether they are comprehensive. I am sure that the Heathrow review will undoubtedly look at whether there was a game plan at Heathrow and at how much it has stress-tested its systems. I do not have anything further to say until the reviews have reported.

The noble Earl was completely right that the Metropolitan Police has recently reported that it does not believe this was a criminal act and is not pursuing that line of inquiry. I am sure that is a relief. I will look further at the government response to the National Infrastructure Commission report, and if I have anything to say I will write to the noble Earl about it.

Airport Expansion

Debate between Lord Hendy of Richmond Hill and Earl Russell

Tuesday 25th February 2025 Lords Chamber

[Earl Russell]

To ask His Majesty’s Government whether they intend to consult the Committee on Climate Change before taking decisions on airport expansion.

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

The Government published their report on the Climate Change Committee’s latest progress report in December last year. The response makes it clear that we recognise the role for airport expansion where it provides economic growth and is compatible with our net-zero target and strict environmental standards. As part of the Airports National Policy Statement review, referred to by the Chancellor in her recent Statement, we will engage with stakeholders on how aviation expansion can be made consistent with our net-zero framework.

[Earl Russell (LD)]

This level of airport expansion is always going to be incompatible with our climate change commitments. It would undo all our work on climate change in under five years. When just 15% of the population is responsible for 70% of all flights, the Government must do more to curb demand. No economy in the world has grown from building runways alone. Meanwhile, in 2024, the green economy grew by 10%, adding £83 billion. Does the Minister agree that what is needed more than anything else are clear and consistent government policies on climate change and green growth, not this damaging policy confusion?