Sustainable Aviation Fuel Bill

Lord Ravensdale Excerpts

Thursday 20th November 2025 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, I declare my interests as a chief engineer working for AtkinsRéalis and co-chair of Legislators for Nuclear. I look forward to the maiden speech of the right reverend Prelate the Bishop of Chester. I support the Bill, with the caveat that costs to consumers of these measures must always be front and centre, with all the freedoms that cheap air travel has opened up to people from all backgrounds in recent decades. But I accept that there is a strategic need to invest in the long-term sustainability of aviation fuel for the UK and that we need a revenue certainty mechanism alongside the mandate.

I have three broad points. My first is around the definitions in the Bill of fuels that are eligible for the revenue certainty mechanism. Clause 16 defines “sustainable aviation fuel” as,

“aviation fuel that is renewable transport fuel”.

“Renewable transport fuel” is defined in the same clause as,

“anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”.

It then refers to Sections 131D and 132. I proposed the amendment to what is now the Energy Act 2023 that led to Section 131D, which treats recycled carbon fuels and nuclear-derived fuels as renewable transport fuels. That amendment was therefore a key enabler for this Bill in enabling support for second-generation and types of third-generation SAF.

However, this requires secondary legislation to take effect and treat these fuels as renewable transport fuels. This has not been completely done for the surface transport renewable transport fuel order; it has been done only for recycled carbon fuels. But it has been done for the sustainable aviation renewable transport fuel order, so we have quite a convoluted legislative route here between various Acts and secondary legislation. Can the Minister please confirm that recycled carbon fuels and nuclear-derived fuels are within the scope of the revenue certainty mechanism outlined in the Bill?

Clearly, recycled carbon fuels will be very important in the near term. Over the medium to long term, nuclear could well be a significant source of synthetic fuels due to the potential economic efficiency it brings to hydrogen production, whether that is high-temperature electrolysis, with the current pressurised water reactor plants, or, looking further ahead, the sulphur-iodine cycle in advanced high-temperature nuclear plant.

My second point is around the powers that the Government are taking in the Bill. They have clearly stated that they do not intend to offer contracts for first-generation SAF based on hydrogenated esters and fatty acids—HEFA. Should this therefore be stated in the Bill? The Government should take only the powers they need, given that this Bill is a framework for the long term. There is a case that the powers in the Bill should be limited to second-generation and third-generation sustainable aviation fuels. I do not foresee any good reason why HEFA fuels would need such support, so I believe that this could be clearly stated in the Bill.

My third point is around value for money and competition. We rightly heard a lot of discussion in the other place around costs to consumers and analysis on the £1.50 impacts on airfares. The Minister clearly stated that we need to get the right balance between investors and consumers with the prices that are negotiated, but another way of looking at this relates to the competitive structure within the Bill. Of course, the way the Bill is structured around bilateral negotiations, rather than a competitive process, is what is needed for the SAF market at this stage, noting its immaturity. An auction process, such as that which we have for offshore wind, is not perhaps appropriate at this stage.

However, this Bill needs to be fit for the longer term. Competition is the way to drive down costs for consumers in the long term, as has been demonstrated in more mature markets such as offshore wind. So, in the longer term, we need that mechanism for auctions and competitions within the Bill but, looking through it, I cannot see a mechanism for setting up such a competitive process.

Other government legislation, such as the Energy Act 2013 for CfDs for renewable energy generation, clearly states that regulations made may include provision for,

“the determination of a matter on a competitive basis”.

We also have that in the Energy Act 2023 for low-carbon hydrogen, which clearly states:

“Provision falling within subsection (2) may include provision for … the determination of a matter on a competitive basis”.


This Bill makes no provision for regulations to cover the determination of a matter on a competitive basis, or indeed for allocation frameworks. I would be grateful if the Minister could state whether, in his view, a competitive framework is covered by the Bill as written and, if not, whether it should be. The Bill should be fit for the future to avoid the need for future legislation in this area, and it should be structured to minimise costs to consumers, which in the end will be enabled through competition.

Finally, this Bill will go a long way to realising second-generation and third-generation SAF production in the UK, but the Government need urgently to address broader challenges as well, not least our high industrial electricity prices. I have spoken to a number of companies that want to set up SAF plants and related infrastructure in the UK, but they simply cannot make the numbers stack up when our electricity is four times as expensive as competitors such as the USA. This is a very energy-intensive industry. Alongside the measures in this Bill, we need to address the fundamentals to ensure that we are being fair to consumers and minimising required subsidies. I hope the Government will think about the broader framework as well and not just see this as a problem to be addressed through subsidies.