Sustainable Aviation Fuel Bill

Debate between Lord Harper and Earl Russell

Committee stage
Wednesday 10th December 2025 Lords Chamber

[Lord Harper (Con)]

My Lords, I will speak briefly in support of my noble friend Lord Moylan’s Amendment 11. He set out the point of it in great detail so I will not repeat what he said but will just emphasise two of the points.

The first is about transparency. It is very important that we are transparent about what we are doing here. Having sustainable aviation fuel and making aviation more sustainable is an important policy goal. It is one that we supported in government and the present Government support, and the principle of it was also supported by the Liberal Democrats. We should just be open about the cost involved in doing it. There are two reasons to be transparent. First, that is how you generate confidence among the public as they can see that aviation is becoming more sustainable. There is a cost involved but that cost is sensible and one they are prepared to pay. Secondly, transparency enables there to be competition or downward pressure on the costs, which is easily missing if the costs are obscured. Having the costs transparent is very helpful and will also mean that different suppliers are not able to hide these costs in their invoicing.

The second point is that I am still unclear about how a mechanism based on market share would work. As well as the lack of clarity and the risk of that leading to overcharging, there is a risk of being backward-looking and looking at historic market share. I am also not clear whether the intention is that different suppliers would, in effect, have different costs being added to what they have to charge, which would seem to have an adverse competitive effect. We want people to bear the cost of the levy, but do not want different suppliers to be picking up a different proportion of that based on their historic market share and then having to charge a different price per litre to competitors. That seems to me to lock in a previous competitive structure and outcome. Part of what we are trying to do here is to encourage new producers and new people to come into the marketplace with new fuels and to enable that competitive process to take place. It is that competitive process that will make sure that we get SAF produced at the lowest possible cost, which is important for consumers. I would welcome some clarity from the Minister and would urge for that clear price per litre of fuel that can be placed on people’s invoices and for transparency.

I also want to speak briefly to Amendment 26 in the name of my noble friend Lord Grayling. It would place a sunrise clause or a commencement period on Section 6 so that it does not come into force until the first SAF producer is six months away from producing that sustainable aviation fuel in the UK. I think what my noble friend is driving at in this amendment is to make sure that the costs of producing SAF do not start being paid until a domestic plant is almost ready to go and payments to that producer ready to go—that, in effect, we are not starting to charge people in advance and saving up the money on the basis that at some point many years down the road a producer is going to start producing. There is merit in this amendment. Six months may not be the right period but it would be helpful to understand whether the Minister is broadly supportive of the principle and for him to set out the Government’s view on that. That may be an issue that the Government can return to on Report, as the Minister has indicated he will on the earlier group of amendments, or he may have a different way of dealing with the issue raised by my noble friend.

[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.