Sustainable Aviation Fuel Bill

Viscount Trenchard Excerpts

Thursday 20th November 2025 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I add my congratulations to the right reverend Prelate the Bishop of Chester on his entertaining and informed speech. He should moonlight and take a second job on the Climate Change Committee.

It is a great pleasure for me to follow my noble friend Lord Harper, who rightly stressed that we should continue to lead the way in developing new technologies. Perhaps the Government could pay more attention to the absurdly high level of electricity costs in this country and the high levels of taxation.

I thank the Minister for introducing the Bill today. I have been a frequent flier for most of my working life and still travel regularly overseas, especially to the Far East. So I declare my interest as set out in the register, especially in connection with advising Japanese companies and British companies with regard to their Japanese business.

My noble friend Lord Grayling knows a great deal about this subject and made a compelling speech. The rapid adoption of SAF is still broadly supported by the Conservative Party, but I believe the sands have been shifting on the whole question of how quickly and at what cost businesses and individuals should be compelled to adopt a net-zero and clean energy agenda. In particular, if the larger carbon dioxide emitters, such as China and developing countries in Africa and Asia, are not imposing similar constraints on market forces in their countries, logic suggests that we should not do so either.

It seems to me that the effect of the Bill is to distort the market for sustainable aviation fuel. I suspect that the cost of this distortion will be borne ultimately by consumers. The Bill is about the creation of a revenue certainty contract, which will, in effect, insulate the quango which will be created as the counterparty from market risk. I am very sceptical about the Government’s claim that the net cost per passenger of implementing the revenue certainty mechanism will be between minus £1.50 and plus £1.50 per passenger. How can this be possible if the cost of the SAF itself is going to be more like £10 per passenger? In any event, ticket prices have soared beyond our wildest expectations over the last few years, so whether the cost of the RCM amounts to one cup of coffee or 100 cups of coffee is not really relevant.

I am not certain that forcing an increase from 2% to 22% of the SAF component of aviation fuels over the next 15 years is likely to save the planet. Can the Minister tell us whether the Government will interfere with airlines’ freedom to refuel their aircraft in other jurisdictions at will, including those that either have not imposed any mandate for inclusion of SAF or have imposed a less onerous one? I am not sure that the performance in miles per gallon of cars using E10 fuels is not slightly inferior to that of cars using E5 fuel, and I ask the Minister to tell the House what evidence there is that fuel economy and, crucially, safety are not at all impacted by the quite steep and burdensome mandate imposed on an already challenged aviation sector.

My noble friend Lord Davies of Gower in his interesting speech encouraged me to be more positive about SAF and to recognise its benefits and its importance. But he did point out that the Government’s mandate will be difficult to achieve without diverging from HEFA-based SAFs, and there is doubt about whether second- or third-generation SAFs will work well. There are more than 160 ships powered by small nuclear reactors, and the noble Lord, Lord Ravensdale, rightly drew attention to nuclear power as a potential source of power for aircraft. In particular, he pointed out that high-temperature gas-cooled reactors enable the production of hydrogen at scale, and hydrogen technologies are already capable of powering aircraft. Airbus plans to have commercial hydrogen aircraft in service by 2035. Unfortunately, the Government’s hydrogen strategy does not recognise the role of nuclear in producing hydrogen at all. I ask the Minister why this is the case. Our Japanese friends are disappointed that we are moving so slowly with their project to develop high-temperature gas-cooled reactor technology with the National Nuclear Laboratory and believe that Poland may be a better partner than we are likely to be.

Can the Minister tell the House about the counterparty? He is going to have a great number of powers to direct it. How many people will it employ, and what does he expect will be its annual cost of operation? The Bill is designed to enforce a piece of industrial policy. Is the Minister certain that the counterparty will be well placed to manufacture SAFs competitively in this country, given our very high energy costs? Surely, if either the taxpayer or the consumer is going to have to pay for the cost of the counterparty and its activities, it follows that the legislation should require the Government to monitor costs and that the counterparty should be required to prioritise British technologies. Can the Minister tell the House why the Government declined to accept a perfectly reasonable and sensible amendment to require transparency over the effect of any revenue certainty contract on ticket prices, on both a one-year view and a five-year view?

I note that Jonathon Counsell of IAG, in his evidence to the Public Bill Committee in another place, raised the question as to whether the Government’s estimate of plus £1.50 to minus £1.50 really included all elements of the counterparty’s costs. If the Government did not like the amendment moved by my right honourable friend Richard Holden, could the Minister not undertake to bring forward the Government’s own amendment to achieve the same purpose? It is beyond doubt that the public and the consumer are entitled to know that the costs of this new foray into industrial policy will be strictly monitored.

How will the Minister ensure that the counterparty will ensure that any contract leading to the establishment of a new factory will prioritise the use of British technologies? We would certainly welcome the Minister telling the House how we can ensure that new factories will prioritise the use of British technologies. I look forward to hearing the Minister’s winding-up speech and to working with other noble Lords to improve the Bill, which is absolutely necessary.