Sustainable Aviation Fuel Bill (First sitting)

David Reed Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Euan Stainbank (Falkirk) (Lab)]

Q Thank you, Mr Pritchard. Both Airlines UK and RTFA touch on this in their written submissions, but using municipal solid waste will give a substantially higher greenhouse gas saving than incinerating it, as is currently done. What do you think the Government could do further to incentivise use of the feedstock in that way, rather than seeing more energy go towards waste projects and incineration, or do you anticipate that the revenue certainty mechanism and the sub-mandate will be sufficient?

[David Reed (Exmouth and Exeter East) (Con)]

To pick up on Mr Greenwood’s point about unintended consequences, at a time of increased international instability, the need to produce things domestically in the coming years has become more and more apparent. Do you think this will impact our traditional ways of producing those fuels that we will probably need in the UK?

Paul Greenwood: First, from an energy security point of view, and as Gaynor rightly pointed out, a very significant amount of the road fuels in the UK are imported. They are imported rather than refined here, as it is not economic to refine them here, because of all the cost issues we face in energy, labour and carbon dioxide. That has effectively driven refineries to not invest or expand, and in some places, to go bust. That is the major driver here.

If you are prepared to import 70% of your jet fuel now, I do not see why you need to increase local production of SAF. There is a very good reason for doing that—the creation of jobs—but there are unintended consequences in the costs and how you are going to pay for that, which need to be thought through seriously. I do not think this is an energy security issue, given the amount of product that you are importing into the country now. By layering cost on to refiners and fuel suppliers as you are doing now, you actually risk precipitating the decline and demise of the refining sector even more, which will mean importing significantly more fuel across the piece. To my mind, that is a quid pro quo.

Gaynor Hartnell: We import about 85% of our road fuels. Lamentably, that figure is going to go up, because existing biofuel and renewable fuel production facilities are falling away. There was a Greenergy announcement last week about the closure of the Immingham plant, and two bioethanol producers are at risk of closure. They are linked into the UK in so many different ways, from CO₂ production to the market for grain that does not meet the required grade for milling, so it has to be used as feed wheat instead. We will suffer the consequences of not taking care of our domestic industry. We need production in the UK.

It is not just a question of saying, “We can simply buy it from overseas”. As Rob has pointed out, the SAF mandate creates a specific demand for waste-based SAF that is not specifically encouraged by any other mandate around the world, so we need this. If we are not going to make it, we cannot rely on other people making it, and the airlines and fuel suppliers ultimately rely on pulling that into the UK to avoid paying the buy-out for the mandate. Paying the buy-out for the mandate would be a really bad situation for everybody, so we need to safeguard against that happening.

You also asked about the waste hierarchy and what could be done to encourage residual municipal solid waste to find its way to the best carbon outcome, rather than being used to produce electricity, which is already going on to a largely decarbonised grid. Adjusting the waste hierarchy to recognise the carbon benefits of this route for residual solid waste would be really helpful. At the moment, local authorities are in a situation where they have a reliable route through just sending it off to an energy from waste project, against prospects of hopefully SAF projects coming down the line in future, if all else goes well, then RCM comes along and they win contracts. There is a lot more risk involved in choosing the SAF route. That has to be specifically encouraged, and the waste hierarchy would be a way of doing that.

[The Chair]

Mr Griggs, I am sorry—you have 35 seconds.

Rob Griggs: We fully support the changes to the waste hierarchy. On municipal solid waste, our key point is that our analysis suggests that there are plenty of UK feedstocks across the different technology pathways, of which municipal solid waste is a huge potential advanced pathway. The way the waste hierarchy and local authority contracts are set up, it is just not working as we think it could be to maximise your decarbonisation bang for your buck. When there are cheaper and better ways of making electricity, decarbonising is tough, and we think that we should be prioritising that.

That links to the question about domestic production. Again, we think that the UK is advantaged in that we have a lot of potential to be producing advanced SAFs through the wastes that we have available, and through the technology infrastructure that we already have in the UK.

--- Later in debate ---

[Euan Stainbank]

Q What effect has anticipation of the RCM and the corresponding timetable, which I imagine your companies are now working to, had on your ability to make a final investment decision? Can you give us as much detail as possible about your current plans, spades in the ground and such?

Noaman Al Adhami: Our project is a £2 billion investment. We need the RCM to be able to reach FID. We already have lenders on board, and that is the requirement they have asked us to secure before reaching FID. Our project was part of the windows of the advanced fuels fund. The original plan was to start construction by 2025—this year. We were planning all our development activities to be ready to start construction this year. Unfortunately, that is now not possible, because the RCM is now pushed to the end of 2026.

Yes, immediately after I sign the contract—the day after—I will start constructing the site and reach FID. I will technically be ready by the end of this year. I am finishing FEED. We have invested more than £70 million in this project so far and we will finish FEED by the end of this year, so technically I am ready to start construction after the end of this year.

If there are delays, we are worried. We are broadly very supportive of the Bill; our issue is timing. If I do not get the RCM by the end of 2026, then the project will be delayed, and then I will not be able to produce SAF as planned starting from the end of 2029, and then provide the market with the SAF quantities by 2030, when it is required, as per the mandate. The second-generation SAF is required in 2030. I will not be able to do that if there are delays.

Sophia Haywood: We are currently in the FEED phase, which is front-end engineering and design—we are really good at acronyms in this space. Basically, what that means is that we are looking at the facility specific to the site and designing everything up with the site. It is a really important stage, before we then go to a final investment decision. We are expected to go to a final investment decision next year. That is what we came out publicly and said. Any policy uncertainty in this space, even if it is for a good thing, creates questions, but at the moment we are still working towards that timeframe.

One of the things we are hearing at the moment on access to finance is a lot of positivity towards when you get to that final investment decision space. But again, who knows the full impact that this will have on the broader markets in the financial space as well? All eyes are on the UK; they have been, first with the SAF mandate, and now with the RCM. Also in Europe, there is a lot of looking to what the UK is doing.

This is undoubtedly going to have an impact, but in all honesty it is very difficult to say right now what that impact could be until more details are available. From our perspective, the development of the scheme as swiftly as possible and, as Jonathon Counsell said, the competitivity within that, is important. It is about as much swiftness as possible. We are very supportive at the moment of what is happening.

[David Reed]

Q Following on from the shadow Minister’s questions about scalability and production, Ms Haywood, you talked about the globally distributed nature of this technology sector. With international supply chains becoming more contested and the view that traditional production methods will be scaled down and SAF will be increased, where do you see the biggest blockers to growth and scalability, and how do you balance that against energy security?

Sophia Haywood: That is a great question. In terms of the international value chains, as I said before, all eyes are on the UK. For a lot of projects that are developing globally, even if they are being developed in countries significantly further away from here and Europe, we are going to see a lot of opportunity for product to be moved over to the UK, at least until other mandates in other countries are put in place, and then we will start seeing shifts in where this goes.

Instead of a blocker, perhaps, I would phrase it more as an opportunity about things that we could maybe do slightly differently. One example that we have just had is a project in Japan that we have done. We had a large amount of funding. It is quite similar to the advanced fuels fund principle, but a lot larger in terms of the quantity of funding that is available, albeit with a smaller number of participants. That has enabled a much larger-scale project in partnership with one of Japan’s largest oil companies to develop a SAF project. This is a transition, and they are going to move at the same pace as one another.

As much as we can support investments on existing sites with existing infrastructure, such as both of our projects in Teesside in terms of the regeneration, I think more activities like that could be a great opportunity for the UK. The steps that have been taken so far with Project Willow are a good example of how that could be taken to the next level. The project is looking at opportunities on the site of the former refinery at Grangemouth; maybe this could be a similar example, where you could take it to the next level. However, we will see increasing competition globally.

Coming back to the points around planning and electricity connections, anything that could help us to bring investments to the UK, where we have some of the highest energy costs, would be welcome. We saw a commitment in the industrial strategy to reducing electricity costs, which is fantastic. We would welcome greater clarity as to whether SAF can definitely be included in that. I saw that it is an extension to an existing scheme, which is why I am asking that question. These are some of the things that help us to compete better globally.

[David Reed]

Q That is a very good answer; I am happy with that, and it is obviously coming from a company’s perspective. In terms of Government engagement, how many conversations have been had with the Cabinet Office and the Department for Energy Security and Net Zero around energy security and your production capability?

Sophia Haywood: It is not something that we have had great levels of conversation about, particularly when it comes to energy security. It is a really important part of energy security. Coming back to the point about access to locally produced bioethanol, I see it as another great example of something that would be sustainable, affordable and secure, if we are able to take wheat that is produced locally by British farmers, and convert it in local facilities and then at a SAF facility. With all the additional benefits on things such as CO₂, that is a great opportunity on energy security, but speaking more broadly it has not been a huge part of the interest in SAF.

Noaman Al Adhami: I will focus more on scalability. When it comes to scalability, allowing all the routes to SAF and not focusing on one route will potentially enable SAF production to be scaled up. Green hydrogen will also potentially be there in large quantities with an affordable price, and that will contribute. For example, we could utilise green hydrogen to triple production if it were available, but currently it is not.

We are also designing our plant to utilise multiple types of feedstocks. It is mainly solid waste to SAF. I would start with a less challenging feedstock to prove the line-up and then explore much more difficult feedstocks, such as MSW. Even sewage sludge, chicken manure and grease, for example, could be used to co-fire the gasifier, so we think the supply chain will potentially build once it sees a home for their waste.

We will start with a safe option for the feedstock, but our objective is to explore all other potential feedstock and increase capacity. We have plans for at least phase 2. Our site in Teesside can accommodate phase 2 and we are already planning for that. Hopefully, once we reach FID, we will announce phase 2 of the project.

[Tom Collins (Worcester) (Lab)]

Q You have talked a little about this already, but I am interested in the conditions you are operating in and the constraints you are facing. You mentioned regulations and planning, but I am also interested in the availability and maturity of standards and the particular different types of biofuel. I am also interested in how you store intermediates and if there are any issues around that, because I have heard from others that there is perhaps a lack of regulation on the safe storage of some of these intermediates. I do not know whether you are using hydrogen for upgrading at all, but I am interested in whether you have a vision for a future UK hydrogen system, and what that might look like.

Noaman Al Adhami: In terms of standards, as I mentioned before, our route is approved as per the ASTM route. The rest of the standards—mainly on feedstock—are already there in the SAF mandate with all the details, and we are complying with that. I think one of the big advantages of SAF, compared with other means of decarbonising aviation, is that it is a drop-in fuel. It is a liquid fuel, very similar to the jet fuel kerosene, so it is easy to store and transport; you can use existing pipelines.

Obligated parties, whom we may potentially supply with SAF, have the capability to blend it. Currently, it can be blended up to 50% drop-in, and they can do so using the infrastructure that is already available. If you compare hydrogen with SAF, SAF is much easier, because you can use the existing infrastructure in airports, storage and logistics. To be frank, we do not see any challenge there in Teesside, which is an industrial area with storage facilities. We do not see any issues. With hydrogen, as I explained, we can use hydrogen not necessarily to power the plane directly, but we can certainly use it to boost production of SAF. That is possible. I have the CO that I mentioned earlier, which I am currently capturing to reduce carbon intensity. I can convert this to CO, mix it with hydrogen, and produce more SAF.

The issue in the UK is the cost of producing green hydrogen. We, as a global developer of renewables, know the cost of producing green hydrogen in the UK is very high. If you have this valuable green electron, is it better from an efficiency perspective to use it to electrify cars and heat homes, where you can get up to 80% efficiency, or to produce fuel at 30% or 40% efficiency? But things are happening; once hydrogen storage and production costs advance—we think perhaps between 2035 to 2040—hydrogen will potentially be available in quantities. We will need large quantities, of course: for our project alone, we will need 1 gigawatt of hydrogen to fully utilise the biogenic carbon we produce.