Sustainable Aviation Fuel Bill

Greg Smith Excerpts

Report stage
Wednesday 15th October 2025 Commons Chamber

[Olly Glover]

This has been an informative debate on all the new clauses. From a procedural point of view, we are happy not to push new clause 1 to a Division.

[Greg Smith (Mid Buckinghamshire) (Con)]

To begin, I draw Members’ attention to my entry in the Register of Members’ Financial Interests with regard to the synthetic road fuel provided to me for a constituency surgery tour last year. That is not strictly relevant to sustainable aviation fuel, but I want to be entirely transparent about it, as I have been throughout this Bill’s passage.

May I also welcome the new Minister to his place? He has a big pair of shoes to fill, and I equally want to commend the hon. Member for Wythenshawe and Sale East (Mike Kane)—we did not always see entirely eye to eye—for the effort and attention he put in to getting this Bill through the House and to his other duties in the House.

I begin with new clause 6, which requires the Secretary of State to lay before Parliament a report on the economic impact of the Act once it is in force. This amendment goes to the nub of what is important. Does the Bill enable growth or stifle it? Does it support our world-class aviation industry or go against it? More importantly, does it enable our constituents to do what they have always done and fly, be that on holiday, on business or to visit family and friends overseas, or does it hinder them in doing that; and does it hinder our businesses in bringing goods in and out of the country by air?

New clause 6 forces the Secretary of State to confront the realities of the Bill on multiple fronts. It covers the impact on the UK’s aviation fuel industry and the UK’s sustainable aviation fuel supply, and the impact on small, medium and large producers and potential importers of sustainable aviation fuel.

[Iqbal Mohamed]

Could the hon. Member clarify over what period the Government would do the cost impact assessment, if they were to do one? Does he agree that the transition to any new technology requires significant initial upfront investment? All the trillion-dollar companies in the world were losing millions before they became profitable.

[Greg Smith]

I am grateful to the hon. Gentleman for his intervention. I will come on to some of the technological points he made earlier, which it may surprise him to hear that I was incredibly sympathetic towards. On the timescale he asks for, I think it reasonable that, when a new Act comes into force, the Government should review it on a yearly basis at least, if not more frequently, to check that it is working. The point he makes is valid, and I thank him for it.

Last on the list of impacts covered by new clause 6 is the impact on international and domestic tourism in the UK and passenger air fares. We in this House can pass all manner of laws and schemes, and we can mandate new things, but their impact, including on the wider economy, matters. Reviews like the one proposed by new clause 6 would ensure that Governments of all political persuasions monitored real-life outcomes and, if necessary, tweaked provisions—or completely changed course. I cannot for the life of me understand why any Government would run scared of such a clause; it would help them govern better in the long run.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

The hon. Member will know that countries right across the world are moving towards SAF. Has he reviewed them to understand what is unique about the UK that means that we are vulnerable, while other countries are able to drive ahead? Are these countries undertaking the same bureaucratic reviews of their own legislation, and which country is he modelling his approach on?

[Greg Smith]

I think it is necessary for any Government to review the legislation they are passing to check that it actually works, does what it says on the tin, and does not negatively impact real people and businesses going about their day-to-day lives. If he has paid attention to the debates in previous stages of this Bill, he will know that I support a move to sustainable aviation fuel; I will come on to that shortly, when I speak about other amendments. I think, as the hon. Member for Dewsbury and Batley (Iqbal Mohamed) does, that some technologies are superior to others when it comes to power-to-liquid, but the move to those fuels is very important. We have to get it right. If we do not, and we do not make it affordable, it will not happen.

[Sir Edward Leigh]

I commend my hon. Friend on his speech. Does he agree that the Conservative way is to ensure practicality over mere ideology, and consumer rights over Government imposition of controls and regulations that can do serious damage to the economy and people’s livelihoods?

[Greg Smith]

I am grateful to my right hon. Friend the Father of the House; I could not have put it better myself. It is essential that whatever measures, on any matter, are brought forward by any Government—be it the current Government or any future Government—real people’s lives and the cost base be reviewed regularly, so that we are not making people poorer, or stopping people from being able to do what they want, be it go on holiday, travel for business or move goods around.

With that, I come to amendment 8 and the cost impact on passengers. The amendment would require the designated counterparty to report on the impact of the revenue certainty mechanism on passenger air fares. One of the most contentious areas surrounding the Bill, and indeed the Government’s whole approach to net zero, is: what does it actually cost real people? The amendment seeks to clarify that, and it gives the Government the opportunity—in theory, they should cheerfully embrace this—to lock in a claim that they profess to believe, namely that the Bill will have an impact of plus or minus £1.50 on air fares. The previous Minister repeated that statistic time and again on Second Reading and in Committee. The new Minister has the challenge today of either sticking with his predecessor’s assertion, backing the amendment and locking in protections for consumers, or admitting that this may well be more costly to air travellers.

It is worth noting that during the evidence stage of Bill Committee, none of the witnesses was willing to affirm the Government’s figure. In fact, some noted that the estimated price appeared low. For example, Jonathon Counsell from International Airlines Group stated:

“We think there are potentially some elements that have not been included in that calculation, but £1.50 per passenger feels quite low when you think the costs of the SAF itself will be nearer to £10.”––[Official Report, Sustainable Aviation Fuel Public Bill Committee, 15 July 2025; c. 17, Q12.]

Consumers need peace of mind that the Bill will not cost them dear, and will not act as a financial barrier to the family holiday or any other trip, so failure to back the amendment can only mean uncertainty.

I turn to amendment 11, which is focused on transparency. The amendment would require the Secretary of State to set a standardised levy rate, payable by all suppliers of aviation fuel, that must be publicised by suppliers of aviation fuel on invoices to their customers. Valero, for example—one of the world’s largest renewable fuels producers—has contacted the Opposition arguing for the amendment, saying that it would offer a workable solution; it would support the development of new SAF production without significantly impacting the industry as a whole. The amendment would apply the levy equally to all jet fuel suppliers, providing a fair and transparent mechanism for supporting the broader SAF industry.

Just this week, I have been contacted by Virgin Atlantic, which is arguing that transparency safeguards must be in place to keep costs low for consumers. As organisations including the International Air Transport Association have highlighted, since the mandate came into effect in January 2025, fuel suppliers have been adding compliance risk premiums to the cost of mandated SAF, contributing to the price of SAF and doubling it for some carriers. That is to cover the eventuality that they do not meet the 2% mandate target and must pay the buy-out price for any missed volume. Virgin Atlantic has argued that to prevent SAF prices increasing further, the revenue certainty mechanism must have sufficient safeguards in place to ensure transparency over cost pass-through. There must also be a transparent process for refunds in the event of over-collections, and all revenues generated under the RCM should be ringfenced, rather than going into the general taxation pot.

Amendment 9 looks at British technology and intellectual property. It would require the designated counterparty to prioritise UK-based technology when entering contracts. As I said from the Dispatch Box on Second Reading, there is a historical reality that we need to confront, and the amendment would stop history repeating itself. The historical error that I refer to is this: a great many projects supported by grants from the advanced fuels fund use foreign-owned technology. It cannot be right that the British state, while arguing for domestic fuel security, funds overseas technology when we have incredible innovators and manufacturers right here.

Domestic fuel security must mean domestic fuel IP, manufacture and supply. It is important both to develop a UK market for SAF, eSAF and local production, as is provided for by the Bill and the mandate, and to support and encourage the use of home-grown technology for the manufacture of those products. That not only retains revenue in the United Kingdom but leverages a huge amount of revenue for future exports through technology licensing. The amendment tackles that head-on, and a failure to back it would be a failure to back United Kingdom innovators.

Lastly, amendment 10 is on technological choices. It states:

“The terms under subsection (4)(c) must include a requirement for the producer to consider the longevity of supply and relative environmental impact when prioritising between organic and synthetic derived sustainable aviation fuel solutions.”

I feel incredibly strongly about this amendment. It is on a matter that I have championed in this House for many years—in the last Parliament, during my time on the Transport Committee and, since July, from this Dispatch Box. The amendment is in the name of the shadow Secretary of State, my right hon. Friend the Member for Basildon and Billericay (Mr Holden), and it is relevant to new clause 7 and amendment 12 in the name of the hon. Member for Dewsbury and Batley, both of which I have a great deal of sympathy for.

Governments of all political persuasions have professed to be technologically neutral. They seldom are. There is a natural tendency to pick winners and losers. We need to look through that lens, and ask ourselves what the Bill is promoting and using the levers of primary legislation to enable. The disappointing answer to that is the potential to bring alive SAF plants using technologies that have already been superseded—plants that would therefore be temporary at best. Stepping up something with no longevity, and with an estimated build cost of between £600 million and £2 billion, would be no small mistake.

Power-to-liquid solutions, otherwise known as eSAF or synthetic fuel—liquid hydrocarbons literally made out of air and water—are surely the better and sustainable future for aviation fuel. We had debates on Second Reading and in Committee about other solutions. I cannot imagine that anyone is ready to defend growing food to burn it, but equally, waste-derived fuels simply are not sustainable in the long term. Solid waste is not readily available; the primary source is local authorities, the majority of which are on contracts with energy-from-waste facilities and incinerators that have decades to run. Likewise, I am not sure there is enough chip oil in the country to meet our aviation fuel needs.

That leaves power-to-liquid solutions and eSAF. Many say that it is not ready; some say it is too expensive; but those of us on the Public Bill Committee heard loud and clear from Zero Petroleum that it is ready to scale right now. It just needs the green light from the regulators, and with scale will come affordability. Amendment 10 is in many ways a light-touch amendment to bring this debate to the fore. It does not close down other technological routes, but forces the Government to acknowledge the risk, both to the environment and in terms of cost, when choosing contracts under the RCM.

As other speakers have said, the Bill can still be improved. I urge the Minister to accept the amendments, which would improve the Bill, and to ensure a strong and affordable future for sustainable aviation fuel in our great United Kingdom.

[The Parliamentary Under-Secretary of State for Transport (Keir Mather)]

Before I turn to the amendments before us, I would like to thank the many hon. Members who have made considered and helpful contributions. This legislation has been long in the making, and few have been more central in bringing it to fruition than my predecessor, my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane), who I would like to thank personally for his efforts throughout the Second Reading and Committee stages.