Sustainable Aviation Fuel Bill (Second sitting)

Lewis Atkinson Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Luke Taylor]

Q It is the broader question of how this sits within the system. The implications of this Bill are really broad in the way the incentives will come into a whole different set of markets, including agriculture, waste and local government.

Philip New: First, I challenge the suggestion that this is an incentive. I think of it more as an insurance policy. If you are a recipient of the insurance policy, if it turns out that the market price is higher than you contracted for—your strike price—you will end up paying. The counterparty will be in receipt of money from the participants in the scheme. It is not a one-way incentive.

One of the charms of the RCM is that it is nicely balanced. If you are worried that the market will go long and there will be lots and lots of lower-priced product that undermines your economics, the RCM is a great way of giving you insurance that your investors will stay whole and happy.

On the other hand, by taking it on, you are sacrificing your exposure to the upside. That is the premium you are paying. I think the balance that has been designed into the RCM is a really attractive way of keeping everyone honest while still enabling investment to flow into the sector. I do not think it should distort the underlying drivers or mechanisms.

That having been said, I worry about the range of sectors that a successful SAF industry will touch. It has the potential to touch them in a very positive way, but it is also exposed to some inadvertent—I would not call it negligent—inattention in somewhere that does not feel a very strong ownership of the space, which could really mess things up. A degree of conscious, whole-system understanding of what it takes to enable a brand-new sector to emerge, and providing some co-ordination of that, would be welcome. Whether that looks a little like mission control in the electricity transition or something else, I do not know, but something to provide more comfort would be important. It touches many parts of the economy and many Departments.

[Lewis Atkinson (Sunderland Central) (Lab)]

Q Mr New, in your report you say that one of the key asks for industry is around confidence. We have talked a lot about revenue confidence today, but I want to go over that a little bit. You ask how the UK Government can demonstrate that they will stay the course, and I guess the core of that is political confidence.

Since your report, of course, we have had a change in Government, and who knows if there might be another one over the investment cycles we are talking about here? Could you say a little about your assessment of how a Bill—putting something in primary legislation, as this does—helps to provide the political confidence that you believe investors are looking for, and also, frankly, helps to mitigate the actions of the varying parties in Parliament as we approach this issue?

Philip New: There were two big pushes from the investment community when I was writing the original report connected with the RCM. The first was that it would just be nice to have that revenue certainty in the first place, and that is what we see in other parts of the green transition.

The other speaks directly to this point. They were very nervous that there might be a change to the mandate design, the mandate targets or something at some stage in the future, and that that would so change the market dynamics and the pricing dynamics that all their assumptions would go out of the window. They were not going to be satisfied with any number of assurances from the Government, because Governments change their minds, so they wanted a bilateral contractual arrangement, which is another feature of the RCM. A big driver of its original definition was precisely to respond to that very concern.

[The Chair]

Thank you for your evidence, Mr New. We will now move on to the next panel. Before I call our next witness, Mr Geoff Maynard, I say to colleagues that there may well be a Division around 4 pm, or perhaps 4.05 pm, so we may or may not get through the whole of this session before then. If there is a Division, we will go and vote. Return within fifteen minutes maximum, please. If there is another vote, which I do not think there will be, it will be a further 10 minutes.

Examination of Witness

Geoff Maynard gave evidence.

--- Later in debate ---

[Lewis Atkinson]

Q I am neither a chemist nor an aviation policy expert, so I will ask my questions from the perspective of my constituents in Sunderland. Looking at this policy area, they would be interested in the potential impacts on jobs and airfares. On jobs, could you say a little more about what you think the potential upside is in areas like mine? On airfares, can you confirm that clause 10, which deals with the payment of potential surpluses back to levy payers, creates the potential for downward pressure on airfares, depending on where the strike price ends up?

Mike Kane: First, you have been a big supporter of sustainable aviation fuel in your constituency, because you have the Wastefront tyre-to-fuel plant, so your constituency is already benefitting from jobs that have been created by that company. The Bill also allows us to scale up the technologies that we want to use, which could be of particular benefit to the north-east. I am also the maritime Minister, and we have announced £1 billion investment at the Port of Tyne for LS Cables, and Teesport is about to announce big investments in sustainability as part of our clean energy mission. The mayor, Kim McGuinness, is absolutely tied into this agenda, and using the whole north-east coast to support our green energy mission is vital.

You are absolutely right that the pressure on ticket prices could be downward. Very recently, there was an article in The Sunday Times by the International Airlines Group, which hedged its SAF supplies a long time ago in advance of this. It says that it will now, as an airline, have a competitive advantage in the price of ticketing over the next few years, because it got SAF at the right price at the right time.

[The Chair]

If there are no further questions, thank you, Minister, for your evidence this afternoon. That brings us to the end of today’s session. The Committee will meet again at 11.30 am on Thursday 17 July to begin line-by-line consideration of the Bill.

Ordered, That further consideration be now adjourned. —(Kate Dearden)