Sustainable Aviation Fuel Bill

Lord Moylan Excerpts

Report stage
Tuesday 10th February 2026 Lords Chamber

[Earl Russell (LD)]

My Lords, I am pleased to see the noble Lord, Lord Grayling, back in his place. On behalf of these Benches, I also thank the Minister and the Government for bringing forward these amendments. These important issues were raised in Committee. The Government have listened to the concerns that were raised and we welcome the amendments that have been brought forward. We are grateful that the Government have listened and we are delighted to accept them.

[Lord Moylan (Con)]

My Lords, I wish only to congratulate my noble friend Lord Grayling on his amendment and, further, on having persuaded the Government to table alternative amendments that have the same effect as his. We have no objection to those amendments.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord, Lord Grayling, for Amendment 5, which we debated in Committee, and for his contribution. I am very grateful to hear from all noble Lords that the amendments that the Government have tabled deal with the issue that was raised in Committee.

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Moved by

[Lord Moylan]

3: Clause 1, page 1, line 17, at end insert—
“(2A) A revenue certainty contract may not provide for payments in respect of power-to-liquid sustainable aviation fuel.” Member’s explanatory statement
This amendment ensures that revenue certainty contracts under the Act may not be used to subsidise power-to-liquid sustainable aviation fuels.

[Lord Moylan (Con)]

My Lords, for the benefit of noble Lords who have not become totally enmired in the question of sustainable aviation fuel, it might be appropriate at this stage to spell out that there are, essentially, three sorts of aviation fuel. Of course, everything I say on this topic is, to some degree, a simplification that may be subject to correction and refinement, but broadly speaking there are three sorts. One of them goes by the inelegant name HEFA. I will not tell noble Lords what it stands for, because I cannot remember the very long sequence of syllables that comprise it, but, essentially, it is recycled cooking oil.

There is no real shortage of HEFA in the world. The Government have said that it is not the intention of the Bill for the financial support mechanism it contains to be used to subsidise the production of HEFA. None the less, the Bill allows for HEFA to be subsidised; one of the amendments in my name in this group would preclude that. Another amendment, in the name of the noble Lord, Lord Ravensdale, would have a very similar effect to mine, although his is worded much more elegantly and elaborately. Its effect is also slightly more impenetrable than mine but, if one follows the chain of words, it comes to a very similar effect. He and I are at one in saying that the Bill should preclude the subsidisation of HEFA.

There is, higher up the chain, a further form of sustainable aviation fuel, which we can describe as non-HEFA. The difference is that the source material, the feedstock, has to come from sources other than used cooking oil. Municipal waste, for example, would be non-HEFA fuel. There is in place, prior to the Bill, a sustainable aviation fuel mandate that was introduced by statutory order about 15 months ago, under this Government. It requires an increasing amount of HEFA to be mixed into aviation fuel over the next few years, but at a certain point, the mandate says non-HEFA has to be mixed in as well. In other words, the sustainable aviation fuel requirement cannot be satisfied by using simply HEFA and adding more and more HEFA over the years—at some point, some non-HEFA fuel has to be added as well.

As I understand it, it is largely the case that the Bill is aimed at stimulating the production of non-HEFA fuel, which is currently not in production. We will come back at a future stage to whether it is sensible and necessary to subsidise this—at the moment, we are simply discussing what the fuel consists of and what the Bill should be directed at.

Again, while I do not wish to steal the Minister’s thunder, my understanding is that the Government are clear that the main aim of the Bill is to subsidise this non-HEFA fuel. Beyond HEFA, if one goes right to the top of the chain, there is a form of fuel that is not entirely speculative, but is in production in a small, experimental way in the United States and is called power to liquid. PtL, as I understand it—and I speak in a simplified way because I am not technically qualified—captures carbon from the atmosphere and turns it, through some wonderful process, into a liquid fuel that can be mixed in with standard aviation fuel.

It is true that the sustainable aviation fuel mandate that has been in place for 15 months requires that a certain amount of PtL is added in years into the future. That would mean HEFA in the early years, then more non-HEFA, which has to build up, and some PtL added later. That is the progression envisaged by the sustainable aviation fuel mandate.

The Bill would allow the subsidisation of PtL, but I have an amendment in this group which would prohibit that. The whole question of PtL is so speculative that we have no idea what it would cost to subsidise, and it is far distant. I remind noble Lords, who I am sure have been attentive to this, that a sunset clause is introduced in Clause 1(7) and that no contract, by way of a subsidy, can be let

“after the end of the period of 10 years beginning with the day this Act is passed”.

If we are to have long-term subsidies for sustainable aviation fuel—and it may well be 10 years before PtL production is feasible—the Bill will probably be useless for that purpose in any event because, unless amended, it will have expired. My amendment to remove PtL would be a safeguard against the subsidy regime envisaged by the Bill, whose mechanics we will turn to in later amendments, being abused and run away with as we finance and support a very speculative and potentially very expensive fuel.

In the meantime, I understand that the Government take the view that the very small amounts of PtL required and envisaged by the mandate can be secured by import at the due time in the future—again, the Minister can correct me if all this is wrong—so there will be no damage to the mandate if the Bill excludes PtL. That is the substance of these groups of amendments.

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[Lord Moylan (Con)]

Could the noble Lord kindly repeat the beginning of that statement where he talked about the Government’s intentions on HEFA? It is important that the House hears exactly what the Minister is saying about that.

[Lord Hendy of Richmond Hill (Lab)]

Of course; I am very happy to repeat it.

Our intention is for HEFA technology and feedstocks to be excluded from RCM contracts because HEFA SAF has already overcome many of the barriers to investment that the revenue certainty mechanism seeks to address. However, the SAF market is at an early stage and uncertain, so the legislation needs to remain flexible to allow for potential future changes in the market to which the revenue certainty mechanism may need to respond.

I hear noble Lords’ concerns on growing crops for purposes other than food; the sustainability criteria in the revenue certainty mechanism will align with the sustainability criteria in the SAF mandate. This will be implemented through the eligibility criteria within the contract allocation process and will reflect the latest market and technological developments.

We are actively monitoring trends to ensure that the policy keeps pace with technical and commercial developments. Therefore, we have launched a call for evidence on the eligibility of crops in the SAF mandate, which will run until 16 March this year. It asks for evidence on potential benefits, risks and trade-offs of using crops in SAF production. In answer to the questions from the noble Lord, Lord Mackinlay of Richborough, about carbon dioxide, I am sure that evidence on that will be provided as a consequence of that call for evidence.

The call for evidence does not propose any changes to the SAF mandate. Should there be a case to review the feedstock eligibility criteria, it would be subject to consultation, and any changes would require amendments to legislation. We would not want to exclude specific feedstocks in the Bill in case updated evidence proves that they meet the sustainability criteria for eligibility in the SAF mandate.

In answer to the point raised by the noble Lord, Lord Harper, on the position of the United States, we note that, but we will run the consultation first to understand the evidence arising from the questions we have asked.

I thank the noble Lords, Lord Moylan and Lord Ravensdale, for tabling their amendments and ask that they do not press them based on the actions already being taken to give flexibility and ensure value for money.

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[Lord Ravensdale (CB)]

I thank the Minister for making that strong statement from the Dispatch Box on the intention to exclude HEFA technology and feedstocks. That is further than the Government have gone before in their statements. It sets out a clear direction of travel for the legislation and the revenue certainty mechanism, and I thank him for that.

[Lord Moylan (Con)]

My Lords, taking the issues separately, we in this House are used to governments seeking powers much broader than they need, and explicitly broader than they are intending to use. The Government seek the power to offer a subsidy regime, the character of which we will come to in the next group. They want the power to extend a subsidy regime to the production of something which requires no subsidy, as the technique for producing it is well established. Neste Oyj, a Finnish company which came to see me a few weeks ago, is producing vast quantities of HEFA already in various European centres.

There is no need for a subsidy for HEFA, and the Government agree. They say that they have no intention of using the revenue certainty mechanism for HEFA; none the less, they want to have the power. That is a bit shabby, although I appreciate that, thanks to the intervention of my noble friend Lord Harper, they are now willing to come to the Dispatch Box and explain why they would want to do this, if they ever should.

On power to liquid, at the other end of the scale, while I and the noble Lord, Lord Ravensdale, were broadly in agreement on the question of HEFA and crop-based fuels, we were diametrically opposed on the question of power to liquid. It is unfortunate that the Government are giving themselves the ability to launch a subsidy regime for a highly speculative type of fuel that should be subject to much closer parliamentary scrutiny when the Government might want to offer such subsidies. However, in the meantime, I beg leave to withdraw my Amendment.

Amendment 3 withdrawn.

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Moved by

[Lord Moylan]

6: Clause 1, page 2, line 15, at end insert—
“(9) Regulations made under this section must not permit a revenue certainty contract entered into under subsection (1) to have a term exceeding 10 years.”

[Lord Moylan (Con)]

My Lords, Amendment 6 requires, perhaps by way of introduction, a few words on the structure of the subsidy and how it actually works. Bear in mind that prior to all this, as I said earlier, a sustainable aviation fuel mandate was put in place by statutory instrument some 15 months ago which guarantees the demand for the product. There is a guaranteed demand: in simplistic terms, it is like saying that everybody in the country has to eat half a pound of chocolate every day.

If that were to be the Government’s policy and they put that in place, you would expect chocolate factories to spring up. Existing chocolate factories might expand; new chocolate factories would come into existence. So, what is the problem? Why is it that putting the demand in place is not sufficient? Why do you need to go further? Why are factories and investors not producing this stuff for which you have put in place a mandatory and growing demand over the years ahead? I do not know the answer to that.

The Government have decided that putting the demand in place is not enough. To satisfy our somewhat rapacious foreign investor friends, they also need to be given a guaranteed price for the product. Not only is half a pound of chocolate going to be eaten every day, but you will have to guarantee the price in order to get the chocolate factories to work.

That is what the Bill does. It is not about putting the demand in place—that exists—it is about guaranteeing the price, and the way to do that is to provide some form of subsidy. Of course, a direct subsidy out of the coffers of the Treasury is almost unaffordable in our current circumstances, but it is also unnecessary because the Government have, as we know, discovered in the field of wind farms and solar panels the device of the contract for the difference.

A contract for difference is a way of guaranteeing a price, and it is done by putting in place a counterparty—separate from the Government, but essentially a government glove puppet—which will enter into contracts with these foreign investors to guarantee them a price. They will negotiate the strike price, but on what basis they will negotiate it, what skills they will bring to negotiating it, how they will be certain they are not going to be given the runaround and end up with a very adverse price—none of these things is put in place or explained to us. They will end up with a contract, which will be in place for a number of years. The effect of the contract will be to increase the price of the fuel. The increase in the price of the fuel is very likely to find its way through to ticket prices. So this Bill has an indirect but none the less fairly ineluctable consequence: it will increase air fares.

When you ask the Government by how much air fares will go up—and we are going to do that later, in group 5—they say they have done an assessment and it will be, per year, which I think means cumulatively every year, £1.50 up or £1.50 down. They do not know. It is a fairly small amount and fairly neutral, but it is almost impossible to discern how they reach that conclusion, or to find it very credible, because airlines are complaining that the HEFA they have to buy already, because the mandate is in place—and they were buying it even before the mandate came in—is turning out to be very expensive indeed compared with standard aviation fuel.

It is wrong that Parliament and the Government should burden future generations for unnecessarily long periods with these additional costs of travel and subsidies. Therefore, I propose that any contract entered into strictly by the counterparty—not by the Government but under the direction of the Government—should have a term of no more than 10 years.

Clause 1(7) of the Bill—I drew attention to this in the last group—envisages a sunset clause after 10 years. It is extendable under Clause 1(8), as the Minister said, but it has a sunset clause in it. That, however, is not a limitation on the length of the contracts that might be entered into during that 10-year period. You could quite lawfully enter into a contract with a life of 100 years within that 10-year period. There should be some limit put on that, because these costs will fall not on oldies like us, whose flying days are passing, but on young people over the rest of their lives and their careers. There may well be no justification for it by then. Who knows, by then we may well be paying people to produce a fuel but life has moved on and the fuel is not necessary. Yet we will have to buy them out of that, and that will fall on air passengers. So, a10-year limit on the contract should be quite enough for any foreign investor to start up this process and get it going. They have a guaranteed price for 10 years and after that they should be on their own. That is what the substance is of this amendment, which I beg to move.

[Lord Berkeley (Lab)]

My Lords, this is a very interesting amendment, because a revenue certainty contract, as the noble Lord, Lord Moylan, said, is wonderful for the suppliers. It presumably links in not just the price but the volumes—which may change from year to year —and the sources. The noble Lord opposite mentioned the issue of Drax and where that material comes from every year. Would there be a 10-year guarantee price for that? As the noble Lord, Lord Harper, said, any old agricultural product that was edible could be covered as well. And we have not yet discussed the worry that many people have about the number of trees and everything else being cut down in the Amazon basin, which could also be covered by this. So, a revenue certainty contract is pretty difficult and this amendment is a good start in at least limiting its scope and time.

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[Lord Moylan (Con)]

My Lords, I am disappointed by that answer. One can look at this issue in a number of ways. The way I look at it is that we have a responsibility to future generations not to burden them with excessive costs on a speculative basis. The Government are consulting. They are no doubt consulting with the foreign investors who are considering investing in these plants. If they listen to the foreign investors, the longest possible term is what they will bid for.

We need to be tougher. It is for us to put the case of those who are voiceless in this consultation: the people—in many cases young people, as they will be the ones paying in the future—who will have to sustain this. I am afraid I am not satisfied with the answer given by the Minister. I wish to test the opinion of the House on my amendment.

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[Lord Grayling (Con)]

My Lords, I will speak to a series of amendments that I tabled. I have given the Minister advance notice, and I hope he is going to be able to reassure me on them. I will take them in turn.

Amendment 8 is simply to try to avoid the Government pulling a fast one, raising money from air passengers and spending it on something completely unrelated. I am looking for a cast-iron, on-the-record assurance from the Minister that that cannot happen under the terms of the Bill. We know that on occasions government departments try to slip things under the counter, and I am simply seeking absolute assurance that that will not happen in this case. Amendment 9 basically seeks to achieve the same thing.

Amendment 10 addresses what is still the crucial operational point for this legislation: where and how do you actually apply the levy? The Minister knows that I have had serious misgivings, as have many people, about the plan to try to apply a mechanism that relates to market share in the previous year, to do it the year after and the rest, which I think would be completely unworkable and, of course, distorts the market if you have new entrants or people leaving the market.

The one thing we do not want to do is to end up undermining the existing producers of aviation fuel, which are carrying an extra cost. We do not want to have them closing and going elsewhere because we have not got this right. I remain persuaded that the way to do this is to levy a charge at or around the time of delivery—the time at which it is delivered from the refinery or the terminal to the airline. I appreciate that it may be something you do one month in arrears, looking at the previous monthly invoice accordingly. I do not have a problem with that, but I have a problem with anything looser than that.

I am looking to the Minister to explain tonight how this is going to work. I know the Government are still working on all the details, but we cannot have some abstruse mechanism that tries to refer back years in the past. We need something current and relevant that reflects changes in the marketplace and applies the costs in a timely way to those producing the fuel, so that there is no distortion of the marketplace.

Amendments 17 and 18 are really about the timing of the legislation. We know that we are maybe four or five years away, I hope slightly less, from the first significant SAF plant being operational in this country. We cannot have a situation where the levy starts to be applied now and is just piling up in the background with nothing to spend it on. I am looking for an explanation from the Minister as to exactly how the commencement of this legislation will work. I have proposed in these amendments that it should be six months before the first manufacturing facility comes on stream—the Minister may have an alternative suggestion—but we cannot have a situation where commencement is imminent but the operation of the Bill is years away. Again, I am looking for assurance and explanation from the Minister on this, so that we know we are not charging air passengers today for something that is years in the future. I beg to move.

[Lord Moylan (Con)]

My Lords, I have Amendment 11 in this group, which substantially coincides with Amendment 10 in the name of my noble friend Lord Grayling. I will just take a minute to explain, in my perhaps rather more simple terms, what mischief these amendments seek to address. I gave some idea of the mechanism when we spoke on the last group. It will work like this: contracts will be entered into by a counterparty and a fixed price will be guaranteed under a contract for the difference. That means that if the prices are below a certain price, the counterparty will collect money by way of the levy, and if they are the other way around, it will pay out to ensure that the producer receives a fixed price. We know that economically, ultimately, the levy will be paid by the passenger on the flight, but who is going to be charged the levy?

The Government have decided—we are not disputing this—that the levy should be charged at the highest point in the supply chain, which is the producers of standard aviation fuel, essentially kerosene. They have to mix in the SAF to the required amount, whichever type of SAF it is, and they should be the ones that will pay the levy if a levy is required—that is, if prices are such that a levy has to be paid. We do not object to them being the levy payers, but how is the levy calculated and then applied to them?

The Government’s proposal is that the levy should be calculated a year in arrears and then applied to them as a charge which they have to pay in arrears at that point according to the market share that they had in that year. That is all very well, you might say, and very convenient from the Government’s point of view, because at that point they know exactly how much they have to charge, so there will be no difficulty and no question of having the wrong charge paid and having to make up bits later, or of the counterparty being out of funds by a penny. They will know exactly by the end of the year what should be charged and they will distribute it to the producers according to their market share during that year, which will also be known by that point.

The difficulty for the producers is that they will not know during the year in which they are selling the fuel what they should be charging the airlines to cover the cost of the levy. It is accepted that they should charge the airlines, because that is the way it trickles down to the passenger. They will not know during the year how much levy they are going to have to pay at the end of the year, so they will not know how much they should be charging per litre of fuel that they sell.

They would prefer, as it is easier for them and avoids this complexity, if they were told a price per litre which they should charge. The charge of the levy in addition to the base kerosene fuel could even be apparent on their invoices. Of course, if the Government were to do that, it would expose the counterparty to some financial risk—I see that—because they would have to work on the basis of estimates. They would have to estimate the prices during that period and therefore would be exposed to some financial risk. I imagine that, behind the Minister, there is a middle-ranking official in the Treasury saying, “You cannot take any financial risk that will fall upon the Government or any entity associated with the Government”.

What the Government are proposing is fundamentally unworkable, because the only way the producers can handle this is to protect themselves by overcharging. They will overcharge to compensate themselves for the levy, and so the transparency of the levy travelling through the chain of command, so to speak, down to the ticket payer will be obscured. The producers leave one in no doubt when one speaks to them that this is the only mechanism they will have. There is a real point of workability about the Bill which has not been addressed.

I imagine the Minister will respond by saying, “Oh, but we are having a consultation”. This is a futile protest, but I want to raise this point of protest as I have the opportunity: would it not have been better if the Government had done the consultation and then brought forward the legislation? Why is it that we have to have the legislation before we know the results of the consultation with the industry, so that we do not actually know what is workable? I suspect the Minister will say that, but I am afraid it is not satisfactory that we are asked to pass this legislation with that important question of workability still outstanding. I may be wrong, and it may be that the Government can explain that it is perfectly workable, but nobody has been able as yet to establish what that workable solution is.

[Lord Harper (Con)]

My Lords, briefly, I support my noble friend Lord Moylan’s amendment. It is very important, particularly when we come on to later groups and are talking about the ultimate impact of this—which is that it will, in effect, fall on to the end consumer, as all taxes do—that we make sure that this is as simple and straightforward a process as possible, so that we can explain to people what we are doing, why we are doing it and what the cost is. That is always to be welcomed in policy-making.

Further, this should be workable and straightforward for aviation fuel producers. They are the ones that we have chosen to put the mandate on, in giving them the legal responsibility to produce sustainable aviation fuel and blend it with their regular fuel. The current structure transfers the level of financial risk to them. I agree with my noble friend Lord Moylan, in that I suspect that behind this—the Minister can tell us that we are wrong if we are—is the Treasury wanting to make sure, not entirely unreasonably, that there is no risk to the taxpayer. However, in doing so, all that has happened is that the risk has been moved on to the fuel supplier.

As my noble friend Lord Moylan says—I have thought about this as well, and I have listened to the industry—it seems that, for the producers to deal with the risk, they will have to increase what they charge the airlines. So rather than the cost and the risk falling on the Treasury and the taxpayer, it will, in effect, still fall on the taxpayer but just in their guise of an airline passenger who will face a higher ticket price. That is not very economically sensible.

The industry is very clear that the Treasury should not be picking up the costs for this. The only sensible thing would be to have a per unit price. There would be some risk for the Treasury in the short term, but that could be smoothed out over time, and the Government are perfectly able to do that. That would be a much better solution, and I hope that the Minister can at least indicate that that is where the Government’s thinking is. If he cannot do that, I suggest that my noble friend Lord Moylan is correct that we should have done the detail before the legislation, rather than the other way around.

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Moved by

[Lord Moylan]

12: After Clause 14, insert the following new Clause—
“Impact of this Act on the price of airline tickets(1) Within one year of the day on which this Act is passed, the Secretary of State must publish a report assessing the impact of the sustainable aviation fuel revenue certainty mechanism on the price of airline tickets.(2) The report under subsection (1) must include an assessment of whether the impact of the sustainable aviation fuel revenue certainty mechanism on ticket prices is greater than £1.50 per ticket per year.(3) The Secretary of State must lay the report under subsection (1) before Parliament.(4) The Secretary of State must publish and lay before Parliament further reports under this section at intervals of not more than one year for so long as the sustainable aviation fuel revenue certainty mechanism remains in operation.”Member's explanatory statement
This amendment requires the Government to assess and report on the impact of the sustainable aviation fuel revenue certainty mechanism on airline ticket prices within one year of Royal Assent, and to continue to report annually thereafter.

[Lord Moylan (Con)]

My Lords, we have worked our way through what the SAF is, and through the mechanism by which it is going to be subsidised and how it is going to fall on the passenger, but how much is going to fall on the passenger? What is it actually going to cost? How is it going to strike? How is it going to hit your pocket?

We are not completely in the dark on this subject. We have The Revenue Certainty Mechanism Cost Benefit Analysis, produced by the department in May 2025. Paragraph 4.23 has a lot of hinting in it, but it comes down to saying about the revenue certainty mechanism that

“the likely impact on ticket prices is between -£1.5 and £1.5, on average, per year”.

I take it that the “per year” means that it will go up, in the worst case scenario, by £1.50 a year—so over a 10-year period, it will be £15.

This is a highly speculative document; it has quite a large amount of numerical material attached to it, but it remains highly speculative none the less. Effectively, it has to guess the price of standard kerosene fuel out into future years, and the cost of SAF under mechanisms that have yet to be negotiated, so we do not yet know what they are going to be. None the less, that is the figure the Government are presenting to Parliament and the public as the cost and the pain of this measure. My Amendment 12, which is of capital importance, would require the Government to ensure that this prediction of theirs is not lost in the mists of time—that this document does not become waste paper.

The Government should be required periodically—annually, as the amendment says—to produce a report showing what this is costing in terms of ticket price. That is not straightforward for producers of aviation fuel to calculate, of course, because they are at the top end of the supply chain and would not be able to know how it worked out; they could tell you what the levy was, but they could not tell you how it translated into ticket price.

So that is what the amendment does, and it is essential because, in all this, we privilege the discussions we have with the foreign investors that are going to build these plants, and the discussions we have, to some extent, with the fuel producers on which the levy is going to fall. It is very easy, as I say, to forget the voice of the consumer and the people who, year after year, will pay more to travel. It is a significant sum if you are a family of four going on holiday, and we should be reminded of that through the Government putting their money where their mouth is, so to speak, and agreeing to report on these effects every year out into the future. I beg to move.

[Lord Harper (Con)]

My Lords, I support my noble friend Lord Moylan’s amendment, for all the reasons he set out. If you look at the opinion polling on this, the public support aviation and flying and want to continue doing it, and they support it being made more sustainable, so it is important that we are transparent about that. We have seen other areas where the costs of decarbonisation are not entirely clear, such as in energy production, which leads to suspicion and people who are not in favour of it being able to make mischief. It is much better if we can be transparent about it.

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[Lord Hendy of Richmond Hill (Lab)]

My Lords, bearing in mind the diligent research of noble Lord, Lord Moylan, on sustainable aviation fuel, I have resisted repeating the general aims of the Bill, but I want to say in respect of Amendment 12 that the Government are committed to keeping air travel affordable for UK holidaymakers and UK air travellers while fostering the development of a United Kingdom sustainable aviation fuel industry.

As the noble Earl, Lord Russell, said, it will take time for contract negotiations, for sustainable aviation fuel plants to be constructed and for the fuel itself to be produced and sold before any meaningful effect on fares can be assessed. The Government’s cost-benefit analysis, from which the noble Lord, Lord Moylan, quoted, of the revenue certainty mechanism that was published last year is the most reliable estimate of the likely impact on passenger air fares over this period. Given that little has changed since that cost-benefit analysis was produced, the amendment is unnecessary, as it would merely produce the same answer. I hope my explanation is sufficient for the noble Lord not to press his amendment.

[Lord Moylan (Con)]

My Lords, it was open to the Minister to take up the offer of my noble friend Lord Harper and suggest that any infelicities in the drafting of the amendment—for example, the requirement that the first report should happen within the first year—could be dealt with through his offering to bring forward an amendment himself at Third Reading that was drafted with the benefit of government legal advice, but he has not done so. He has no difficulty with relying on speculative reports that claim to estimate the cost of this measure, but he does not want reports based on actual experience at due time in the future.

As I say, there is a voice that is not being heard in this, except from these Benches, and that is the voice of the consumer. We will not give up on the consumer, and I wish to test the opinion of the House on my Amendment 12.

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[Lord Grayling (Con)]

My Lords, I rise both to support what my noble friend Lord Harper has just said and to add a caveat. I have great respect for the noble Baroness, Lady Pidgeon, and I find we agree on a lot of things, but it worries me more broadly—and this is not specifically just about this amendment—that when one passes an amendment like this, one creates huge bureaucratic demand. If we look at the practicality of what will be needed, as my noble friend Lord Harper has just described, we are talking about putting together, in effect, an inspectorate, because that is what this would entail—an inspectorate to talk to airlines, an inspectorate to talk to producers, and an inspectorate to have a pretty close watch on the flow of feedstuffs, the supply chain of feedstuffs and the sourcing of feedstuffs.

What we are looking to achieve here is to build a UK industry so that we do not simply end up buying SAF from abroad. The truth is, right now, the limited amount of SAFs used in this country are coming from United States and potentially elsewhere. We do not want that to happen; therefore, we want to create as investor-friendly an environment as possible in the United Kingdom. That is what this Bill is all about. It is what the purpose of the revenue certainty mechanism is, and I am very glad that the principle behind the Bill has attracted cross-party support. To try to put together now a mini-inspectorate—and maybe not that “mini” an inspectorate—to look at all the things covered by this amendment would cost taxpayers’ money and push up the cost of the revenue certainty mechanism.

We talked earlier about how the funds would be used. Certainly, the funds would be eligible to be used for the monitoring of all this, so that is an extra cost on the revenue certainty mechanism and an extra cost ultimately therefore to airline passengers. It is an extra level of complexity for investors, putting a whole range of bureaucratic requirements on them. And, of course, for government, it opens the doors to judicial review. Very often, a broad-ranging amendment that seeks reports and clarifications ends up in the courts, being used by somebody who has a particular point to prove against government. It opens the door to too much activity within the courts and not enough freedom for government to get on with the job. That would be a negative step for the legislation, given that we all want this to happen, want it to work well and want the investment to flow in the country. To create a monitoring mechanism on this scale would not in any way be the right thing to do.

As my noble friend Lord Harper rightly pointed out, simply monitoring the impact on the cost of an airline ticket is one thing, but covering the range and dimensions of activity in this amendment would create too much extra cost and too much complexity and it risks being a deterrent to investment in the UK. So, with apologies to the noble Baroness, I cannot support her amendment.

[Lord Moylan (Con)]

My Lords, perhaps I may welcome the noble Baroness, Lady Pidgeon, to this debate. She is much missed. Normally, when there is legislative matter that calls the noble Lord, Lord Hendy of Richmond Hill, to the Dispatch Box, there is a well-established team that assembles opposite him, consisting of me in my humble capacity and the noble Baroness. It has been a puzzle to me in the course of this afternoon why she appears to have been elbowed aside by the dour but noble Earl, Lord Russell, whose mantra appears to be “Mr No” throughout, whereas now that the noble Baroness, Lady Pidgeon, has landed, if I may say that, at this very late stage in the debate, we find that she is here with her customary positivity and proposals for something useful that the Government might do.

The noble Baroness’s proposal is that the Government might usefully produce a report which tells us what the effects of this measure in front of us are. It would not be an easy report to assemble, and I am sure the Minister will explain its impossibility. It would, however, be no less easy for the Government to produce the report I was asking for, to say what the effect would be on ticket prices, but, as my noble friend Lord Harper so clearly explained, that was ruled out completely by Mr No sitting at the other end of the Bench. It has been most entertaining and instructive this afternoon listening to what the Liberal Democrats have had to say, but we are now in a position where splits within the Liberal Democrats are apparent. I say this to offer some consolation to noble colleagues on the other side of the Chamber to know that it is not only the Labour Party that is riven by dissension and uncertainty about the future and that these qualities can be found among the Liberal Democrats as well. I am delighted—

[Lord Hunt of Kings Heath (Lab)]

The noble Lord talks about splits. Could he remind me which Government signed this country up to mandatory targets on net zero by 2050?

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I will go further than that; I will remind the noble Lord which Government introduced this Bill. Nobody on this side of the Chamber has argued today that we should not have a mechanism for supporting the production of sustainable aviation fuel, so the efforts of the noble Lord to stir the pot and look for split-ism on the part of the Conservative Party are completely misdirected, misguided and failed. It would be a great deal better if the noble Lord were to join in with dumping on the Liberal Democrats for five or 10 minutes, because we do not normally take that opportunity—and relish it and seize it and run with it—in the way that perhaps we should.

Now, that said, I was going to try to draw out some interesting points from the speech made by the noble Lord, Lord Berkeley, who is always to be listened to. I learned much, but not enough, from the noble Lord, whose speech I could not immediately tie to the amendment proposed by the noble Baroness, Lady Pidgeon, but he appeared to be saying that a byproduct of HEFA was something called HVO—which also had a long name underneath that—and that this could be used for heating homes. If I understood him correctly—which I may not have—that was the thrust of what he was saying, and he wished to see the Government encourage this in some way or other with yet another form of subsidy. Of course, it would be nice to think that beyond the level of the corner shop there was some scope left for private enterprise and a non-Stalinist, non-directed economy in this country, but none the less the noble Lord has found a further opportunity, another little crack in the economy that has not yet been subsidised, that he feels he should pursue.

But what I want to know is, if this HVO stuff exists and does what I think it does—I may have misunderstood the noble Lord—and if it is true that it can be used for home heating and that it is a by-product, it presumably has a value. That value could be captured in market terms, but where has that been included in the calculation of the levy? Does the counterparty take account of the economic value of the by-products of HEFA that may be used in the market and what is the Government’s position on that?

--- Later in debate ---

Tabled by

[Lord Moylan]

15: Clause 17, page 8, line 25, at end insert “except hydroprocessed esters and fatty acids (HEFA) sustainable aviation fuel;”
Member’s explanatory statement
This amendment excludes hydroprocessed esters and fatty acids (HEFA) sustainable aviation fuel from the revenue certainty mechanism.

[Lord Moylan (Con)]

My Lords, in light of the assurances given by the Minister at the Dispatch Box, and the further undertaking that he gave to my noble friend Lord Harper that government policy on this matter would not change unless there were a Statement by a Minister in the House, I do not wish to move my Amendment 15.

Amendment 15 not moved.