Sustainable Aviation Fuel Bill

Paul Kohler Excerpts

2nd reading
Wednesday 11th June 2025 Commons Chamber

[Mr Paul Kohler (Wimbledon) (LD)]

I thank the Secretary of State for her speech, and congratulate the Aviation Minister on the Bill.

The challenge facing the aviation sector—as with our entire economy—is decarbonisation. Reaching net zero by 2050 is essential, and given the scale of the scientific and technical challenge, it is clear that decarbonising aviation will not be easy. Sustainable aviation fuels have an important role to play in this effort. We consequently welcome the establishment of a SAF revenue certainty mechanism, which has long been called for by many in the aviation industry and which, as we have heard, is vital to ensuring that the SAF mandate is both feasible and achievable for airlines. Providing SAF producers with a guaranteed level of revenue will be key to unlocking investment in the sector—which, I think, answers some of the questions posed by the shadow Minister, the hon. Member for Orpington (Gareth Bacon). It will help to stimulate private capital at this early stage, and will support the UK’s ambition to become a global leader in SAF development and production. The growth of the industry also has the potential to generate jobs and economic activity across the country.

However, while my party supports the Bill, there remain important questions, regarding in particular the scrutiny of the mechanism, international alignment, and the wider strategy for aviation decarbonisation. The Bill sets out the broad principles for the revenue mechanism, but leaves much of the detail to secondary legislation and ministerial discretion. That is, to a degree, understandable—the early stage of SAF technology and the uncertainty in market development mean that flexibility is crucial and necessary—but the Government must ensure that Parliament has an adequate opportunity to scrutinise the development of the mechanism, and the SAF sector more broadly. Given the importance of SAF to achieving net zero in aviation, it is vital that the House is updated regularly on progress in the industry, and on whether any adjustments to the mechanism are necessary. That is especially important in the light of previous Government promises to kick-start the domestic SAF industry—promises that have yet to materialise. In 2022 the Conservatives promised to have five commercial SAF plants up and running by 2025, but, as so often, they failed to deliver. I will therefore be pushing in Committee for the Bill to increase the level of ongoing scrutiny.

It is also crucial for the UK to work collaboratively with international partners on net-zero aviation technologies. Currently, the criteria for both what qualifies as SAF and what levels of different technologies should be used differ between the UK and the EU, with each jurisdiction prioritising different fuel types at different times. Given the inherently international nature of the aviation sector, closer regulatory alignment with the EU and other key partners is essential to fostering growth in the industry and ensuring that there are sufficient levels of SAF production internationally to support the transition. The Government must therefore work more closely with the EU and others to ensure that our frameworks dovetail.

Finally, while we welcome this Bill, it is important to acknowledge that SAF alone will not be enough to decarbonise aviation, as the Chair of the Transport Committee made clear. Although SAF can significantly reduce the carbon intensity of air travel, flights using SAF will not be carbon neutral, so many of the necessary emission reductions to reach net zero will need to come from other areas. By the Government’s own estimates, SAF could cut emissions by 6.3 million tonnes of CO₂ equivalent by 2040. That is not insignificant, but given the projected growth in passenger numbers, it would represent only a 0.8% reduction in overall aviation emissions compared with today.

While the Lib Dems support the Bill, we continue to urge the Government to take more ambitious action to decarbonise the aviation industry. With plans for airport expansion still on the table, the Government must clearly articulate how net zero aviation will be achieved by 2050.

Sustainable Aviation Fuel Bill (First sitting)

Paul Kohler Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Chris Vince]

Q Yes—I recognise that there are a lot of benefits of SAF, but I am wondering how the Bill can help that along.

Gaynor Hartnell: I think it is worth mentioning some of the environmental benefits specifically of producing SAF in the UK. They are focused on the second generation—that is, SAF that comes from waste. We have problematic waste to deal with in the UK, and it is better in terms of the proximity principle if we deal with our own waste domestically. There are various different feedstocks that the SAF mandate is seeking to encourage that have not traditionally been used, so it is aiming to expand the feedstocks to things such as end-of-life tyres. We currently export a lot of that waste to India, and we have heard in the news about the devastating environmental and health impacts that that has. If we deal with our own waste domestically, that is an environmental benefit; we will import somewhat less, but the aviation fuel we use at the moment is largely imported.

The main benefits of producing the SAF in this country are economic. The Government have realised that and they support it as part of their growth agenda, which it plays to.

Paul Greenwood: To round that out, if you listen to Rob’s comments, which I thought were very insightful, about the complexity of this and the need to ensure you get the right projects, with the right feedstock, at the right size and with the right basis, that to my mind is classic market distortion. Fundamentally, you are intervening in a market and saying, “I’m going to decide what is going to happen in this marketplace and I’m going to incentivise it to happen with a tariff.” The best way to do that is effectively to set a very clear demand signal, which happens through the SAF mandate, and let the market go and work that.

I do not buy into this idea that the market is incapable of supplying second-generation SAF; I had breakfast this morning—not because I was coming here today—with an Asian supplier who I deal with, who let me know that they had taken a final investment decision on a second-generation SAF plant in Asia that will be starting up in 2028. These things are happening; the market is responding. You are deliberately intervening in the marketplace with very good intentions, but it will distort that market signal. There is no doubt about it.

[Mr Paul Kohler (Wimbledon) (LD)]

Q Mr Greenwood has made a compelling critique of the basics—“We have a mandate; why do we need the RCM? There might be unintended consequences.” I know you disagree with him, but I would like to hear why you disagree with him.

Gaynor Hartnell: These projects are first of a kind, pretty much. This waste-based stuff is not being produced at scale anywhere in the world yet. It is very challenging to build one of these projects. There are numerous risks. You have Philip New coming later to give evidence; he has written a report on that, so you could ask him what those risks are. This addresses the showstopper risk if you like, which is the revenue certainty that a SAF producer can rely on when going to a bank and asking to borrow the millions or billions of pounds that it costs to build one of these projects.

In the UK, we now have many precedents of other large-scale projects that are driven by environmental requirements, from renewable electricity generation to carbon capture and storage. Those various different projects are all supported by some sort of equivalent to the contracts that will be let under this revenue certainty mechanism, whether it is a contract for difference for electricity or whatever. It is par for the course. We are not asking for this just because everyone else gets it so we should get it too. There is a competition for capital, among other things. If there are supported projects in terms of revenue stability, it will be easier for the capital to flow to those projects. This is a new mechanism. We are seeking new types of SAF production pathways. It is incredibly complex, and it is necessary.

Underlying all of this, the SAF mandate creates a market for greenhouse gas certificates, and the price of those certificates will be variable. It is very much built on a preceding policy—the renewable transport fuel obligation for road transport. That was just a demand mechanism without any accompanying equivalent to this revenue certainty mechanism. We import 85% of our road fuels, and we are not doing a very good job, I must say, given the opportunity, at preserving those early movers of projects that were built in the early days. Getting project funding is challenging, and it is not made easier by the fact that we have some early movers that are not managing to keep their renewable fuel projects going. I am talking about the bioethanol producers.

Rob Griggs: I agree with what Gaynor says. Ultimately, UK SAF projects are competing for investment against other renewable projects across the UK economy that have similar types of support—CFDs for energy and hydrogen and other types of things. In some way it is levelling the playing field a little for SAF compared with other forms.

I am here representing airlines; I am not representing producers. We want and we need SAF, and we want it as cost effectively as possible. We have seen all the evidence, given the nature of our mandate, its design, the global market and the work of Phil New that Gaynor referenced, which specifically asked that question: you have a mandate; why do you need an RCM? Everything suggests that given all those dynamics, without some form of revenue certainty you will not get that investment in the first-of-a-kind plants that we need to prove out the technology and get that initial set of volumes on a really aggressive timeline for 2030.

As airlines, on balance, we want the system to be competitive. We expect there to be imports as well as domestic production, but we think that without that UK 2G supply kick-started by the RCM, we will struggle and then we risk the buy-out. That is why we support it. On top of that, if it goes right, you get a UK industry better for your security, and jobs domiciled in the UK. It is a win-win, notwithstanding that as airlines, that is not necessarily our primary goal, but it is a huge benefit, so why not support it?

[Mr Kohler]

Q And issues such as tankering?

Rob Griggs: We think it is probably too early to say. We need to keep an eye on that and whether there are unintended consequences of the way that this is set up. It is one to monitor.

[The Chair]

We have six minutes left and two other Members want to ask a question. Mr Greenwood.

Paul Greenwood: I would take a look historically at the energy industry, which is a trillion-dollar industry. We have risen to the challenge of any technology that has been set and have managed to move from leaded gasoline to unleaded gasoline, and from high-sulphur fuel oil to low-sulphur fuel oil. New technologies come in all the time. We have the capability to deliver those if the market signals are right. I see no reason at all, as I look around the world, why sustainable aviation fuel, second generation, would not be the same.

--- Later in debate ---

[Alice Macdonald]

Q I want to pick up on the monitoring point. For example, say a consumer feels that they have had to pay a little more for a flight that is more environmentally friendly; how soon would you be able to quantify whether that mechanism had had an effect? In a year’s time, would you be able to say that it has meant that the carbon has been decreased by x amount?

Jonathon Counsell: Definitely. All SAF has to be independently assessed for its life cycle emission savings. Before we purchased it, we have to prove that, and as I said, get an independent authority to test the life cycle emissions. We will be able to declare publicly, of any SAF that we use, the independent assessment of its life cycle savings.

Lahiru Ranasinghe: If you look at the mechanics of how it works for meeting the mandate, there is a minimum threshold that we set when buying compliant fuel. In this case, compliant fuel is kerosene: fossil-based kerosene blended with SAF. When we pay for the supply, we get the product transfer documents, which have the sustainability criteria associated with that specific batch of SAF. At that point we can very accurately calculate the emissions saving. In terms of planning, we have to set a range, because there is some variation depending on the pathway and the SAF provided. Building on what my colleagues here have said, there is an opportunity for the UK both in home-grown production and up and down the value chain in the development and export of the technology and the financing and trading of SAF in the longer term. We have what is seen as a gold standard for sustainability criteria, especially going to 2G SAF and the conversion of waste into usable fuels, which addresses multiple issues at the same time and is something that we can export to the rest of the world.

[Mr Kohler]

Q Mr Counsell, I would like to quiz you on your first point. Given the premium on SAF, the mandate is going to cost far more than the RCM?

Jonathon Counsell: Yes.

[Mr Kohler]

Q The RCM is all about increasing the ability to produce, which will surely bring down the market price. Is not the RCM, in fact, an investment to cut your costs in the long run?

Jonathon Counsell: We support the RCM: it is a critical mechanism and you will not get 2G plants funded in this country without it. We spent the last five years talking to investors who said that the mandate is not enough. The mandate creates demand; it does not create investment. If you have a mandate on its own, all your SAF will be imported. The RCM unlocks the investment to get the plants built—so it is absolutely an investment, but the issue for airlines is that we are paying for the SAF and also paying for our carbon emissions. If we then pay for the derisking of the infrastructure, we are double-paying.

The EU ETS first established that the key principle is that money is recycled to help decarbonisation of those sectors that fund it. It is not taxpayers’ money. Aviation puts £500 million into the UK emissions trading scheme. That money is supposed to come back to support the decarbonisation of aviation. None of it does. All we are saying is, is that not a perfect opportunity to use some of that aviation money to support the costs that are coming back to us through the levy? Then we would not be paying twice. Instead, we would be paying for the levy, but through the UK emissions trading scheme.

[Mr Kohler]

Q To your point on the RCM, the money you put into the RCM will bring down your overall costs, because the premium on SAF will go down, will it not?

Jonathon Counsell: Absolutely—we hope that eventually, as you scale up SAF supply, the cost will come down. Will it ever come down to jet fuel levels? I do not think it will, because of the factor cost element. I agree with Paul Greenwood, who said earlier that one of the disadvantages we have in this country is high energy costs. We are doing SAF contracts with SAF suppliers in the US, where their energy costs are one third of those in this country, so we are at a disadvantage.

On 2G SAF, however, I think we have some real advantages: we have some sites, we have expertise and we have feedstock, both waste biomass and municipal solid waste. We put 20 million tonnes of municipal solid waste into landfill; we even ship 5 million tonnes of it to Europe. That is energy. We should be using it to make SAF. Those advantages can overcome the energy disadvantage in the short term. Hopefully we will sort out that energy disadvantage, but as we scale up those plants that SAF price should come down. It is an investment, but we do not want to double-pay for it.

Luke Ervine: Just to add and clarify, I think Luke Taylor asked a question earlier about ways to pay for the SAF mandate. We have always been very clear about paying twice through things such as the ETS scheme. We would love to see those revenues used to reinvest in the decarbonisation of the aviation industry. Given the economic value it returns and the Government’s growth agenda, we believe that creating a SAF industry also creates jobs and a lot of economic prosperity. The Sustainable Aviation report in 2023 estimated that the UK SAF industry would create about 60,000 new jobs by 2050 and about £10 billion gross value added by the same time. There is a benefit here for the UK economy as a whole purely in terms of the SAF industry, and using some of the taxes we currently pay to fund the RCM would be very helpful.

Lahiru Ranasinghe: I do not have much to add to what has already been said, but the cost of SAF means that the cost of fuel will go up in the long run, even with the RCM. In our minds, the RCM is something that unlocks production, as opposed to something that brings the cost down. The primary role we see for it is in getting production up so that supply can meet demand in the short run. Ultimately, though, we will have higher costs because of SAF, especially as eSAF and power-to-liquid comes in, and those costs will have to be passed through.

We are doing a huge amount to try to be as efficient as we possibly can; that is where the investments in aircraft and how we operate come in. As they say, the best energy is the energy you do not use, and in that way we are trying to manage our costs in the same way we have for the past 30 years, but I completely agree that we have to be wary of adding on to the costs we are already paying in the name of sustainability, both right now and in terms of meeting the mandates.

[Lewis Atkinson (Sunderland Central) (Lab)]

Q Building on the point Mr Ervine made about the potential wider economic contribution of SAF, I am particularly interested in the jobs. We have heard that 70% of existing fuel is imported, and therefore a significant part of your economic supply chain is essentially providing economic benefit overseas. Could you say a little more about—if we get this off the ground, as it were—how far you think that value chain and economic benefit will shift into the UK from imports? In particular, could you talk about the potential regional economic benefits of SAF, as opposed to being concentrated on London and the south-east?

Jonathon Counsell: From our modelling and analysis, we still want to have the flexibility to import SAF, because there is a global market there and we do not want to put ourselves at a competitive disadvantage by saying that all mandated SAF has to be produced in the UK. We still want access to imported SAF, particularly 1G SAF; we do not think the UK has much competitive advantage in producing 1G SAF. We think roughly 50% feels about right, and you have to compare it around that. Our view is that, of the mandated SAF, approximately 50% should be produced here in the UK—but, as I said earlier, not all of that will need the revenue certainty mechanism.

One of the key points that I want to make is that the revenue certainty mechanism is for those plants that cannot get funding: they are early stage, first-of-their-kind technology, and cannot get tracker funding because it is perceived to be too high risk by the investment market, and they cannot get that revenue certainty through any other mechanism, so therefore they rely on this mechanism. We think that roughly half of that 50% will need the revenue certainty mechanism.

A good example is LanzaJet in Teesside, the speedboat project that I mentioned earlier. That does not need the revenue certainty mechanism because we at IAG are providing the company with a long-term committed take-or-pay offer. We are giving the revenue certainty to LanzaJet, so that project does not need it; but other projects do, typically including the municipal solid waste projects that take black bag waste. They are at a very early stage, using less mature technology, and they are massively capital intense projects. They definitely need the revenue certainty mechanism, so we must ensure that it is targeted.

As Luke said, we think that by 2030 there could potentially be 10,000 extra jobs in the UK from that UK production. We can share a piece of analysis that we did through Sustainable Aviation that showed what that looks like for each region of the UK. We think there is certainly potential to build plants in Wearside, Teesside, Humberside and south Wales; if we get the policy right, we think there could be up to 14 plants within the next 10 years, which will deliver £1.8 billion in GVA by 2030.

However, the big prize will come in 2050: 60,000 jobs and £10 billion in GVA. We are creating a new energy industry for the UK. I have to congratulate the Government: we have potentially the most powerful package of SAF policy in the world, with the mandate, the revenue certainty mechanism and the advanced fuels fund. Taken together, they mean that we are the envy of the world and we have a huge chance to be a world leader on SAF production.

Lahiru Ranasinghe: To add to that, it would also enable UK aviation to grow. Our estimates are that each aircraft based in the UK supports around 400 jobs and £27 million of GVA. We have over 150 aircraft in the UK as it is, we have three aircraft going to a new base in Newcastle shortly and we absolutely intend to continue with the growth in the UK. By having the RCM unlock SAF production and SAF supply, that opens the doors to us to continue growing, while also decarbonising. That is a massive part of the economic benefit that the RCM helps to unlock, beyond the obvious effects of supporting jobs and production on the ground in the SAF industry.

Luke Ervine: Just to add a note on benefits, it is important to recognise the cost of not having the RCM. We have spoken a lot today about the buy-out. The UK is unique in its ambition to have a 2G SAF mandate, so the cost of not having the RCM is important. If we do not have it, we pay buy-out, and then we are going to lose out regionally to other areas, such as Europe and the US, that do not have those 2G SAF mandates, so it is important that we recognise that there is a cost of not having the RCM.

Sustainable Aviation Fuel Bill (Second sitting)

Paul Kohler Excerpts

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Luke Taylor]

Q Just for clarity—forgive my technical inexperience—what you are suggesting is production of the hydrocarbon at the source, at the base of a wind turbine, which is then collected in tanks rather than transmission over cables?

Doug McKiernan: Correct. Within that report, there were also comparisons to hydrogen—that was a sixfold increase over a two-foot oil pipeline—and to ethanol, methanol and ammonia. It looked at how you get energy from A to B in the cheapest operational expenditure and capital expenditure form. That is a fundamental. The cost of getting the renewable energy is what all the engineering will come back to. I believe the renewable energy will be in remote locations, a bit like oil today. Ultimately, we are going to put renewable energy in those places. Hopefully we do not cover all the fertile soil with solar panels and we can generate it elsewhere, and then use the power-to-liquids to get it from A to B.

[Mr Paul Kohler (Wimbledon) (LD)]

Q Using carbon dioxide to produce SAF is a wonderfully seductive and brilliant solution. You are addressing the regulatory obstacles, but what are the technical obstacles?

Doug McKiernan: To be perfectly transparent with everybody, with carbon dioxide at the moment I think the direct air capture, compared with where we are, is a bit of an Achilles heel. It is probably around two to four years behind in its scale-up, in terms of being able to keep pace with our scale-up, but actually there is plenty of biogenic carbon dioxide around for large-scale commercial plants here in the UK, which could be a stepping stone to the direct air capture. A lot of the work with direct air capture at the moment talks about the cost of it; you can sequestrate the carbon dioxide in the ground. That is not what we want to do as a petroleum company; we want to put that carbon dioxide into a liquid fuel, and then it is net zero. You have carbon dioxide and water coming out of the exhaust—whether that is a turbine or internal combustion engine. If you capture the carbon dioxide again with the direct air capture, you are then net zero.

When you integrate that direct air capture with our process, the cost of direct air capture is probably reduced by 80%, because we have an exothermic reaction going on, and the majority of the cost in direct air capture is in the de-absorption of carbon dioxide. Once you have absorbed it from the air, you have to heat up the catalyst again—or the material that has absorbed it—to get the carbon dioxide out again, and we have an exothermic reaction. We would not have those costs associated with our process. Integration of our direct air capture with our power-to-liquid solution in three to four years’ time would be quite a mature technology, and definitely scalable within the UK.

[The Chair]

Time is pressing; we have only four minutes left.

[Chris Vince (Harlow) (Lab/Co-op)]

Q Partly because you are based in Oxfordshire, my mind goes to universities. I wondered—based on what was said by a previous contributor—where we are with this technology compared with other countries. I do not know whether you are working with universities, but I am sure you are working with young people to develop skills. Is there is a risk, if the Bill is not passed and we did not get the RCM, that some of the skills that you are developing will be lost to other countries?

Doug McKiernan: There is no question about it. The people who we have recruited have been researching, and have done not only doctorates but post-docs in this area. They have been working in it for nine or 10 years, hoping that there was a company out there that would recruit them and turn their R&D into a reality. These people are very passionate about their career and what they want to do. They are not going to work for the money; they come to make a difference. We have recruited a lot of those people. They will go wherever the company is that will make what they want to do happen.

[Mr Kohler]

Q Have you overcome the technical problems? Once you have the CO₂, is the technical process now scalable, or are there still many issues involved in it?

Doug McKiernan: Our technology at the moment has to be scalable. When I go to the Jet A-1 ASTM committee at the end of the year, it has to be scalable. That is part of getting of getting the certification. We have to have a scalable process as well as a quality of fuel—so yes, we are there.

[The Chair]

We have a minute left, but there are no further questions from Members. I thank the witness for his evidence.

Examination of Witness

Ruben van Grinsven gave evidence.

--- Later in debate ---

[Greg Smith]

Q If the Bill becomes an Act, Shell will find itself in a peculiar place given that it will be both a levy payer, as a fossil fuel producer, and a developer of SAF potentially looking to benefit from the strike price. The Government put an analysis in the public domain on Second Reading: they suggested that the ultimate cost to the end user, such as somebody getting a flight—there will be a different calculation for those using air freight—will be plus or minus £1.50. Witnesses earlier suggested that that might be a “conservative” estimate—in their own words. Where would Shell see the ultimate cost pass on to the end user?

Ruben van Grinsven: The principle makes sense: at the end of the day, additional cost will find its way to the end user. We do not have enough information at this point in time to calculate what the cost is going to be because a lot of the details of the Bill are unknown. We would like to better understand how this is going to work, what the volumes are, what the timing is going to be, and how we will organise the contracts between the supplier and the off-taker. There are a lot of things that we do not know at this point, and therefore it is difficult to model what the final cost of the levy is going to be for the end consumer. I do not know; it is difficult to answer.

On top of that, I think it is going to change over time. Over time, if the market is short and the prices are high, money might flow towards the levy, so it would be like a negative levy but then it might turn into a positive levy. It is very difficult to assess that and put a number on it.

[Mr Kohler]

Q Some of the evidence we have received from the contributors to the consultation expressed concern over the levy calculation. Under clause 6, it could be based on historic market share. Do you share those concerns about complications in the levy calculation? Should it be a simple levy placed on sales going forward, rather than on historic market share?

Ruben van Grinsven: Again, that is hard to judge because we do not have the full details of how this is going to be done. I agree that it is a very thin-margin business, so we have to make sure that the levy is distributed properly, and that we do not give certain people a disadvantage or advantage just based on calculation methods. We need to design it very carefully so we do not disturb the market too much. We will be able to assess that much better when we have more details about the Bill.

[The Chair]

I thank the witness for his evidence.

Examination of Witness

Matt Gorman evidence.

--- Later in debate ---

[Tom Collins]

Q You have mentioned that the UK is taking a strong leadership position on this stepping-stone technology with SAF. If the UK were to prepare itself now, early on, to be in a leadership position in sustainable aviation using hydrogen, what do you think that would look like?

Matt Gorman: I think it would look broadly like what the UK is doing. We think about it in three buckets: the plane, the airport infrastructure and the regulatory environment. It is worth remembering that UK aerospace is one of the jewels in the crown of our manufacturing sector. We have a very long history in aerospace, and the Aerospace Technology Institute funds some of that technology development alongside the private sector. That is important.

With airport infrastructure, we have always said, certainly for Heathrow, that we do not want to be a blocker. We do not want a hydrogen plane to be designed but not able to fill up at our airport. We keep an active watching brief on technology developments. We have taken a stand at Heathrow to trial hydrogen technology so that we can understand and build understanding. That is partly to influence the regulatory environment so that we are supporting the roll-out of hydrogen.

The latest views from manufacturers are that we will probably start small with hydrogen—small plane sizes and small ranges—and build confidence there before getting bigger. However, that could play a real role in domestic connectivity. I think we are doing the right things, but it is a both/and with SAF and hydrogen, not an either/or. I would also say that SAF is the solution that we know exists today and that we can deploy today, so we need to get it moving.

[Mr Kohler]

Q First, given the obvious international aspect of aviation, does it make sense for the UK mandate and the EU mandate to diverge, or would it make more sense if they were the same? Secondly, we heard from one witness that the levy would encourage tankering, with air operators filling up in other locations. Does that happen now, and is it an issue that you can see being made worse by the levy?

Matt Gorman: On the first question, I touched earlier on the fact that the EU and the UK have taken different trajectories, certainly into the longer term. I will be a little bit careful in what I say, because we are just finalising our thinking on what we submit to the Government, but increasing ambition with SAF will be important in the UK as we build confidence in production and scale-up of the technology. We can see a case in future to be more ambitious with the UK mandate. I think the Government said that they want to keep that actively under review, which we support.

On the question of tankering, it happens to a limited extent today. We do not fly the aircraft, but our understanding, from when we last looked at it several years ago, is that on short-haul aircraft in particular, where there is a very rapid turnaround and you do not necessarily want to take time to fill up the aircraft at the other end of the route, the CO₂ penalty was not huge in terms of the industry overall. I am not close enough to comment on whether the levy poses a particular challenge there, but when the Government get to the stage of consultation on the detailed design of the mechanism and are working with the industry, it will be important to design it in a way that avoids that wherever possible.

[Amanda Hack]

Q We talk an awful lot about the customers and what they might see on the price of their ticket, whether that is for freight or for going on holiday to Spain or wherever, but are your customers demanding that you be more environmentally friendly? As an airport, how far do you need your customers to support the transition to SAF?

Matt Gorman: It is a great question. All the evidence from our polling of customers, as well as what we read in regular polls and consumer surveys, shows that people are broadly concerned about climate change and environmental issues generally. In terms of aviation, they see that there is a role for customers, but they are clear that the industry needs to set out a plan and take action. They understand that airports do not necessarily fly planes, but that we clearly have a responsibility. They expect us to set out the plan, communicate it and take action at the airport where we can. In that sense, all the evidence shows that consumers support us taking action.

As the answer to an earlier question alluded to, the net zero transition will have some costs to consumers. The challenge is how we keep those costs as low as possible while reaching the goal of net zero. I think the balance of the mandate and the revenue certainty mechanism is well designed to achieve that. We think that domestic production in the long term so we are not reliant on imports—we have discussed the energy security angle—is a good way of helping to manage price certainty in future. Consumers are supportive, engaged and willing to pay a bit more to support the transition to net zero, but the industry and Government need to take action to manage it cost-effectively.

[Mr Kohler]

Q May I go back to my first question? I hear what you say about being more ambitious, as the EU is towards the end of the mandate or as it progresses, but do you see any problems with the mandates being out of kilter? Or is that not an issue?

Matt Gorman: If we start with the mandates out to 2030, we at Heathrow do not see a particular challenge in the UK’s adoption of a more ambitious mandate. We very actively supported the 10% mandate for the UK. As I say, it is really important that we start to get SAF flowing and to produce it in the UK, with the support of the Bill.

In the longer term, through the work we are doing and our submissions to Government, I expect us to say a bit more about the long-term ambition for the mandate in the UK, but we have not quite finalised that. I will be happy to update the Committee in writing later in the summer.

[The Chair]

There are no further questions from Members. Thank you for your evidence, Mr Gorman.

Examination of Witness

Josh Garton gave evidence.

--- Later in debate ---

[Amanda Hack]

Q In terms of SAF’s growth potential, I would be interested to hear more about how smaller organisations can get involved and how we can ensure that lots of businesses benefit from this huge step forward for our economy. A lot of SAF production will be in coastal areas, but my constituency, which has an airport, is inland. How can that growth potential reach all parts of the UK?

Mike Kane: Indeed, and Amanda, you are a great champion of East Midlands airport in your constituency—I have Manchester airport in mine, and I see from day to day the benefits that growth brings in terms of jobs, skills and inward investment. You make exactly the right point. Good strategy is turning what you have into what you need to get what you want.

We have industrial heartlands dotted right across our nation, including in our coastal communities. They are almost oven-ready to host the technology, inward development and jobs. Our analysis, which was a minimum compared with those of everybody else in the room, is that this would create 15,000 jobs in the next few years and £5 billion in GVA. Those jobs are in many of our run-down coastal communities and industrial heartlands, so this is a win-win on many levels—in terms of decarbonisation, carbon capture, production and the regeneration of parts of our nation that have been left behind for far too long.

[Mr Kohler]

Q I have been looking at some of the written evidence we have received in addition to the testimonies from the witnesses. I understand why clause 6 is widely drawn, but do you recognise that the levy being calculated in too complex a way would produce uncertainty, a lack of transparency, and externalities or transaction costs that we do not need?

Mike Kane: I think clause 6 gives us flexibility. That is what is key in letting the contract. We have made some principle statements here. This is industry-funded; we do not think the taxpayer should pay for the decarbonisation of aviation. We know that at the moment it is a small amount of what transport emits nationally, but because it is one of the harder-to-decarbonise areas, we know that the graph will go up over time. That is why we are funding the fuel suppliers, at the top of the chain here, so that the costs are spread as this goes lower down the chain and eventually to the passenger.

[Mr Kohler]

Q I do not know whether you have seen it, but Valero makes the point in its written submission that if the way that you calculate the levy is too complex, and if you base it on historical market data rather than current data, then with just a standard levy, that will produce problems, whereby new entrants will not be subject to the levy. We have to be sensible about how we calculate the levy. That is all I am suggesting. Do you recognise that as an issue?

Mike Kane: The first thing I would say in response to your question, Paul, is that this is a very technical, short Bill, but there are huge challenges ahead. I want to compliment my officials, who have worked extraordinarily hard to get to this point, and also industry who have worked with us to get to this point. As we go to the strike price and the levy, we will continue to work with industry to make sure we get that right.

Somebody described it earlier—I think it was Mark again—as being like a seesaw. It will go up, it will go down; but by letting the contracts or drawing them in, we can keep that balance in equilibrium, as far as humanly possible. That is the quality of this. While that is not the answer you might want to hear about the end piece, there will be scrutiny of the Secretary of State and of this, and of the legislation, and that will be covered by the Competition and Markets Authority. There will be many levels of scrutiny of how well Government are delivering this.

[The Chair]

I am sure Hansard will pick it up, but just for the record, Minister, you have mentioned Mark twice. I believe it is Professor Mark Maslin you are referencing, rather than the Chair, who of course remains neutral—and is not in a seesaw chair.

Mike Kane: You are always Mr Pritchard to me.

Sustainable Aviation Fuel Bill (Third sitting)

Paul Kohler Excerpts

Committee stage
Thursday 17th July 2025 Public Bill Committees

[Mike Kane]

Clause 6 enables the Secretary of State to introduce, through regulations, a levy on aviation fuel suppliers to meet the costs of payments made by the counterparty to SAF producers and to cover the counterparty’s administrative costs. We plan to fund the revenue certainty mechanism through a levy on industry because it is right that the costs of decarbonising air travel are borne by the aviation sector rather than the taxpayer. We are levying aviation fuel suppliers because placing the levy higher up the supply chain spreads costs across the sector and reduces administrative burdens, and because aviation fuel suppliers will benefit from the greater volumes and lower prices for SAF that the revenue certainty mechanism will create.

Broadly, if the counterparty has incurred costs in a set period, we will cover those costs by levying aviation fuel suppliers based on their share of the fossil fuel market during that period. We are continuing to work closely with industry on the details of how the levy will operate. This approach is in line with the approach of other contracts-for-difference-style schemes, such as in the renewable electricity sector where there is a levy on electricity suppliers. The clause will also ensure that the counterparty’s obligations and activities in respect to the levy are appropriately regulated. I assure Members that the regulations under this clause will be subject to consultation and the affirmative parliamentary procedure, so there will be further opportunities for scrutiny in this area.

Clause 7 enables the levy regulations to require a person who is liable to pay the levy to provide financial collateral to the counterparty. This acts as a failsafe if there is cause for concern about non-payment. It ensures that if a levied party does not make a payment, the counterparty can take any owed money through the collateral. Without this power, there is a risk that non-payments to the counterparty lead to the Government needing to provide financial assistance to ensure that the counterparty can make payments under the revenue certainty mechanism contracts.

Clause 8 enables the levy regulations to include provisions to ensure that the levy is administered efficiently. It allows the Secretary of State to confer statutory functions on the counterparty, such as collecting levy payments and enforcing regulations. It is vital that the counterparty has the powers and functions it needs to operate efficiently and effectively.

Clause 9 will allow us to make regulations on who will calculate matters relating to the levy, and how—for example, how levy payments should be calculated and who is responsible for doing so. It ensures that calculations are made in an appropriate way by people who are qualified to do so. The regulations made under this clause will be subject to consultation and the affirmative procedure.

[Mr Paul Kohler (Wimbledon) (LD)]

I rise to speak on clause 6 and new clause 6. As we have heard, clause 6 would create a levy on fuel producers. While I do not necessarily believe that to be the wrong approach, as with much of the Bill, the devil will be in the detail that is not available for us to scrutinise here, for obvious reasons. As my hon. Friend the Member for Sutton and Cheam will make clear, there may be unintended consequences if the regulations are not designed correctly.

In my opinion, leaving much of the mechanism to a later date is not necessarily a bad thing—I agree with the flexibility that is being put in place. With a new, emerging technology and industry, ensuring that the Government’s hands are not tied at this early stage is a strength, not a weakness. That notwithstanding, some assurances should be given about how the mechanism will be designed, and how the potential flaws raised in the written evidence received by the Committee will be sidestepped. I point in particular to the written evidence from Valero.

Clause 6(3) implies that the levy will be based on criteria relating to the historical market share of fuel suppliers. That has been raised by those in the industry as potentially having unintended consequences. As I raised yesterday with the Minister, who I am not convinced gave me the clearest of answers, there have been worries that it may allow new market entrants not to pay any levy, as they will not have had a previous market share. Will he commit to ensuring that the levy regulations will account for such obvious loopholes?

It is clear that the challenge of decarbonisation, both in aviation and beyond, is great and will not be solved without collaboration with our closest international partners. I therefore tabled new clause 6, which would require the Government to review the differences between our approach to sustainable aviation fuel and that of our European partners in the European common aviation area. With 71% of international air passengers at UK airports travelling to or from Europe, it seems sensible that we should strive to be in broad alignment with Europe with regard to SAF.

I appreciate that there may be differences: in the case of the early part of our SAF mandate, we are going further and faster than the ECAA, but our European partners may accelerate beyond our thresholds later on. However, we believe it is important to remain mindful of what our partners across Europe are doing in an industry that has international competition at its very heart. The new clause would ensure that the Government are fully aware of differences in policy, and alive to any unintended consequences or differences that the Bill could result in for those in the aviation industry. We think that would be helpful.

I would welcome the Minister’s observations on both the mechanism that we have suggested and the broader issue of alignment with our European partners. This is, of course, a probing clause. Can the Minister assure the Committee that the Government will keep a watching brief on what the ECAA are doing with regard to SAF from here on?

--- Later in debate ---

[Mr Kohler]

I have a brief question. When the Minister talked about the effect of £1.50 either way on airfares, was he talking about the effect of just the levy or the effect of the mandate as well? As we heard on Tuesday, the mandate will have far more of an effect on prices than the levy, given the premium that is likely to be repayable on SAF.

[Mike Kane]

Well done to the hon. Member for Mid Buckinghamshire; he pulled it out of the fire there with the amendments. He is right that we are putting SAF on the statute book. We should have put it on the statute book years ago, which is why it was in our manifesto and we are doing the right thing now. I will address the questions about £1.50 in a moment.

Amendment 4 tabled by the hon. Member would put a requirement on the counterparty to report on the effect of the introduction of the revenue certainty mechanism on air travel prices. Once operating, the revenue certainty mechanism is expected to make minimal changes to fares with an average ticket price, as we have said, decreasing or increasing by up to £1.50 on average per year. I remind him that that is less than a bus fare on Andy Burnham’s Bee Network in Greater Manchester where I live. I would offer to pay it, but it is quite cumulative over time and I do not have that type of resource—I am happy to fund the hon. Member for one year at £1.50 if he so wishes. That figure comes from a DFT analysis.

The costs of the scheme and the impact on ticket prices will be kept under continual review. The Government will also set the approach to the allocation of contracts, the number of contracts awarded and the scale of support they provide. Those controls will help to minimise any potential impacts on airfares. The costs of the scheme will also be reported in the DFT annual report and accounts in the usual way. I therefore ask the hon. Member to withdraw his amendment.

The hon. Member for Wimbledon asked whether the figure refers to the mandate or the revenue certainty mechanism. I assure him that it is just the revenue certainty mechanism.

--- Later in debate ---

[Luke Taylor]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 3

Review of the supply of bioethanol for use in sustainable aviation fuel production

“(1) The Secretary of State must, within six months of the passing of this Act, publish and lay before Parliament a report reviewing measures to encourage the supply of materials for Sustainable Aviation Fuel.

(2) The report under subsection (1) must include—

(a) an assessment of the impact of the closure of bioethanol plants on the ability to encourage overall increases in sustainable aviation fuel production;

(b) options for mitigating any adverse impacts on the availability of supply of sustainable aviation fuel by the closure of bioethanol plants;

(c) recommendations for any necessary Government action to promote a stable supply of bioethanol for Sustainable Aviation Fuel.”—(Mr Kohler.)

This new clause would require the Secretary of State to lay before Parliament a report outlining measures to encourage the supply of materials for SAFs, including considering the impact of bioethanol plant closures on encouragement to increase supply.

Brought up, and read the First time.

[Mr Kohler]

I beg to move, That the clause be read a Second time.

New clause 3 would require the Secretary of State to publish a report within six months of the Act’s passing, reviewing how we can better secure the supply of bioethanol for use in sustainable aviation fuel production.

The success of the UK’s sustainable aviation fuel ambitions will rely not only on bold targets and optimistic projections, but on the reliable availability of the resources needed for manufacturing. Bioethanol will be a resource that can be part of the manufacturing process for SAF, and help support a low-carbon industry in the UK, yet while the Government continue to laud their commitment to green aviation, they have stood by while domestic bioethanol production is at risk from Donald Trump’s bully boy tactics.

Since the signing of the UK-US trade deal, the owners of two UK bioethanol plants based in Hull and Teesside have threatened to close the sites as the trade agreement fundamentally undermines their business position. This Government have given US ethanol producers a 1.4 billion litre tariff-free quota—equivalent to the UK’s entire annual demand for the product—and completely undercut the industry, making the UK vulnerable to the whims of, to put it at its mildest, the mercurial Trump Administration.

The new clause would require the Government to assess the impact of plant closures on SAF production potential, set out options to mitigate supply risks and, crucially, recommend the policy steps needed to promote a stable domestic supply of bioethanol. We cannot afford to leave this to chance, or to the good will of a US President who, as we all know, simply cannot be trusted. If the Government are serious about scaling up SAF production, they must ensure that the raw materials are available. That means a proper strategy to support and stabilise the UK’s bioethanol sector.

[Greg Smith]

I absolutely understand and appreciate where the hon. Gentleman is coming from with this new clause. This topic came up in the oral evidence sessions and on Second Reading.

It is of great concern that the slightly lower tariffs deal done with the United States of America has clearly and materially threatened UK production of bioethanol, which of course has many uses. Many of us on the petrol station forecourt will have seen the curious E5 and E10 labels on the petrol pumps, which is about the ethanol blended with the regular fossil fuel. Our consumption of it as a country is particularly high.

As we are debating the potential future of bioethanol in sustainable aviation fuel production, it is incumbent upon the Government to reflect, within the scope of the Bill, on how much domestic supply there can be. So much of the Bill is underpinned by sovereign capability and fuel security—a point on which the Opposition and I think the Liberal Democrats are equally aligned on; it is so important—and so surely this new clause must also be important to the Government. I ask the Minister to reflect on that when he responds.

[Mike Kane]

I am extraordinarily proud that we have a Prime Minister and a Government who are rebuilding the UK’s reputation across the world once again, building trade deals with our closest partners across the planet, whether that be India, America or the recent agreement with the European Union. That is where Britain should be—leading and involved, not on the fringes as we have been for many years.

We are debating sustainable aviation fuel, but this is also about decarbonising the planes that will fly in our skies for generations to come. That US trade deal is zero tariff on aviation technology, which is a huge deal for this country, making it a world leader again in the future.

However, I am worried for the workers and families who have been affected by the trade deal. Ministers and officials, including the Business and Transport Secretaries, have met the companies consistently during this challenging time—those companies were struggling regardless of the time—to understand their concerns, discuss what action could be taken and to support them, because that is what good Governments do. The Department for Business and Trade is in discussions on requests for support from the UK bioethanol sector. As a responsible Government, there is a series of strict criteria and well-established due diligence processes that we must follow to consider such requests.

While I would like to see a thriving UK bioethanol sector, we would not expect a significant impact on the SAF mandate if there were to be a reduction in that sector’s production. That is because the UK bioethanol plants use crops that are not eligible for the SAF mandate. The SAF mandate, which is the framework for the supply of SAF in the UK, sets targets based on the availability of waste feedstocks rather than crop feedstocks. The SAF mandate is a global scheme and can use fuels from all around the world, providing an opportunity to draw upon a diverse pool of feedstocks.

However, we also want to encourage a UK industry. In January, the Chancellor announced £63 million of funding this year to help grow UK supply of SAF through the advanced fuels fund, which has been further extended in the recent Budget through to 2029-30. The SAF revenue certainty mechanism—the subject of the Bill—will also boost investment in UK SAF production.

Finally, under the SAF mandate, a formal review of the whole scheme has been built into the legislation, with the first review taking place in 2030. That will provide an opportunity to make an assessment on the availability of SAF supply. The above steps demonstrate how many of the recommendations set out in the hon. Member for Wimbledon’s new clause are already being undertaken by the Government. Given that, I ask him to withdraw it.

[Mr Kohler]

I hear what the Minister says, but we think that not enough is being done to protect the bioethanol industry in this country. We will therefore push the new clause to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Mr Kohler]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 5—Increasing greenhouse gas saving potential of sustainable aviation fuel—

“(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report which sets out a strategy for increasing the greenhouse gas emission saving resulting from the promotion of sustainable aviation fuel production in the United Kingdom.

(2) The report required under subsection (1) must include, but not be limited to—

(a) proposals for incentivising the research and development of Sustainable Aviation Fuels that maximise greenhouse gas emission savings;

(b) an assessment of, and recommendations for increases to, the minimum required greenhouse gas emission reduction in order for a Sustainable Aviation Fuel to be issued a SAF certificate;

(c) an assessment of, and recommendations for increases to, minimum ratios for renewable content in blended sustainable aviation fuels, for the purpose of more quickly reducing greenhouse gas emissions.

(3) Twelve months after the publication of the report required under subsection (1) and within every twelve months thereafter, the Secretary of State must publish a further report which—

(a) sets out progress against the strategy, and

(b) makes any necessary adjustments to the strategy as a result of developments in the sustainable aviation fuel industry.

(4) In this section, ‘SAF certificate’ has the meaning given in article 2 of the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.”

[Mr Kohler]

As we are all aware, aviation is one of the most challenging sectors to decarbonise and one of the fastest growing sources of emissions worldwide. While other sectors benefit from mature, low-carbon technologies, aviation remains heavily dependent on fossil jet fuel, and is one of the few industries where there is not an alternative available already. The Bill will attempt to grow the alternative industry, but it is clear that its provisions are only the first steps on a long journey to reach net zero by 2050 in aviation. If we are serious about hitting net zero by 2050, we must be equally serious about tracking our progress and course-correcting where necessary.

New clause 4 would require the Secretary of State to conduct an annual review of what contribution the revenue certainty mechanism is making in helping the UK achieve its target of net zero aviation emissions by 2050. It is a simple step that would help us to understand further the impact our SAF policy is having on our net zero targets, and whether other changes or alterations will be needed in the jet zero plan. It would allow us to ensure we understand, year by year, whether we are making the progress the science demands. Are SAF volumes increasing fast enough? Are emissions falling across domestic and international routes fast enough? Are the technologies we are backing delivering real, verifiable carbon savings? To reach net zero, those are the questions we should ask, and we must ensure that we have the evidence base to do so. The new clause would help provide us with that information as a guard against complacency.

New clause 5 would also contribute to our net zero responsibilities. It would require the Secretary of State to, within six months of the day on which the Bill is passed, publish and lay before a Parliament a report that sets out a strategy for increasing greenhouse gas emission savings from SAF production in the UK. It would allow us to understand and ensure that we are implementing new technologies within SAF production. The point of SAF is to reduce the carbon cycle of jet fuel. We should be vigilant in ensuring that anything marked as SAF delivers just that.

New clause 5 consequently sets a minimum standard of the lifetime carbon emissions that can be classed as SAF, and ensures that that is monitored effectively. If we do not embed a culture of accountability, we risk drifting and passing legislation that sounds ambitious but fails to deliver at the pace required. With only 25 years left to decarbonise a sector that today remains overwhelming fossil fuelled, we cannot afford complacency. This Government have rightly set the bold target of net zero aviation by 2050, which the Liberal Democrats support, but targets must be matched with transparent measurement and a willingness to adapt. These new clauses would simply give us the tools to do just that, and I urge Members to support them.

--- Later in debate ---

[Mike Kane]

My kingdom for a chemistry degree! I will let the hon. Gentleman know the answer to his question in due course.

To go back to the point, new clause 5 would duplicate the process already embedded in the SAF mandate legislation. I therefore ask the hon. Member for Wimbledon not to press the new clause.

[Mr Kohler]

New clause 4 was of course a probing amendment, and the Minister has satisfied most of us that enough will be done to report on our progress towards net zero. I was less convinced by the Minister’s answer to new clause 5. With or without a chemistry degree, the point is a simple one: SAF is green, but some SAF is greener than other SAF. I am not convinced that the Government are yet embracing that or doing enough to work out which SAF should be pushed because it is the most beneficial to the environment. We will press new clause 5 to a Division, but not new clause 4. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 5

Increasing greenhouse gas saving potential of sustainable aviation fuel

“(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report which sets out a strategy for increasing the greenhouse gas emission saving resulting from the promotion of sustainable aviation fuel production in the United Kingdom.

(2) The report required under subsection (1) must include, but not be limited to—

(a) proposals for incentivising the research and development of Sustainable Aviation Fuels that maximise greenhouse gas emission savings;

(b) an assessment of, and recommendations for increases to, the minimum required greenhouse gas emission reduction in order for a Sustainable Aviation Fuel to be issued a SAF certificate;

(c) an assessment of, and recommendations for increases to, minimum ratios for renewable content in blended sustainable aviation fuels, for the purpose of more quickly reducing greenhouse gas emissions.

(3) Twelve months after the publication of the report required under subsection (1) and within every twelve months thereafter, the Secretary of State must publish a further report which—

(a) sets out progress against the strategy, and

(b) makes any necessary adjustments to the strategy as a result of developments in the sustainable aviation fuel industry.

(4) In this section, “SAF certificate” has the meaning given in article 2 of the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.”—(Mr Kohler.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Sustainable Aviation Fuel Bill (Fourth sitting)

Paul Kohler Excerpts

Committee stage
Thursday 17th July 2025 Public Bill Committees

[Mr Paul Kohler (Wimbledon) (LD)]

I beg to move, That the clause be read a Second time.

If we are serious about meeting our climate obligations and economic ambitions, then transparency, accountability and evidence-led policy must be at the heart of the legislation. The ambition of the Bill to build a whole new industry is to be lauded, but it lacks the level of scrutiny that such a large project entails. The Bill sets a framework, but frameworks alone do not produce fuel. Nor do they deliver jobs, attract investment or lower emissions. We must not content ourselves with well-intentioned ambition. After previous broken promises by—I am sorry to say—the Conservatives—to have five plants up and running by now, we have already seen that ambition alone will not deliver what we need.

To truly build the sustainable aviation fuel industry, we must track progress, identify bottlenecks and act on evidence. That is what the new clause provides. It demands a detailed assessment of SAF production levels, uptake by airlines and investment in infrastructure. Further, it requires the Government to consult widely with a full range of stakeholders, widely enough drawn to include employees and unions, as well as producers, suppliers, environmental experts, academics and, importantly, the communities whose lives will be affected, whether by new plants, changes in aviation demand or environmental impact.

The new clause would ensure that Ministers come back to the House not with warm words but with evidence, consultation and a plan. I urge the Minister to accept it in the spirit in which it is offered—constructive, collaborative and committed to making the legislation truly fit for purpose.

[The Parliamentary Under-Secretary of State for Transport (Mike Kane)]

I thank the hon. Member for the new clause, which seeks to ensure parliamentary scrutiny and that the SAF revenue certainty mechanism will run effectively. I also thank him for saying that I am full of warm words, because I am.

I agree with the hon. Member that it is important to have measures to assess the impact of the Bill and make necessary recommendations; however, significant developments in the SAF industry are unlikely within the first 12 months after the Bill becomes an Act. We are committed to deliver the revenue certainty mechanism as soon as possible, but it is vital that such complex contracts are considered carefully, with time taken to get them right. That will involve negotiations with potential SAF producers.

I reassure the hon. Member that we are committed to transparency in the Bill. We have committed to publishing details of who receives revenue certainty contracts and on what terms. We will also continue to publish annual data on the volume of SAF supplied under the SAF mandate. I hope that he accepts the explanations in the spirit in which they are given and withdraws his new clause.

[Mr Kohler]

I am grateful for the Minister’s flattering and sometimes unctuous words. He makes a good point about 12 months not being sufficient time to give such a report, and I acknowledge the assurances that he has given. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 8

Review of the Potential Conversion of Industrial Sites for Sustainable Aviation Fuel Production

“(1) Within twelve months of the day on which this Act is passed, the Secretary of State must lay before Parliament and publish a report into the merits of converting disused oil refineries and other relevant existing industrial sites into facilities for the production of sustainable aviation fuel.

(2) The report required under subsection (1) must include, but is not limited to—

(a) an assessment of the technical and operational feasibility of such conversions;

(b) an evaluation of the economic viability of such conversions;

(c) the cost effectiveness of such conversions compared to new build production facilities, taking into account—

(i) the ability to use existing infrastructure such as tanks and pipelines;

(ii) the complexities of environmental remediation and site preparation.

(iii) the availability and suitability of a skilled workforce within proximity to such sites.

(d) recommendations for government actions to facilitate and incentivise such conversions, where they are deemed beneficial for enhancing the resilience and increasing the domestic production of sustainable aviation fuel industry.

(3) In preparing the report required under subsection (1), the Secretary of State must consult relevant stakeholders, including, but not limited to—

(a) sustainable aviation fuel producers,

(b) representatives of the oil and gas industry and workforce,

(c) environmental organisations,

(d) local authorities, and

(e) academic experts.

(4) The report must be accompanied by a statement from the Secretary of State on how the findings of the report will be addressed through Government action.”—(Mr Kohler.)

This new clause mandates the Secretary of State to publish a report within twelve months, reviewing the merits of converting disused oil refineries and other industrial sites for Sustainable Aviation Fuel production.

Brought up, and read the First time.

[Mr Kohler]

I beg to move, That the clause be read a Second time.

New clause 8 calls on the Secretary of State to publish a report within 12 months on the merits of converting disused oil refineries and other existing industrial sites into sustainable aviation fuel production facilities—and there is an opportunity to have such a report early on. Many Members present, including, notably, the hon. Member for Falkirk, have spoken about the strength and possibilities of SAF to reinvigorate and reuse industrial sites.

The UK has several disused oil refineries and industrial sites, which already possess critical infrastructure—storage tanks, pipelines, grid connections—and are often located near skilled workforces familiar with complex industrial processes. That presents a real opportunity to repurpose existing assets, accelerating the deployment of SAF production, supporting local economies, and reducing the cost compared with greenfield sites, but we must proceed with a clear understanding of the technical feasibility, operational requirements and environmental considerations for such conversions.

Environmental remediation, site preparation and ensuring community support are complex challenges that require careful evaluation. The new clause would mandate a thorough, evidence-based report that would address such technical, economic and environmental factors, and include consultation of a wide range of stakeholders, including SAF producers, the oil and gas workforce, unions, environmental organisations, local authorities and academic experts. The findings will help the Government to shape policies and incentives that maximise the benefits of such conversions where appropriate. I do not think we can simply leave it to market mechanisms; the Government need to intervene here.

This is not about preserving the fossil fuel past, but transitioning our industrial heritage and workforce, and some of our dying economies, to a new sustainable future. The UK’s industrial regions deserve a just transition that leverages their existing strengths to help to power the green economy. The new clause would be a step towards securing the resilience and growth of a domestic SAF industry that can create good jobs, strengthen supply chains and reduce reliance on imports. I urge the Minister to welcome this practical proposal, accept the new clause and commit to a clear timeline for delivering the report. The future of UK aviation depends on not only ambitious targets but pragmatic steps to make those targets achievable and bring the country with us. The new clause would help us to take one such step.

[Greg Smith (Mid Buckinghamshire) (Con)]

New clause 8 has considerable merit. It is always preferable where new industrial facilities are to be built—in this case for the production of sustainable aviation fuel—for those identified sites to have had former brownfield status and former industrial use. I have no argument with that element of the new clause.

The one note of caution I have on the new clause is that many of the existing sites—certainly oil refinery sites—are not necessarily located in the right places currently for certain SAF technologies. That includes the e-fuels and power-to-liquid solutions, which require, as part of the process, electrolysis and the creation of green hydrogen. Of course, if the hydrogen element that goes into making the SAF is not green hydrogen, the whole problem becomes rather academic—we could still make the fuel, but the reality is that it would not be as green as we want it to be. Those SAF production facilities, by definition, would need to be located in places with potential large-scale offshore wind, electricity production or, possibly, nuclear generation.

If we look across the world at such fuel plants that have been created, Porsche, for example, chose the hills of Chile to produce its particular fuel, because it can leverage off the wind power that it can get up there. In our country, Orkney seems to have been a popular site for harnessing the offshore wind technology available up there. While I fully support the principle that underpins the new clause—for many SAF production sites to be on former industrial or oil refinery sites—I simply wish to add the note of caution that they might not be suitable for every application and technology out there.

[Mike Kane]

On new clause 8, the hon. Member for Wimbledon is right to talk about deindustrialisation. Growing up in the 1970s, I saw the impacts of that, particularly on the east side of Manchester, with the chemical and mining industries being wiped out. In this day and age, we are still getting over that in my great city. I reassure him that we are supporting the SAF industry, in part, to grasp this opportunity for deindustrialised areas. Emerging SAF projects are often located on former industrial sites, and I remind the Committee that, if we do this right, our low-carbon fuels industry can support up to 15,000 jobs and £5 billion to the economy by 2050.

I also reassure the hon. Member that work is ongoing across Government on the future of our refineries. We are acting urgently in response to the deeply concerning news of insolvency at Prax Lindsey oil refinery, and have put £200 million into the National Wealth Fund to back investment at Grangemouth. I want that work to continue at pace, and am conscious that specific sites will need to be considered on a case-by-case basis. Commissioning an additional separate report would not be beneficial, and would risk delaying potential investment decisions. Given that, I ask the hon. Member to withdraw the motion.

[Mr Kohler]

I am saddened by the Minister’s response. We cannot just leave it to the invisible hand of the market to make sure that sensible decisions are made regarding old oil refinery sites.

[Euan Stainbank (Falkirk) (Lab)]

In Grangemouth, we have £200 million dedicated from the National Wealth Fund, and Project Willow, which has two SAF options contained within it. Does the hon. Member acknowledge that, and acknowledge that we need to move at pace to deal with deindustrialisation in such places? His new clause would risk potentially adding another layer of report-making, rather than the real action that needs to be taken in places such as my constituency.

[Mr Kohler]

Such a report would not require there to be a delay. The report would be within 12 months, and we have already heard from the Minister that not much will happen within the first 12 months. That was the excuse given earlier in Committee for not doing various things. A report to focus attention on these sites would be useful and helpful, and I really cannot see why there should be any objection to it.

Question put, That the clause be read a Second time.