Sustainable Aviation Fuel Bill (Fourth sitting)

Debate between Paul Kohler and Greg Smith

Committee stage
Thursday 17th July 2025 Public Bill Committees

[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.

Sustainable Aviation Fuel Bill (Third sitting)

Debate between Paul Kohler and Greg Smith

Committee stage
Thursday 17th July 2025 Public Bill Committees

[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.

Sustainable Aviation Fuel Bill (Second sitting)

Debate between Paul Kohler and Greg Smith

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[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.