Sustainable Aviation Fuel Bill (Second sitting)

Debate between Tom Collins and Greg Smith

Committee stage
Tuesday 15th July 2025 Public Bill Committees

[Greg Smith]

Q Where does your organisation see the price of SAF going in the medium and long term? In theory, if the Bill works, SAF production in the United Kingdom will increase exponentially. Therefore, the unit cost—the per litre or per tonne cost—will come down. How long does your analysis suggest it will take us—as a country, as opposed to a global market—to be able to supply SAF to the airlines at a cost that is closer to the fossil-fuel equivalent today?

Geoff Maynard: On the face of it, you would expect the cost to fall, but the problem is that there is only a limited amount of raw materials for the generation 1 and 2 fuels to proceed. You will have to move forward to meet the requirements; you will have to move to power-to-liquid fuels, and they are going to be more expensive to produce. Therefore, at some point, as they kick in, to meet the overall figures, the cost base will rise. That is why we believe that, in the longer term, it will be slightly more expensive because there are not the cheaper feedstocks that are currently available.

[Tom Collins]

Q As you mentioned, this is an enabling Bill and what will really count is how the RCM rounds are designed. You have talked about the need for us to realise economies of scale and advances in technology as we move through larger and larger availability of feedstocks. Do you see that kind of mechanism as being a useful vehicle for us to make those economies of scale and bring that innovation to bear?

Geoff Maynard: The short answer is yes, I do. I think it will be very effective. As many previous witnesses have said, it provides a guarantee to investors that they will get a return on their money. A point that perhaps has not been made is that it gives quite a lot of authority to the Secretary of State. If he sees that the process of moving to SAF is slowing, he can instruct the counterparty to let additional contracts and thus speed up the process and the amount that we have. There is a considerable degree of confidence that, properly used, it will produce the desired results.

--- Later in debate ---

[Greg Smith]

Q That is very helpful. You may have heard me ask previous witnesses about the cost to the end user. The Government’s analysis is that it would end up being plus or minus £1.50 on the airfare, but a succession of witnesses have not been willing to put their name to that, or even to go as far as saying that they think that that is a conservative estimate. Where does your analysis sit on that?

Professor Maslin: Our analysis is slightly different because it is looking at the industry as a whole. On the airline side, there is a worry that these costs will literally be shoved on to the airlines. Many of us do not realise that the difference between this industry and others is that it is a very narrow margin industry. If there is any change in geopolitics, companies can go bust—for example, Finnair. Airlines are worried about this levy system, not necessarily because of the extra cost, but because they are not reassured that when there is a surplus, which goes back to the actual producers, it will be then be passed back to the airline. Again, they are happy with the up and down mechanism, but there seems to be no way of shunting that back to airlines to say, “Okay, you have done well, so you can get some money back.” That is more the concern.

Adding £1 or £2 to the price of a flight does not concern the airlines from the passenger point of view—it will not put passengers off. What will put them off is when the airlines suddenly realise that if you multiply that by 550, which is the number of people in an A380, you suddenly start to bankroll quite a lot of extra money that has to be found. I am hedging my bets, so I will not tell you that it will be higher or lower than £1.50. That is a very small amount per individual, but for the companies that are trying to make aviation work and are positive about trying to move to net zero, this is the perfect time to push, as they have suddenly woken up to the fact that they are laggards.

[Tom Collins]

Q As someone who works in research and innovation, you will be familiar with the UK pain point, where we are often excellent at planning the technologies at low technology readiness levels, and then we lose them to that mid-level valley of death. The UK is strong in sustainable fuels at the research level; this mechanism is intended to help us to navigate through the valley of death, and to reach scale and economic viability. Do you think it is a good mechanism for that and that it will help us to break that trend in the UK?

Professor Maslin: Other levy systems that have been used in the energy sector have been very successful, so I am personally very positive about this because it gives a guarantee. We have seen what I call the solar rollercoaster: suddenly everyone has solar panels, and then suddenly all the companies go bust. What you are doing, very sensibly, is trying to level those bumps in the road. That worked for offshore wind and it should work for this, but there also needs to be support through other mechanisms, such as R&D and mechanisms designed to support small and medium-sized enterprises, so they can get the research they need, to go from “Wow! That’s a brilliant idea!” to being world leading. This is a great mechanism, but the Government need to use the other mechanisms to fund those companies to develop as well.