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Aviation: Fuels

Question for Department for Transport

UIN 3570, tabled on 17 May 2022

To ask the Secretary of State for Transport, if he will make it his policy to introduce a contract for difference price stability for the sustainable aviation fuel industry.

Answered on

24 May 2022

We want the UK to be a global leader in sustainable aviation fuel (SAF) and we see the potential to create over 5,000 jobs from a domestic SAF industry. Our SAF programme is one of the most comprehensive in the world. We continue to look at options to help build a UK SAF industry, in addition to the government’s proposed SAF mandate and £180m grant funding mechanisms.

As part of our work we are engaging industry, including through the Jet Zero Council SAF Delivery Group, to get a better understanding of how private investment in the UK SAF industry can be leveraged, and the potential need for and impacts of a price stability mechanism such as a contracts for difference scheme.

We are working at pace on a number of levers to support the UK SAF industry, accelerating its commercialisation and ensuring existing and prospective SAF plants developing in the UK can progress to construction as quickly as possible.

Our support includes a £168m capital grant funding competition to support the development of advanced fuels plants and £12m for the operation of a SAF clearing house to help certify new fuels and support early stage aviation fuel testing for years 2022-25; a consultation on the introduction of a SAF blending mandate to drive the uptake of SAF in the UK; a £400m partnership with Breakthrough Energy which aims to drive investment into the next generation of clean energy technologies, including SAF; and funding to help deliver the world's first net zero transatlantic flight fuelled by 100% sustainable aviation fuel by the end of 2023. We are also exploring what additional policy interventions may be needed to accelerate the commercialisation and scale up of SAF plants developed in the UK such as those that address price stability and risk.

Unique circumstances globally, including the war in Ukraine, have pushed up transport fuel prices. How current fuel and future SAF costs are passed through to passengers is a commercial decision for airlines. Future SAF cost uncertainties make it difficult to predict exactly how much ticket prices could increase, but our analysis suggests this impact will be relatively small.

Industry has welcomed the potential introduction of a mandate and we continue to work with all stakeholders on this matter, aiming to reduce any adverse effects on air travel.