UK's sustainable aviation fuel mandate: only up to 2040, and with caveats


In Apr-2024 the UK government published its long-awaited mandate on the production of sustainable aviation fuels (SAF). The mandate, which still requires parliamentary approval, follows extensive consultation with the aviation industry in 2022 and 2023.

It sets targets for the overall share of jet fuel to be supplied as SAF and separate targets for SAF produced as power to liquid, while also capping fuel from hydroprocessed esters and fatty acids. The mandate is binding on suppliers of aviation fuel into the UK market.

UK Transport Secretary Mark Harper described the mandate as "ambitious but realistic". It only covers the period up to 2040, whereas the equivalent European Union mandate (adopted last year), sets targets up to 2050 and is more ambitious.

Moreover, the UK would effectively scrap the scheme at short notice if there was a threat of significantly increased consumer costs.

  • The UK aims for SAF at 2% of aviation fuel in 2025, rising to 22% in 2040 (but no targets beyond).
  • EU targets are higher after 2030, and extend to 2050.
  • The UK has a cap on SAF from hydroprocessed and fatty acids (HEFA). Power to liquid targets are also included.
  • A buy-out mechanism is aimed at limiting consumer costs when SAF supply is scarce. There will be further consultation on a revenue certainty scheme.
  • The scheme will be reviewed every five years – or immediately, if there was a threat of big increases to consumer costs.

The UK aims for SAF at 2% of aviation fuel in 2025, rising to 22% in 2040.

The percentages of UK jet fuel demand that the mandate requires to be met by SAF are 2% in 2025, 10% in 2030, and 22% in 2040.

The requirement will remain at 22% after 2040 until there is greater certainty regarding SAF supply.

EU targets are higher after 2030 and extend to 2050

The European Union adopted a SAF mandate in Oct-2023, with targets up to 2050.

The UK's percentages match the EU's in 2025, then rising above the EU's 2030 target of 6%.

However, the UK's 2040 target of 22% is below the EU's 34% aim.

Moreover, whereas the UK does not yet have targets beyond 2040, the EU aims for 42% in 2045 and 70% in 2050.

In the central scenario of the UK government's 2023 consultation document the SAF percentage rose to 50% in 2050, below the EU's 70% target. However, the mandate does not to go beyond 2040 for now.

UK and EU mandate: targets for SAF as a percentage of aviation fuel

The UK has a cap on HEFA SAF

Currently, the only commercially available SAF pathway is from hydroprocessed and fatty acids (HEFA). However, the long term ability of HEFA to meet demand is inadequate due to limited feedstock availability.

The UK is placing a cap on feedstocks from HEFA. The mandate allows 100% HEFA SAF in 2025 and 2026, falling to 71% in 2030 and 35% in 2040.

The cap on HEFA is designed to allow space for more advanced fuels to develop.

Power to liquid targets are also included in the UK mandate

To stimulate newer and more diverse SAFs, the UK mandate has targets for the power to liquid (PtL) fuels from 2028.

PtL fuels are synthetic liquid hydrocarbon fuels produced from renewable electricity, water and carbon dioxide (CO2).

The hydrogen is produced by the electrolysis of water using renewable electricity ('green hydrogen') and the CO2 needs to be captured from the atmosphere or come from sources that would otherwise be emitted into the atmosphere.

Synthetic fuels are still in the development stage, but are regarded as more scalable, deriving from renewable electricity as their source of energy. They are less dependent on feedstocks than SAF derived from biomass, and lead to greater emissions reductions.

The UK's target percentages for PtL are 0.2% in 2028, rising to 3.5% in 2040.

Again, these are below the targets set by the EU for synthetic fuel production.

The EU's synthetic fuel targets are 1.2% in 2030, 2% in 2032, 5% in 2035 and progressively reaching 35% in 2050.

UK and EU mandate: targets for PtL* (UK) and synthetic fuel (EU) as a percentage of aviation fuel

UK government has sustainability criteria to determine eligibility

The UK government has laid out strict sustainability criteria defining the eligibility of SAF under the mandate. Some of these are noted below.

  • SAF must be made from sustainable, not-recyclable wastes or residues (such as used cooking oil or forestry residues), recycled carbon fuels, PtL fuels. SAF made from food, feed or energy crops is not currently eligible.
  • It must meet relevant technical specifications for jet fuel and achieve a minimum 40% greenhouse gas (GHG) emissions reduction (this minimum threshold to be increased in future years).
  • PtL fuels will be subject to additional criteria to ensure genuine GHG emissions reductions.

A buy-out mechanism is aimed at limiting consumer costs when SAF supply is scarce

Unlike the EU's scheme, the UK has introduced a buy-out mechanism allowing fuel suppliers to pay a price per litre to the government if they are unable to meet minimum required levels of SAF supply.

The buy-out - priced at GBP4.70 per litre for the overall SAF obligation and GBP5.00 for PtL - allows them to avoid paying higher prices to meet their obligations when supply is scarce and prices rise.

In effect, it caps the price airlines will have to pay for SAF, therefore also minimising the impact on consumers.

There will be further consultation on a revenue certainty scheme

The UK government has launched a consultation into the options for a SAF revenue certainty scheme. Such a scheme would help to incentivise SAF production by providing a guarantee of revenues for SAF producers.

The government's preferred option is a guaranteed strike price, which provides certainty over a pre-agreed price for SAF supplied to UK aviation.

The aviation industry has welcomed the UK mandate

The UK SAF mandate and proposed revenue certainty scheme have been welcomed by a number of aviation industry participants, including British Airways' owner, IAG.

Aviation industry representative organisations have also expressed support - these include the Airport Operators Association, Airlines UK and the Renewable Transport Fuel Association.

The scheme will be reviewed every five years…

Subject to the passing of the necessary legislation in parliament, the UK SAF mandate will be implemented from 1-Jan-2025 and will be reviewed every five years, starting with 1-Jan-2030.

By the time of the review, the UK government will need to have some clearer views on SAF percentages beyond 2040.

…or immediately, if there was a threat of big increases to consumer costs

However, it has also said that, if SAF supply shortages led to significant increases in SAF prices, with possible increases in the buy-out and in costs to the consumer, it would immediately review the scheme.

It could then "alter key parameters to ensure price rises do not happen", thereby ensuring consumers are not adversely affected.

SAF production at scale needs certainty and investment incentives

Current production of SAF remains at a fraction of a percentage point of global aviation fuel consumption - moreover, SAF is considerably more expensive than fossil kerosene.

Greater commercialisation and production scale should lead to lower prices, in turn creating a positive feedback loop helping to accelerate SAF usage and steepen the currently shallow upward curve of production.

The UK SAF mandate is a step in the right direction, but mandates are more of a stick than a carrot for investment in production of green fuels - moreover, the UK's scheme currently leaves significant scope for uncertainty, which is something that investors do not like.

On the one hand, it is seeking a still-to-be-determined revenue certainty scheme in order to attract investment in SAF production. At the same time, it appears to be anxious to minimise the price impact on consumers.

More focus is needed on devising a supportive policy framework and financial incentives for investors to produce SAF at sufficient scale.

This article was written on 16-May-2024.

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