by Andrew Nealon, Afzaal Abidi, Joshua Hayes, and Alex Lee (Energy Intelligence) Despite many airlines having pledged to use 10% sustainable aviation fuel (SAF) to fuel their planes by 2030, its use has only grown from 0.04% of global aviation fuel in 2021 to 0.17% in 2023. In an effort to boost SAF adoption, the UK government is introducing an obligation on aviation fuel suppliers to blend increasing proportions of SAF into the UK aviation fuel mix (the UK SAF Mandate). This article outlines the legislative framework of the UK SAF Mandate and the challenges that need to be addressed for it to be a success.
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One of the primary challenges in adopting SAF is its cost, as SAF is currently more expensive than fossil kerosene. In addition, production capacity is limited, with current production only sufficient to replace a small fraction of total jet fuel consumption.
Although still relatively few compared with other energy transition projects, there are announced UK SAF projects. LanzaJet, British Airways and Nova Pangaea Technologies are partnering to produce SAF and were awarded a grant of up to £9 million ($12 million) from the Department for Transport’s Advanced Fuels Fund (AFF) in 2023. Velocys and British Airways are also planning to develop Europe’s first commercial scale waste-to-jet-fuel facility in Lincolnshire, a project which was awarded a grant of up to £27 million from the AFF.
UK SAF Mandate
In the US, the Inflation Reduction Act 2022 introduced a clean fuels tax credit program under which SAF producers are eligible for a tax credit of $1.25 per gallon of qualifying SAF. Taking a different approach, the EU’s ReFuelEU Aviation Regulation — enacted in October 2023 — mandates fuel suppliers, when supplying to EU airports, to supply 2% SAF by 2025, 6% by 2030 and 70% by 2050.
Using a similar rubric to the ReFuelEU Aviation Regulation, the UK SAF Mandate will be enacted via the Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024 (SAF Order 2024); a statutory instrument approved by parliament on Sep. 9, 2024, coming into force on Jan. 1, 2025.
Pursuant to Article 3 of the SAF Order 2024, two obligations are imposed on every supplier that supplies aviation turbine fuel at, or for delivery to, places in the UK in a calendar year with a total energy content of more than 15.9 terajoules. These obligations are placed on the suppliers at the point at which their fuel can only be supplied to UK aviation.
The SAF Order 2024 imposes two obligations: (i) the power-to-liquid (PTL) obligation, discharged through the supply of PTL SAF (made when carbon is made into fuel using a process powered by renewable or nuclear energy), and (ii) a main obligation, discharged through the supply of all other types of eligible SAF — with limits on the amount that can be supplied from hydro-processed esters and fatty acids feedstock. The main obligation starts in 2025 at 2% and increases annually to 10% in 2030 and 23% in 2040. The PTL obligation begins in 2028 at 0.2%, rising to 4% in 2040.
Suppliers will be able to meet their obligation by: (i) supplying SAF and earning certificates (excess certificates can be traded or saved to discharge up to 25% of the following year’s obligation), (ii) buying certificates from others who have supplied fuel or (iii) paying a buy-out price (£4.70 per liter). The SAF Order 2024 provides that a supplier is not eligible to apply for certificates where the SAF has benefited from a “support scheme” outside of the UK.
To qualify, the SAF will need to fulfil the "sustainability criteria" set out in Schedule 1 of the SAF Order 2024. Each feedstock has slightly different criteria but, broadly, the SAF will need to (i) make a minimum greenhouse gas saving relative to fossil jet fuel, (ii) meet technical specifications relevant to the specific feedstock and (iii) be derived from sustainable, non-recyclable residues, recycled carbon fuels or PTL fuels.
Challenges Ahead
In July, the King’s Speech confirmed that there will be a Sustainable Aviation Fuel (Revenue Support Mechanism) Bill to introduce a revenue certainty mechanism for new SAF production plants in the UK.
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Some potential SAF producers may wait for more certainty, particularly on how any costs will be “funded by industry.”
Pursuant to Schedule 1 of the SAF Order 2024, the specified minimum emissions savings that SAF has to make to qualify under the UK SAF Mandate will be in guidance published by the Secretary of State for Transport. The previous UK government signaled that the minimum threshold will be a 50% saving, but this should be confirmed soon, especially given that the first obligation applies from Jan. 1, 2025.
SAF is currently zero-rated under the UK Emissions Trading Scheme (UK ETS). The UK ETS Authority intends to align the UK ETS and the UK SAF Mandate as, for example, the sustainability criteria under each are different and the UK ETS does not allow airlines to claim for forms of SAF that are not biofuels. The UK ETS Authority has not said how or when this will be done. With one (the UK SAF Mandate) being an obligation on fuel suppliers and the other (the UK ETS) being an obligation on airlines, it is possible that any misalignment will cause disagreements when negotiating SAF contracts. READ MORE
Related articles
- The Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024 (UK Parliament)
- SAF legislation passes first hurdle in Commons (Biofuels International)
- UK SAF mandate signed into law (Biofuels International)
- How Will the UK’s SAF Mandate Affect the Aviation Industry? (ResourceWise)
- UK parliament approves SAF mandate from 2025 (Argus Media)
- UK SAF Mandate signed into law, government launches Jet Zero Taskforce (Ethanol Producer Magazine)
- UK government signs Sustainable Aviation Fuel mandate (Power Progress)
- A new sustainable aviation fuel mandate: The UK Government’s latest step in supporting the decarbonisation of the UK aviation industry (Norton Rose Fulbright)
Excerpt from Biofuels International: The UK House of Commons has given the green light to the draft Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024.
This was unopposed in the House with support gathered from both sides of the parliamentary divide.
The order was first put before the House earlier in July and it now needs to be approved by the House of Lords before becoming a law.
The SAF mandate will come into force in the new year.
Mike Kane, the Parliamentary Under-Secretary of State for Transport, said: “SAF is one of the most effective ways of starting to decarbonise flights. The SAF mandate will support the decarbonisation of the aviation industry by creating demand for SAF in the UK.”
The UK, which confirmed the mandate in April 2024, said it reached on the target after extensive consultations with the industry. It said the ambitious mandate will see around 1.2 million tonnes of SAF supplied to the UK airline industry each year. READ MORE
Excerpt from ResourceWise: Signed into law on November 18, the mandate will take effect on January 1, 2025. Like similar mandates, SAF blending will progressively increase over the next several years.
Starting in 2025, 2% of the UK's jet fuel must come from sustainable sources. The blending amount will increase to a target of 22% by 2040.
This roadmap includes caps and requirements for a few specific biofuels:
1. Hydroprocessed Esters and Fatty Acids (HEFA)
HEFA’s current supply will likely drive much of the early adoption of SAF in the 2020s. However, that dynamic will change as several other fuels come to market.
The use of feedstocks in HEFA production will not be restricted for the first two years of the UK’s mandate. By 2030, it will be reduced to 71%. By 2040, it will fall to 35%.
This shift over time will slow any overreliance on HEFA while accommodating the current limited supply of other commercially viable SAFs. Over time, advanced SAF production pathways will be developed to scale into increased blending requirements. This will also allow HEFA to supply fuel demand in other sectors like road transport.
2. Power-to-Liquid (PtL)
A separate aspect of the mandate focuses on PtL fuel adoption within SAF blending.
PtL fuels, such as eSAF, are created by converting carbon dioxide and hydrogen into a liquid fuel. The power driving the conversion process also comes from renewable energy such as wind or solar.
Read More: The Growing Role of eSAF in the Aviation Industry
PtL-derived fuel must comprise a minimum of 0.2% of total aviation fuel demand starting in 2028. By 2040, this number must reach 3.5% of total demand.
Another Broad Step in Global SAF Adoption
The UK’s mandate reflects a broader prioritization of UK's SAF sector with a future of rapid growth over the next five to ten years.
Several major producers, like LanzaJet and Nova Pangaea Technologies, have expressed their optimism about the legislation. Governmental provisions with tangible blending requirements will foster innovation and help drive investment.
For instance, strategic caps on feedstocks for the above-mentioned HEFA SAF will drive new innovations and investment into advanced fuels. Pathways through advanced feedstocks like woody biomass will fill in the gaps created from HEFA restrictions. This will ensure more balance inside and out of the SAF biofuels sector.
To further incentivize investment, the legislation has also introduced a revenue certainty mechanism set for 2026. The system will offer buy-out options within a price range of £4.70 to £5.00 ($5.99 to $6.37) per liter. Doing so aims to attract critical funding for a sector still in its early stages.
The system will ease some of the financial risk for new SAF plants being developed. Industry leaders have emphasized that this support is essential for positioning the UK as a global frontrunner in SAF production.
Mandate Also Aims to Enhance Collaboration Among Airlines
Alongside the SAF mandate, the UK government is also revamping its strategy for advancing greener air travel by launching the Jet Zero Taskforce. This new body replaces the Jet Zero Council, which last convened in April 2024 after nearly four years of deliberations.
The taskforce aims to improve decision-making on aviation’s carbon transition while broadening its focus. This new structure includes representatives from organizations across the sector:
- CEOs of Airlines, including Virgin and easyJet
- SAF Producers
- Airport Representatives
- Key Trade Bodies
- Academics
The group will focus on supporting SAF and zero-emissions fuel production, improving aviation systems to boost efficiency, and addressing aviation's wider environmental impact. Ensuring continuity and avoiding delays will be essential for the taskforce to achieve its objectives.
Upcoming Mandate a Clear Signal for the Future
Challenges undoubtedly remain in ironing out the SAF transition. Nevertheless, the UK's mandate sends a clear signal of intent.
At the heart of this change is a cooperative movement toward achieving sustainability goals. The new taskforce's expanded scope also recognizes the need for holistic solutions that address the environmental impact of aviation beyond carbon emissions alone.
With clear targets, financial incentives, and the aforementioned taskforce, the UK has made clear its intention for a renewable future in aviation.
Learn More About SAF Market with On-Demand Webinar
The SAF landscape is changing very quickly. To help you keep up, check out our on-demand webinar from ResourceWise’s VP of Low-Carbon Fuels, Matthew Stone:
On-Demand Webinar: SAF Market Prepares for 2025 Takeoff
Key Discussion Topics
- State of the SAF Market and Its Future
- Projections on How Global Market Will Move
- The Role of SAF Mandates
- Regional Supply and Demand Dynamics
- Production Pathways on Future Fuels
- Pricing Assessment as the Market Expands
Get the critical information you need to better understand the SAF Market—all in one convenient webinar. View the webinar today. READ MORE
Excerpt from Norton Rose Fulbright: In this article we look at how the UK SAF Mandate will work and the options for a revenue certainty mechanism being consulted on, and how they might impact the UK aviation industry.
Content
- Background
- How does the UK SAF Mandate work?
- How the compliance year works
- Use of tradeable Certificates
- Buy-out mechanism
- Tankering
- Consultation on revenue certainty mechanism
- Guaranteed strike price (GSP)
- Buyer of last resort (BOLR)
- Mandate auto-ratchet (MAR)
- Mandate floor price (MFP)
- Future developments
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