Sustainable Aviation Fuel Bill 2024-25

The Sustainable Aviation Fuel Bill 2024-25 was introduced to the House of Commons on 14 May 2025. The bill extends to the whole of the UK.

The bill would introduce powers to enable a ‘revenue certainty mechanism’ (see below) to support sustainable aviation fuel production in the UK.

The explanatory notes to the bill (PDF) provide background and further information on each clause.

The Commons Library research briefing Aviation and climate change (March 2025) provides background information about aviation emissions, options for decarbonising aviation and sustainable aviation fuel.

What is sustainable aviation fuel (SAF)?

Sustainable aviation fuel (SAF) is a broad term for lower-carbon alternatives to conventional aviation kerosene.

Different types of SAF broadly fall into three groups:

• First generation SAFs are made from hydrogenated esters and fatty acids (HEFA), developed from oils or fats, such as used cooking oil.
• Second generation SAFs are made from waste feedstocks including municipal solid waste (such as black bin bag waste).
• Third generation SAF (also known as e-SAF, synthetic fuels, or “power-to-liquid” aviation fuel) refers to fuels made using low-carbon electricity. Liquid fuels are produced by combining green hydrogen (produced by electrolysis of water powered by renewable electricity) and carbon monoxide (which can be produced from captured carbon dioxide, or CO₂). This type of fuel is in an early stage of development.

Why is revenue support required?

The government already supports demand for SAF through the SAF mandate, which is a legal requirement to blend a minimum proportion of SAF into aviation fuel. 2% of the total aviation fuel mix must be SAF in 2025, rising to 10% in 2030 and 22% in 2040.

While the mandate requirement supports demand for SAF, SAF supply in the UK is limited. SAF production carries high risks and requires high capital investment. The aviation industry says it would be difficult to meet the SAF mandate targets without support for investment in SAF production. SAF supply is limited globally and there is competition to establish a SAF production industry.

A revenue certainty mechanism would guarantee a fixed price for SAF over a defined period, to give investors in SAF production confidence in future income. It would be funded by industry. This means that costs of the scheme could be passed onto air passengers or absorbed by airlines.

How would the revenue certainty mechanism work?

Steps to establish the revenue certainty mechanism were initiated by the previous government, which launched the first consultation on options for the design of the mechanism in 2024.

The bill would establish a guaranteed ‘strike price’ mechanism. A government-owned company (the counterparty) would enter into a contract with a SAF producer for a defined period. The contract would set a price (the strike price) that the producer would receive when it sells SAF. When the producer sells SAF:

• if the market price was lower than the agreed ‘strike price’ the producer would be paid the difference up to the strike price
• if the market price was higher than the strike price, the producer would pay the additional revenue back into the scheme

This structure is similar to the Contracts for Difference scheme that supports low-carbon electricity generation.

SAF producers would bid for a limited number of contracts that would be issued in rounds. The government has said that the first round of revenue certainty mechanism contracts will be offered for UK projects producing second or third generation SAF (that is, non-HEFA derived fuel).

The government intends for all the required legislation for the revenue certainty mechanism, including secondary legislation made under this act, to be in place by the end of 2026.

The bill

The bill would introduce powers to enable the Secretary of State to designate a government-owned company as the counterparty, and to direct the counterparty to enter into revenue certainty contracts.

The bill would enable the Secretary of State to impose a levy on aviation fuel suppliers to fund the revenue certainty mechanism, and to impose fines for suppliers that fail to pay the levy.

The bill would allow revenue certainty contracts over a 10-year time frame. The time frame could be extended by regulations.

Stakeholder reaction

The government said the bill would “increase homegrown sustainable aviation fuel” and create a new “world leading” market in the UK. It said the revenue certainty mechanism would “boost jobs across the country” and support plans for airport expansion.

Aviation industry stakeholders have reacted positively to the bill in general, as the industry has been calling for a revenue certainty mechanism for SAF to be established for some time. Airlines UK said it was a “welcome announcement” and that it looked forward to working with government to design a “competitive and transparent bidding process” for SAF contracts that supports consumers.

However, some industry stakeholders, such as the International Air Transport Association, the trade association for most of the world’s airlines, had been calling for a different (non-levy) funding option, such as using the aviation industry’s contributions to the UK Emissions Trading Scheme, arguing this would support lower costs for air travellers.

Some climate action groups have said hydroprocessed esters and fatty acids (HEFA)-derived SAF should be excluded from support because HEFA-based SAF is already commercially available and has higher life-cycle emissions.