Clear need for the implementation of a SAF mandate by 2025, finds UK consultation

Most respondents to a UK government consultation favour the introduction of a national sustainable aviation fuels mandate to support the development of the nascent SAF industry. The government has proposed the mandate in the form of a GHG emission scheme that prioritises carbon savings rather than SAF volumes. Under the mechanism, jet fuel with a GHG emissions intensity below the target and which reaches proposed eligibility criteria would be awarded a number of credits proportional to the amount of CO2e saved. Jet fuel supplied with an intensity above the target or the SAF does not meet the eligibility criteria would incur an obligation. A clear majority of respondents agreed the proposed mandate should start in 2025, which would align with the start date of the proposed EU SAF mandate, as it would allow sufficient time for the fuel industry to prepare while still recognising the urgent need to decarbonise the aviation sector.

Responses to the government consultation were received from a range of organisations covering airlines, airports, aircraft manufacturers (OEMs), fuel producers and suppliers, trade associations, NGOs and other stakeholders. Most respondents agreed a mandate would generate demand for SAF, stimulate the domestic economy, deliver emissions savings and help increase investor confidence. However, many felt that multiple support mechanisms were required to ramp up production and close the price gap between SAF and traditional kerosene, together with the incentivisation of multiple routes to achieve the UK’s net zero by 2050 target.

A small number of respondents did not agree with a mandate on the grounds that scaling up SAF production too quickly may lead to sustainability issues and also risked competitive market distortions, with some suggesting the focus should instead be on placing a cap on total aviation fuel consumption before any mandate is put in place.

A clear majority of those in favour of a mandate agreed that a GHG emissions scheme based on tradable certificates would be preferable to a fuel volume scheme, as proposed by the EU. The arguments put in favour of such a scheme included that it would incentivise sustainable fuel, be technology agnostic, align with the UK’s decarbonisation goals and other schemes such as the UK ETS and CORSIA, and reduce the need for GHG thresholds and positive-feedstock lists for qualifying fuels. Evidence of this approach being successful is the California Low Carbon Fuels Standard, pointed out some respondents.

The government states the mandate should deliver fuels with the highest sustainability credentials and adhere to strict sustainability criteria. “These will ensure significant GHG emissions savings are delivered and will prevent negative environmental consequences such as loss of biodiversity, deforestation and the clearance of land with high carbon stock (for example, dry peatland) that could be associated with the cultivation of raw materials used in certain SAF production,” it says.

The consultation proposed the following mandatory sustainability criteria:

• Fuels must achieve a minimum GHG emissions saving on a lifecycle basis;
• Fuels must be made from sustainable wastes or residues, recycled carbon fuels (RCFs), renewable fuels of non-biological origin (RFNBOs) or nuclear energy, with SAF produced from food or feed crops being disallowed;
• Waste use must comply with the waste hierarchy;
• Feedstocks, including residues, should not be obtained from land with high biodiversity value or land with high carbon stocks in or after January 2008;
• SAF production must not direct renewable electricity away from existing applications; and
• Where hydrogen is used as a process input, it must be low carbon.

Although there was broad agreement from respondents to the criteria, there were recommendations about each and a number referenced other sustainability frameworks such as RSB, ISCC, CORSIA and ISO 14044:2006 (for nuclear energy use). The inclusion of low carbon hydrogen received the most varied responses, with clarity requested on the definition of “low carbon” and whether it included blue hydrogen. Some NGOs responded that only zero carbon or green hydrogen to be eligible as a process input. A couple of respondents noted the importance of considering non-CO2 impacts, given that some types of SAF have been shown to reduce non-CO2 emissions.

Some respondents, including fuel producers, OEMs and airlines, said setting out a list of eligible feedstocks was premature, prescriptive and unnecessary as it could stifle innovation and investment and result in production going abroad. Rather, they believed, that by introducing robust sustainability criteria and rewarding SAF proportionately to the carbon savings achieved, feedstocks with high carbon intensity would be excluded or disadvantaged in the mandate.

GHG savings threshold

The government proposes that 89 gCO2e/MJ be used as the baseline lifecycle GHG emissions intensity to represent jet fuel under the mandate as this figure is accepted on an international level and represents real world GHG emissions. It anticipates the minimum GHG savings threshold that all SAF would need to meet should be at least 60%. Most respondents agreed with the baseline lifecycle GHG emissions intensity figure but there were differences of opinion on what should be the minimum GHG saving threshold. Many of them indicated that it would be ideal to align the threshold with other domestic or international policies as harmonisation made it easier for SAF producers and airlines to operate under more than one scheme. However, there was no consensus as to which scheme the mandate should be consistent with.

To ensure suppliers are able to calculate GHG emissions savings in an accurate and consistent manner, a SAF mandate requires these savings to be calculated with a prescribed GHG emissions calculation methodology. Many respondents, including fuel producers, airlines and airports, expressed a preference for it to be aligned with an existing methodology to reduce administrative complexity. As well as being embedded into third party sustainability schemes, this would minimise the risk of SAF accounting differences for global airlines or the risk of placing UK SAF producers at a competitive disadvantage, they argued. Some respondents said it should align with CORSIA as it would create a level playing field, given the international nature of the aviation industry, while others stated it should align with the UK’s existing Renewable Transport Fuel Obligation (RTFO) scheme as the UK market was familiar with its methodology and would reduce the administrative burden for suppliers applying for credits under both schemes.

The government acknowledges future market developments or other external circumstances could mean fuel suppliers may not be able to produce sustainable fuel or buy credits, therefore failing to meet their proposed obligation. However, most respondents, from all stakeholder groups, agreed SAF that did not meet the proposed eligibility and sustainability criteria should incur an obligation and were in favour of the introduction of a buy-out mechanism to help jet fuel suppliers discharge their obligation in the absence of sufficient SAF supply. There were multiple views on how the buy-out should be set, whether it should be a temporary or permanent feature and what factors should be considered when defining its price. Many of those in favour of a buy-out advocated for directing the revenue gained from the scheme to support new plant builds and programmes that foster SAF development and supply chains. One respondent said rather than a buy-out, the approach be aligned to proposed EU penalties to ensure consistency with other jurisdictions and avoid the risk that UK suppliers would primarily supply SAF somewhere else and buy out of their obligation in the UK. Many others stated that it was not necessary to introduce any additional penalties if a well-designed buy-out mechanism is implemented.

SAF uptake scenarios

In the consultation, the government put forward a number of scenarios for SAF uptake in the short, medium and long term, including no additional intervention, low ambition, high ambition, fast industry development, late SAF breakthrough and, the most optimistic, early SAF breakthrough. All scenarios for SAF ambition were translated into equivalent GHG emissions reduction trajectories, which represent the target aviation fuel suppliers would need to meet (see graph below). The most optimistic scenario assumes a very high number of plants beginning to develop before 2025, with a very high success rate, and up to 20 large-scale SAF plants already operational by 2030, followed by up to 125 large-scale plants in 2050 supplying around 75% of total UK aviation fuel demand. Beyond 2035, supply across all pathways could increase by around 9% per annum.

Most respondents agreed the targets should assume a linear growth up to 2035 and an exponential growth afterwards, but others said there were too many uncertainties at this stage. During the first decade of policy, deployment is likely to be constrained due to the time lag associated with designing, constructing and ramping up production from facilities using novel and emerging fuel conversion technologies. However, felt a number of respondents, once advanced pathways, such as power-to-liquid, became viable at scale, uptake will be accelerated.

In the initial years, the mandate is likely to be fulfilled using the HEFA pathway, which uses wastes and residues such as used cooking oil. The consultation asked whether the amount of HEFA that could be claimed under the mandate be capped over time and, if so, how the cap could work in practice. Respondents were evenly divided in their views, though there was broad agreement that an excessive reliance on HEFA was detrimental to the environment and feedstock competition for other uses. The main argument in favour of a cap was that it would allow other pathways that have potential for greater feedstock availability and GHG reductions to be developed and stimulate investment.

Many respondents from the aviation and fuel sectors suggested that in order to use the UK ETS, CORSIA and SAF mandate together to incentivise uptake while preventing double counting of emissions reductions, the UK should align with EU, international and domestic policy solutions already in use. Some suggested the creation of a SAF coordination platform similar to the UK’s Jet Zero Council but open to stakeholders globally, working at ICAO to develop a common standard SAF mandate to achieve maximum consistency across borders and the use of a global register of SAF claims to ensure double counting is prevented.

To reduce the risk of tankering, where an airline might avoid the mandate by taking on additional fuel on inbound trips to the UK to cover the outbound trip, many respondents suggested the mandate should align with EU mandate provisions, particularly the uplift provision mentioned in the EU’s Fit for 55 package. This would require a certain proportion of uplifted fuel come from UK airports. A few respondents suggested coordination should happen at an international level to ensure the mandate is compatible with other globally agreed schemes or enforceable mandates.

Most respondents agreed that a more comprehensive policy framework beyond a SAF mandate is required to be build a successful UK SAF sector. While a mandate could provide an important investment signal, many argued additional complementary policies were needed to help scale the industry and lower the current price premium of SAF relative to fossil jet fuel. However, some NGOs said it was difficult to make a strong case for public investment in a risky initiative such as SAF.

A few respondents urged the UK government to quickly set out a comprehensive SAF policy framework, which they argued could strongly signal the direction of travel before a legislative outcome by the end of 2022 at the latest. These respondents expressed confidence that three operating UK SAF plants can be delivered by 2025 but only if progress allows sufficient space for project development, construction and commissioning lead times.

A wide range of commercial and other considerations were identified by respondents that should be considered when designing a SAF policy framework, with many encouraging the UK government to emulate the whole of government approach being taken in the United States, which includes a performance-based SAF credit and SAF funding opportunities, including grants and loan guarantees, as well as other federal and state incentives applicable to SAF.

Most respondents identified Contracts for Difference (CfDs) or other price support mechanisms as being essential. A CfD scheme, which has proved a success in the UK offshore wind sector, would provide a fund that enabled the SAF price gap with fossil kerosene to be closed and make it commercially viable for airlines. Under the model, SAF producers would bid for funding to close the price gap compared to a market reference price. A few respondents said the funding could come through the hypothecation of revenues from the UK ETS. Government loans or guarantees were also seen as another essential element of an effective policy framework. Many others recommended long-term support for a UK SAF clearing house as it would lower barriers to entry for new producers in that they would no longer have to send their fuel to the US for testing and certification. Clearing house funding to support early-stage developers would attract many more fuel developers to the UK and help anchor new investment, they said.

The consultation also received responses on other issues connected with a SAF mandate including a chain of custody system, reporting and verification, compliance, publicly available data and the relationship of the mandate with the RTFO.

Photo: An Eastern Airways ATR 72-600 turboprop aircraft fuelled with sustainable aviation fuel supplied by Air bp