{"id":4217,"date":"2023-04-12T16:14:42","date_gmt":"2023-04-12T15:14:42","guid":{"rendered":"https:\/\/www.greenairnews.com\/?p=4217"},"modified":"2023-07-07T09:52:04","modified_gmt":"2023-07-07T08:52:04","slug":"uk-opens-new-round-of-funding-for-saf-plants-and-consultation-on-blending-mandate","status":"publish","type":"post","link":"https:\/\/www.greenairnews.com\/?p=4217","title":{"rendered":"UK opens new round of funding for SAF plants and consultation on blending mandate"},"content":{"rendered":"\n<p><strong>The United Kingdom government has opened the second application round of its \u00a3165 million ($205m) Advanced Fuels Fund that provides financial support for the construction of sustainable aviation fuel plants in the country. The grant funding is to be provided to first-of-a-kind commercial and demonstration scale projects at all development stages up to the start of construction. In the first round, five projects \u2013 Alfanar Energy (Lighthouse Green Fuels), LanzaTech UK (DRAGON), Fulcrum BioEnergy (NorthPoint) and Velocys (Altalto and e-Alto) \u2013 received funding totalling \u00a382.3 million. The government is aiming to have five plants under construction by 2025 to help meet its proposed 10% mandate for SAF use by 2030. It has also launched a second consultation on the mandate, running until June 22, which sets out how the mandate will deliver carbon savings, provide incentives to SAF producers and encourage potential SAF investors. The government has also confirmed the University of Sheffield will deliver the first UK Clearing House to support the testing and certification of new SAF.<\/strong><\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Announcing the moves, Aviation Minister Baroness Vere said: \u201cThis renewed support for sustainable aviation fuel is another step towards making Jet Zero a reality. Developing a UK SAF industry will not only put the country at the heart of green aviation worldwide, but also boost investment, jobs and fuel security in the UK.\u201d<\/p>\n\n\n\n<p>The government points to research indicating that by 2035, the UK SAF sector could generate a gross value added (GVA) of up to \u00a3742 million ($924m) annually and support up to 5,200 jobs, with a potential of a further 13,600 jobs from the growing SAF market through global exports. In addition, UK manufactured fuels could deliver a \u00a3550 million ($680m) per year benefit to the nation\u2019s balance of payments and increase fuel security.<\/p>\n\n\n\n<p>Selected projects in the <a href=\"https:\/\/www.ricardo.com\/en\/news-and-insights\/campaigns\/aff\" target=\"_blank\" rel=\"noreferrer noopener\">Advanced Fuels Fund<\/a> competition, which is being delivered with the support of Ricardo and E4Tech, are required to demonstrate their potential to produce SAF capable of reducing emissions by more than 70% on a lifecycle basis when used in place of conventional fossil jet fuel. As part of support for a diverse range of technologies that utilise a range of sustainable feedstocks, the fund will reserve a new \u2018sub-pot\u2019 of funding for the second window to support projects that use CO2 \u2013 either point source or direct air capture \u2013 as their main carbon source in fuel production. Projects that rely on crop feedstocks or used cooking oil are excluded from the competition. Announcement of the winners and start of the funding period for the second window is expected in September this year.<\/p>\n\n\n\n<p>The purpose of the new <a href=\"https:\/\/www.gov.uk\/government\/consultations\/pathway-to-net-zero-aviation-developing-the-uk-sustainable-aviation-fuel-mandate\" target=\"_blank\" rel=\"noreferrer noopener\">SAF Mandate consultation<\/a> is to seek views on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Overarching targets to be set for 2030 and beyond;<\/li>\n\n\n\n<li>Targets to supply power-to-liquid fuels and a cap on HEFA pathway fuels;<\/li>\n\n\n\n<li>A potential buy-out price, which determines the maximum incentive for supplying SAF;<\/li>\n\n\n\n<li>Eligible fuels and sustainability criteria;<\/li>\n\n\n\n<li>Design of the scheme including who the obligation applies to and how certificates will be issued, traded and used for compliance, and how the obligation will be discharged;<\/li>\n\n\n\n<li>The administrator and enforcement of the scheme; and<\/li>\n\n\n\n<li>Interactions with other domestic and international policymakers.<\/li>\n<\/ul>\n\n\n\n<p>The UK\u2019s commitment to net zero by 2050 requires a rapid decarbonisation of the economy, namely a 68% reduction in GHG emissions by 2030 and a 75% reduction by 2035 from 1990 levels, including international aviation and shipping emissions. Given the level of uncertainty surrounding alternative solutions to decarbonising aviation, SAF is seen as one of the key levers in the transition, along with the co-benefit it brings in reducing sulphur dioxide and particulate matter emissions, and potentially other non-CO2 impacts, including contrails.<\/p>\n\n\n\n<p>The government says the long-term obligation provided by a SAF mandate can generate demand for SAF, provide an incentive to SAF producers (in the form of&nbsp; tradeable credit) and signal to investors the vital role the technology will play in the UK. It recognises that SAF production relies on technology that is yet to be proven at scale, leading to high initial capital and operating costs and uncertainty on return on investment.<\/p>\n\n\n\n<p>\u201cWithout a long-term regulatory and policy framework in place to support industry and provide certainty, these factors act as barriers to an investable proposition for technology developers and investors. Consequently, production capacity will continue to be limited in the UK,\u201d it acknowledges. \u201cA SAF blending mandate will guarantee a level of SAF demand that provides more certainty to investors, and as a result will increase production level and drive emissions reductions. Early intervention and support in this market will drive the industry to move faster than it otherwise would.\u201d<\/p>\n\n\n\n<p>In the absence of an obligation on SAF, supply in the UK is assumed by the Department for Transport (DfT) in its <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/1147351\/uk-sustainable-aviation-fuel-mandate-consultation-stage-cost-benefit-analysis.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Cost Benefit Analysis<\/a> accompanying the consultation to be low, given the lack of demand certainty, apart from some incentive provided by the UK ETS and CORSIA for airlines to use SAF. Uptake on a business-as-usual basis is assumed to reach 2% of jet fuel demand by 2030 and 10% by 2050.<\/p>\n\n\n\n<p>Under the DfT\u2019s central trajectory to 2040 (of three possible ambition options \u2013 low, central and high), the level of the mandate, as a proportion of UK aviation fuel use, begins at 2% in 2025, rising linearly to 10% in 2030. From there, it increases to 22% in 2040, on track for a 2050 ambition of 50%, in line with the \u2018high ambition\u2019 scenario from the government\u2019s Jet Zero Strategy.<\/p>\n\n\n\n<p>However, says the DfT, there are \u201csubstantial risks\u201d around all of the considered options if there are insufficient feedstocks available to produce the required SAF, either domestically or via imports. \u201cIn all three trajectories, we do not expect all SAF claimed under the mandate to be produced domestically,\u201d it says, noting that the UK currently imports 61% of its jet fuel.<\/p>\n\n\n\n<p>The SAF mandate will place an obligation on suppliers of aviation fuel to demonstrate that a given proportion of fuel supplied is SAF, in line with the trajectories. Suppliers will receive credits for each tonne of SAF supplied, which will vary based on the GHG abatement each fuel provides relative to a baseline abatement of 70% compared to standard jet kerosene. Suppliers can meet their obligation in three ways:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The obligation can be met entirely through the supply of SAF.<\/li>\n\n\n\n<li>Fuel suppliers who exceed their obligation can sell excess credits to those suppliers who do not meet their obligation.<\/li>\n\n\n\n<li>Suppliers can buy out of their obligation by paying a fixed sum per credit of fuel not supplied.<\/li>\n<\/ul>\n\n\n\n<p>The buy-out price is proposed as a core part of the mandate policy, to incentivise compliance with the mandate whilst also serving as a price cap on the cost to industry and consumers where the supply of SAF is not possible or too costly. Setting the buy-out price at the correct level is critical to ensure compliance with the mandate, says the DfT. If set too low then suppliers may choose to buy out instead of supplying SAF but if too high, any supplier unable to meet their obligation through the supply of SAF will face a large cost burden that in turn would place an undue financial strain on industry and, by extension, consumers.<\/p>\n\n\n\n<p>The buy-out price can be calculated, says the DfT, as the cost per credit of the most expensive SAF pathway less the cost to supply kerosene. \u201cUsing the most expensive fuel pathway will ensure SAF fuel suppliers will be fully incentivised to meet the obligation,\u201d it says, and is suggesting a buy-out price of \u00a32\/litre, or \u00a32,657 per tonne.<\/p>\n\n\n\n<p>A separate mandate for power-to-liquid (PtL) fuels requires a separate buy-out price and as they are a more costly fuel type, a higher buy-out price is needed, with the DfT proposing a central buy-out price of \u00a32.75\/litre, or \u00a33,525 per tonne.<\/p>\n\n\n\n<p>The government proposes that civil penalties be imposed on an obligated supplier or account holder applying for certificates if they fail to meet certain criteria. It is seeking views and supporting analysis on whether a minimum fuel uplift requirement on flights departing a UK airport should be introduced to discourage airlines from taking on extra fuel for inbound flights to avoid having to refuel in the UK for cost reasons, a practice known as tankering.<\/p>\n\n\n\n<p>The DfT expects airlines will pass on at least some of the SAF purchasing costs to consumers in the form of increased ticket prices. The actual ticket price impacts of the SAF mandate policy will depend in part on the options chosen relating to the trajectory, buy-out price, HEFA cap and PtL target.<\/p>\n\n\n\n<p>\u201cAs this consultation does not set out a preferred option on these elements, we are not able to set out central estimates of the ticket price impacts at this stage but hope to do so alongside the government response to the consultation,\u201d says the DfT. \u201cImpact on ticket prices will be an important factor when making decisions about the SAF mandate.\u201d<\/p>\n\n\n\n<p>In the short term, the DfT is expecting SAF production to be heavily focused in the developed nations but in the medium to long term, nations with cheaper access to renewable energy and currently un-utilised feedstocks will be a key part of the international SAF mix and global SAF production will ramp up quickly. Around 8 million litres of SAF were produced and used globally in 2016, compared to 300 million litres in 2022 and an expected 5 billion litres (4 million tonnes) by 2025. The DfT estimates there are currently 41.6 billion litres (33 million tonnes) under offtake agreements, \u201cgiving planned plants higher levels of certainty in the future demand for their product.\u201d<\/p>\n\n\n\n<p>The UK\u2019s first <a href=\"https:\/\/www.sheffield.ac.uk\/news\/first-uk-clearing-house-certifying-new-sustainable-aviation-fuels-launch-university-sheffield\" target=\"_blank\" rel=\"noreferrer noopener\">SAF Clearing House<\/a> is due to open this summer and will be led by the <a href=\"https:\/\/www.sheffield.ac.uk\/energy\" target=\"_blank\" rel=\"noreferrer noopener\">Energy Institute<\/a> at the University of Sheffield. It will be based across the university\u2019s Sustainable Aviation Fuels Innovation Centre (SAF-IC) and Translational Energy Research Centre (TERC), where academics and industry will work together to develop new low and zero-carbon fuels and technologies.<\/p>\n\n\n\n<p>Any new aviation fuel must meet strict specifications before it can be certified as safe for use in aircraft and must undergo stages of testing against a process to meet the required ASTM standard. The cost of this testing is a significant barrier to new fuels entering the market and the Clearing House will give advice to fuel producers on testing, provide assistance with testing facilities and facilitate fuel certification.<\/p>\n\n\n\n<p>\u201cThis significant and much-needed addition to the UK\u2019s decarbonisation landscape will help to reduce barriers to SAF delivery and will take a vital step on the journey to make SAF a viable solution for the future of aviation,\u201d commented Professor Mohamed Pourkashanian, Head of the Energy Institute.<\/p>\n\n\n\n<p>\u201cWith our world-class sustainable aviation fuels research and testing facilities at SAF-IC, as well as the significant amount of sustainable power-to-liquids capabilities at the neighbouring TERC, we are ideally placed to drive forward the much-needed development, testing and delivery of SAF.\u201d<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-vivid-red-color has-text-color\" style=\"font-size:15px\"><strong>Photo: Heathrow Airport<\/strong><\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-blockspare-user-profile blockspare-3ab76351-9d6d-4 blockspare-authorprofile authorbox\" blockspare-animation=\"\"><div class=\"blockspare-section-wrapper\"><style>.blockspare-3ab76351-9d6d-4 .blockspare-author-wrapper{background-color:#fff;padding-top:10px;padding-right:10px;padding-bottom:10px;padding-left:10px;border-radius:0px;margin-top:30px;margin-right:0px;margin-bottom:30px;margin-left:0px}.blockspare-3ab76351-9d6d-4 .blockspare-author-wrapper .blockspare-user-profile-desc{margin-top:0px;margin-right:0px;margin-bottom:5px;margin-left:0px}.blockspare-3ab76351-9d6d-4 .blockspare-block-profile{color:#6d6d6d}.blockspare-3ab76351-9d6d-4 .blockspare-profile-text-description{font-size:0px}.blockspare-3ab76351-9d6d-4 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.blockspare-title{font-size:20px}.blockspare-3ab76351-9d6d-4 .blockspare-section-head-wrap .blockspare-subtitle{font-size:14px}.blockspare-3ab76351-9d6d-4 .blockspare-user-profile-desc{font-size:14px}}<\/style><div class=\"blockspare-author-wrapper blockspare-blocks blockspare-hover-item\"><div class=\"blockspare-layout-center blockspare-block-profile blockspare-profile-columns\"><div class=\"blockspare-profile-column blockspare-profile-avatar-wrap\"><div class=\"blockspare-profile-image-wrap\"><div class=\"wp-block-image is-style-rounded\">\n<figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"2119\" height=\"2120\" src=\"https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square.jpg\" alt=\"\" class=\"wp-image-5852\" style=\"width:120px;height:120px\" srcset=\"https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square.jpg 2119w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-300x300.jpg 300w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-1024x1024.jpg 1024w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-150x150.jpg 150w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-768x768.jpg 768w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-1536x1536.jpg 1536w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-2048x2048.jpg 2048w, https:\/\/www.greenairnews.com\/wp-content\/uploads\/2024\/06\/Christopher-Surgenor-2024-Square-560x560.jpg 560w\" sizes=\"auto, (max-width: 2119px) 100vw, 2119px\" \/><\/figure>\n<\/div><\/div><\/div><div class=\"blockspare-profile-column blockspare-profile-content-wrap\"><div class=\"blockspare-section-header-wrapper blockspare-blocks\"><div class=\"blockspare-section-head-wrap blockspare-style1 blockspare-center\"><div class=\"blockspare-title-wrapper\"><span class=\"blockspare-title-dash blockspare-upper-dash\"><\/span><h2 class=\"blockspare-title\">Christopher Surgenor<\/h2><span class=\"blockspare-title-dash blockspare-lower-dash\"><\/span><\/div><div class=\"blockspare-subtitle-wrapper\"><span class=\"blockspare-title-dash blockspare-upper-dash\"><\/span><p class=\"blockspare-subtitle\">Editor<\/p><span class=\"blockspare-title-dash blockspare-lower-dash\"><\/span><\/div><\/div><\/div><ul class=\"blockspare-social-links blockspare-default-official-color blockspare-social-icon-circle blockspare-social-icon-small blockspare-icon-only blockspare-social-icon-solid blockspare-social-links-horizontal\"><li><a href=\"https:\/\/www.linkedin.com\/in\/christophersurgenor\/\" class=\"bs-social-linkedin\" target=\"_blank\" rel=\"noopener noreferrer\"><span class=\"blockspare-social-icons\"><i class=\"fab fa-linkedin\"><\/i><span class=\"screen-reader-text\">Linkedin<\/span><\/span><\/a><\/li><\/ul><\/div><\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The United Kingdom government has opened the second application round of its \u00a3165 million ($205m)&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1475,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[39,77],"tags":[277,135,122,562,116],"class_list":["post-4217","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sustainable-aviation-fuels","category-uk","tag-alfanar","tag-fulcrum","tag-lanzatech","tag-university-of-sheffield","tag-velocys"],"featured_image_urls":{"full":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",960,640,false],"thumbnail":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes-150x150.jpg",150,150,true],"medium":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes-300x200.jpg",300,200,true],"medium_large":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes-768x512.jpg",640,427,true],"large":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",640,427,false],"1536x1536":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",960,640,false],"2048x2048":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",960,640,false],"newsever-slider-full":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",960,640,false],"newsever-featured":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",960,640,false],"newsever-medium":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes-720x475.jpg",720,475,true],"mailchimp":["https:\/\/www.greenairnews.com\/wp-content\/uploads\/2021\/08\/Heathrow-tail-fins-VA_BA_AA-HiRes.jpg",560,373,false]},"author_info":{"display_name":"Christopher Surgenor","author_link":"https:\/\/www.greenairnews.com\/?author=1"},"category_info":"<a href=\"https:\/\/www.greenairnews.com\/?cat=39\" rel=\"category\">Sustainable Aviation Fuels<\/a> <a href=\"https:\/\/www.greenairnews.com\/?cat=77\" 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