Parliament has introduced the Sustainable Aviation Fuel Bill, setting clear blending requirements and, crucially, a Revenue Certainty Mechanism intended to give producers confidence in future income. The schedule begins at two percent SAF in 2025 and climbs steadily to twenty two percent by 2040, providing airlines and refiners a transparent pathway for adoption.
What the Bill Delivers
The mechanism promises that producers will receive a predefined price for each litre of SAF sold in the United Kingdom regardless of volatile crude markets. When market prices fall below the agreed
reference, government support fills the gap. When prices rise above, producers pay back the difference, protecting taxpayers while smoothing cash flow.
How the Mechanism Works
Modeled loosely on the electricity Contracts for Difference scheme, the policy establishes competitive auctions that discover a strike price. Successful bidders then receive long term contracts, enabling project finance lenders to rely on stable revenue projections.
Non-Obvious Insight: Financial Predictability Attracts Pension Funds
Because revenue variability is removed, infrastructure investors such as pension and insurance funds, which traditionally avoid commodity risk, can now participate in SAF projects. Their lower cost of capital can reduce consumer prices more effectively than grants alone.
Wider Economic and Environmental Impact
The bill encourages use of domestic waste based feedstocks, fostering circular economy practices and rural job creation. Early mandates send a positive signal to engineering and construction firms to develop supply chains, while airlines gain confidence that sufficient quantities will be available to meet forthcoming carbon targets.
Conclusion
The Sustainable Aviation Fuel Bill demonstrates how smart policy design aligns environmental goals with economic growth. By pairing blending mandates with dependable revenue, the United Kingdom is laying the foundation for a thriving low carbon aviation sector.