Policy Overview
The Department for Transport has launched a detailed consultation on the Aviation Fuel Supplier Levy, the mechanism that will finance revenue certainty contracts for producers of sustainable aviation fuel, or SAF. The proposal follows earlier commitments to a strike price framework designed to bridge the gap between production costs and prevailing jet fuel prices.
How the Levy Works
Every supplier that delivers more than four hundred sixty eight thousand litres of fossil jet fuel into the United Kingdom market would pay into the fund according to its verified volume share. Collected revenues will cover payments to SAF plants administrative expenses and a liquidity reserve. While suppliers may choose to pass costs forward, government modelling suggests that any resulting fare increase would be smaller than normal annual ticket price fluctuations.
Risk Management Features
Two safety nets are under consideration to prevent payment shortfalls. Credit cover would require each supplier to lodge collateral or insurance. Mutualisation would distribute outstanding obligations proportionally across remaining participants if a contributor defaults. These tools aim to maintain uninterrupted cash flow to SAF projects, a prerequisite for attracting long term capital.
Non-Obvious Insight
Because the levy is tied to fossil fuel volume not passenger numbers, airlines that adopt higher SAF blends earlier could effectively lower their per seat contribution to the scheme. This subtle incentive nudges carriers toward voluntary uptake before mandate deadlines, accelerating demand growth without additional regulation.
Timeline and Next Steps
The consultation closes on 8 January 2026, after which draft secondary legislation will be prepared. Authorities target full regulatory approval by late 2026, aligning with financial close schedules for several next generation alcohol to jet and gasification projects already in advanced engineering.
Conclusion
By offering revenue streams to innovators while distributing costs across the supply chain, the United Kingdom is positioning itself as a competitive hub for advanced SAF production and the jobs that accompany it.