On April 25, 2024, the UK government announced that it had approved a target mandating at least 10% sustainable aviation fuel (SAF) in jet fuel blends by 2030. Sustainable aviation fuel, typically produced from renewable sources like waste oils and agricultural residues, is seen as a crucial tool to help decarbonize the aviation industry in the short to medium term, as fuel constitutes the majority of the aviation sector’s emissions. Producers of sustainable aviation fuel estimate that these fuels can provide up to an 85% reduction in lifecycle greenhouse gas emissions compared to conventional fuels. However, efforts by airlines to increase the use of sustainable aviation fuel face significant challenges, including low supply on the market and much higher prices compared to traditional fossil fuels. Globally, sustainable aviation fuel currently represents less than 0.1% of jet fuel volumes.
The new UK announcement is part of the sustainable aviation fuel mandate, expected to come into force in January 2025, subject to parliamentary approval. This mandate continues the government’s “Jet Zero” strategy launched in 2022, which aims to achieve a net-zero-emissions aviation sector by 2050. This strategy identifies key action areas, including accelerating the supply and demand of sustainable aviation fuels, improving the efficiency of aircraft, airports, and airspace, supporting the development of zero-emission aircraft, and offsetting residual emissions through carbon markets and emission removal technologies.
According to the UK Department for Transport, the government’s targets will supply approximately 1.2 million tonnes of sustainable aviation fuel to the UK airline industry annually. The SAF industry is expected to contribute over £1.8 billion to the economy and create over 10,000 jobs.
The plan includes intermediate and long-term targets such as 2% sustainable aviation fuel in fuel blends by 2025 and 22% by 2040. Additionally, the government aims to manage prices and minimize the impact on passengers’ ticket prices by implementing a review mechanism, ensuring the plan does not result in extra costs to consumers.
In addition to the new mandate, the government announced that it has launched a consultation to explore a series of options for providing sustainable aviation fuel revenue guarantees. The revenue guarantee mechanism is designed to give confidence to sustainable aviation fuel producers and investors to invest in the industry. The consultation aims to explore options such as a predetermined price for sustainable aviation fuel supplied to the UK market or a guaranteed sales price.