The UK has set out big plans to scale up sustainable aviation fuel (SAF) but actual construction plans are thin on the ground.

According to the International Energy Agency, there are more than 1 billion litres of capacity in the UK’s SAF project pipeline. But, as of September, no company has reached a final investment decision (FID) on a plant.

The government has set a target of having five SAF plants under construction in 2025.

Much rests on the revenue certainty mechanism (RCM). It featured in the King’s Speech. The SAF mandate will come into force as of January 2025.

This will require 2% of domestic jet fuel demand to be SAF, rising to 10% in 2030 and 22% in 2040.

Where airlines cannot achieve this, they can use a buy-out mechanism. This will cost £4.7 per litre. The aim is to encourage SAF innovation and diversify feedstocks.

Andrew Symes, of OXCCU, described it as a “great step forward”. He went on to say the “final buyout prices and the import rules regarding the use of tax subsidies on the inputs for processes in other countries will be key to ensuring plants get built in the UK”.

A power matter

But there’s certainly scope for more ambition. Liberal Democrat MP Wera Hobhouse said the government’s plans for SAF volumes to reach 22% by 2040 will still require substantial amounts of fossil fuels. “This is just not ambitious enough,” she said.

“A government that is serious about getting to Net Zero cannot shy away from this challenge, however daunting it may be. We must plan for the future now as we cannot get to Net Zero without decarbonising the aviation industry,” Hobhouse said.

“Producing the synthetic fuels needed for SAFs will require enormous amounts of electricity, which we should generate through renewables. But as demand for electricity is expected to double by 2050, scaling up the capacity for renewables must be a priority.”

Symes agreed about the importance of domestic power provision. “Having UK renewable energy prices that are globally competitive is key to Power-To-Liquid (PTL) projects like OXCCU being able to scale.”

At the moment, the UK cannot provide the cheap power that would be required to deliver PTL. This involves the synthesis of CO2 and green hydrogen.

A move to PTL SAF would be a challenge for the UK to meet domestically, Marakon director Johann Franke allowed. “The UK isn’t sufficiently advantaged as a location to have the cheapest power.”

Talking ‘bout my generation

This will become a problem as demand is now growing strongly, after falling in the pandemic.

The UK consumed around 14 billion litres of jet fuel in 2022, with around half of this going to Heathrow. The airport is aiming to reach 11% SAF use by 2030.

SAF is “going to be a huge business. We’re talking billions, possibly hundreds of billions in investment globally to make the transition happen,” Franke said. “And we know it’s a relatively safe bet because hydrogen and batteries to support air travel won’t be the answer in its entirety.”

The scale of the challenge is clear and the government’s plans to role out support. There are still some points of uncertainty, though.

One area is which SAF has the potential to go the furthest. The government appears to favour advanced biofuels, from non-food biomass or waste.

Virgin Atlantic's SAF-fuelled Flight 100 to JFK in 2023. — *Virgin Atlantic’s SAF-fuelled Flight 100 to JFK in 2023*

More ambition

The point is not without its critics. Marakon’s Franke said airlines were concerned about food competition.

“Airlines are not really comfortable with HEFA, they aren’t necessarily that comfortable with anything that smells of food competition,” he said. With rich people dominating the use of flights, the optics of any sort of impact on food security is “an issue they’re not looking to take on in any shape or form”.

Franke pushed for a jump to the next generation of SAF technologies. “The government is proposing that the incentives are equal, so it doesn’t specifically support the currently more expensive tech. We’re not sure that’s the right way to go.”

OXCCU’s Symes agreed. While the SAF mandate is a start, he said, in the longer term, “the UK could be more ambitious around PtL SAF, given its potential, at least matching the EU’s targets for PtL. We also expected to see a larger differential between buyout prices for waste-based and PtL SAF, given that PtL is at an earlier stage of development.”

PTL solves the problem of food competition, but does bring up other challenges. Given their power consumption, large-scale plants will move to cost competitive locations.

I can see for miles

Developing a PTL industry in the UK would need support. “Should the UK be taking a more aggressive stance on SAF to try and capture more of that construction? We don’t think that’s necessarily a bad idea,” said Franke.

Ultimately, PTL plants are likely to converge in locations where power is cheap. But the UK can still capture commercial upside by pioneering technology and skills.

There is work going on in the UK that could capture some of the opportunities around SAF. Franke cited universities developing technologies as able to capitalise on this new interest.

Companies out of universities could ultimately “move to the jurisdictions where the feedstock and the power will be cheaper and available”, Franke said. “But they could be leaders coming out of the UK by globalising. It’s a long bet, but it is a real opportunity in this instance.”

OXCCU is a 2021 spin out from the University of Oxford. Andrew Symes, co-founder and CEO of the company, said UK investors were needed to support domestic technology.

“We have some of the best universities in the world and develop some of the best ideas, but we often lack the capital to scale them into domestic champions, especially when compared to the US,” he said.

“The key to this is encouraging larger-stage funds, pension funds, and insurance companies to back UK growth companies as well as reforming UK public markets to make it attractive to list in the UK. It’s positive that the new government is looking at all this, building on some of the work of the previous government, not least with the Mansion House Compact.”

*OXCCU launching its SAF plans at Oxford Airport*

Tackling demand

There have been various plans around how to support the SAF industry. The Transition Finance Market Review (TFMR) suggested a demand aggregator may work to provide certainty for offtake.

There are risks to linking a single buyer and developer, the TFMR said. Aggregating groups of buyers “provides a clear demand signal for a particular product”, it said.

Such a pooling provides for economies of scale and reduces delivery risk. This could function like an extension of the SAF Clearing House, it said.

Aviation is big business for the UK. Grasping the SAF opportunity would help support the more than 500,000 jobs in the sector. But aviation relies on fossil fuels and there is little prospect of this changing before 2050.

If the UK is serious about aviation, and serious about seizing the net zero growth prospect, SAF must be the way forward.

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