T&E calls on the Government to hold firm on the SAF Mandate
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Transport and Environment (T&E) have submitted their response to the UK Government’s call for evidence on SAF supply and industry certainty this week. It urges the Government to maintain its ambition and hold firm on the HEFA cap and the PtL sub-target, otherwise risk future UK SAF projects being severely undermined.
The response sets out that making changes to either the HEFA cap or the PtL sub-target, only a year and half into the scheme, would derail progress made in commercialising SAF - particularly fuels made domestically.
At present, offtake agreements between advanced SAF suppliers and airlines are being reached across the globe based on the existing conditions of the SAF Mandate. To change these features now, before we have seen any meaningful evidence that there will be significant supply challenges, could lead to considerable financial implications for advanced fuel suppliers both in the UK and globally.
The global supply of non-HEFA SAF is promising and is expected to considerably outstrip UK demand. Crucially, the UK is in a very strong position to access these fuels due in part to the specific design of the HEFA cap and the PtL sub-target. Changing either of these features would weaken the current advantageous UK demand signal and lead to less future supply, not more.
By changing these signals, we also open the UK up to potential overreliance on HEFA SAF, which is a limited and more inefficient feedstock in the longer term. According to T&E’s 2024 study, used cooking oil biofuels account for over one third of European biofuel consumption and Europe burns through 130,000 barrels of used cooking oil a day - eight times more than it collects. This means that there is no potential to further increase use for aviation.
Instead of rowing back on policy and weakening the UK SAF industry, the Government has an opportunity to re-stamp its commitment to the SAF Mandate, creating local jobs, economic growth, and a clear signal to investors that the UK is supporting SAF.
To further support the domestic SAF industry, T&E recommends that the Government take the following steps:
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1
Provide ringfenced funding for e-SAF producers under the RCM - The lack of ringfenced support for e-SAF forces nascent projects to compete with cheaper, carbon-intensive alternatives for RCM contracts, making early wins impossible. Given the need for long-term investment and de-risking, the Government should reverse this position to ensure the business case for domestic e-SAF projects remains viable.
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2
Speed up the RCM contract allocation process, with contracts being allocated in Q2 of 2028 rather than Q4 2028. The current timeline to get plants commissioned and produced in time to meet government targets is highly pressurised.
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3
Allow e-SAF producers to use the Hydrogen Business Model to reduce green hydrogen costs - e-SAF production relies heavily on green hydrogen as a primary feedstock, which remains a considerable cost challenge in early stage production. Without financial mechanisms to bridge the gap, developers are facing economic barriers that are slowing down the path to FID.
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4
Ensure that crop-based biofuels are kept out of the SAF Mandate to protect the environmental principles of the scheme and limit further market pressures on e-SAF production.
