Britain will struggle to create an industry producing sustainable aviation fuel unless the government provides regular subsidies to manufacturers, leading airlines and airports have warned.
The government has set a 2050 “Jet Zero” target for the airline industry to eliminate net carbon emissions, mainly through the use of green fuel produced by household waste such as cooking oil, known as “SAF”.
The government has promised £165mn as seed capital to encourage manufacturers to open at least five plants producing the new fuel and hopes they will be under construction by 2025. It has also set a target under which 10 per cent of aviation fuel must be SAF by 2030.
But leading airports and airlines, including Heathrow, Gatwick, Manchester Airports Group, Virgin Atlantic and British Airways have written to Mark Harper, the new transport secretary, calling for more state intervention to get the fledgling industry off the ground.
The letter, seen by the Financial Times, is also signed by some of the manufacturers with plans for SAF plants in the UK, including Fulcrum, Velocys and Alfanar.
“We believe UK SAF production has the chance to become a domestic success story, but the government needs to act now to ensure manufacturers get the price certainty needed to unlock private investment into this sector,” the groups wrote.
They want the government to create “contracts for difference” (CFDs) to agree a set price for SAF, similar to those the state has used to underwrite nuclear and offshore wind projects.
Under CFDs, when wholesale prices exceed a fixed level producers pay back the difference to the government. When the market rate is below the fixed price, the government tops up the difference.
The letter warns that without this kind of regular subsidy, investors will go elsewhere and airlines will end up importing sustainable fuel from the EU or US.
“To stimulate billions of pounds of investment in UK industry requires targeted action and further direction must be taken to share the current investor risk profile that is a barrier to capital investment in UK production,” the letter says. “The only question is do we make our own SAF, creating jobs and growth for the UK, or do we import it from other countries?”
Flying is one of the hardest industries to decarbonise and technologies such as electricity- or hydrogen-powered aircraft are years away from being able to make long-distance flights.
Aviation accounts for about 2 per cent of global CO₂ emissions and the International Air Transport Association’s (Iata) net zero 2050 target relies heavily on changing fuel mixes to achieve most of its planned reduction in greenhouse gas emissions.
Other countries, including Indonesia, have sought to produce aviation fuel from crops such as palm oil or soyabean oil, prompting concern from environmentalists.
A spokesperson for the Department for Transport said the UK government already had a SAF programme which was one of the most comprehensive in the world.
“We’ve already invested in eight SAF plants, [we] now have a further £165mn available through our Advanced Fuel Fund, and are creating demand by mandating that 10 per cent of jet fuel comes from SAF by 2030,” the spokesperson said.
“This is providing investors with reassurance while helping to deliver our ambition of having five commercial SAF plants under construction in the UK by 2025.”
