The UK government has initiated a public consultation on a proposed revenue certainty mechanism for Sustainable Aviation Fuel (SAF), signaling a significant step towards decarbonizing the aviation sector and achieving the nation's 2050 net-zero targets. The scheme is intended to work in tandem with the recently implemented SAF mandate, which requires airlines to use increasing percentages of SAF in their fuel mix.

At the heart of the consultation is the government’s proposal for an industry-funded revenue certainty mechanism, primarily through a variable levy on aviation fuel suppliers. This approach aligns with the "polluter pays" principle, ensuring that those benefiting from fossil fuel usage contribute to the transition towards cleaner alternatives. The government argues that this levy will not only reduce financial risks for emerging SAF producers but also distribute the costs across the supply chain, while mitigating significant price hikes for consumers.

The public consultation, which runs until March 31, invites stakeholders to provide feedback on the proposed funding mechanism and to offer insights on additional funding and design considerations. The government is particularly interested in gathering evidence and industry knowledge to refine the legislative provisions of the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill, which is expected to be introduced soon.

The revenue certainty mechanism aims to address the inherent financial uncertainties faced by SAF producers. By providing a stable revenue stream, the government hopes to incentivize investment and accelerate the development of domestic SAF production capabilities. This is deemed crucial, as SAF is projected to deliver approximately 70% greenhouse gas emissions savings on a lifecycle basis compared to traditional jet fuel and can be used in current aircraft technology.

According to the Department for Transport (DfT), the proposed mechanism is designed to function as an "insurance mechanism," particularly in the early stages of SAF production. The analysis suggests that the required funding may be relatively modest, with the levy adjusting to reflect market dynamics and the evolving price of UK-supplied non-HEFA SAF.

The consultation document outlines the government’s preferred approach, emphasizing the need for a variable levy on aviation fuel suppliers. The DfT has stressed its commitment to working closely with the industry on the detailed design of the levy, including the calculation of individual contributions, collection, enforcement, and the determination of obligated fuel suppliers.

The implementation of the revenue certainty mechanism is a critical component of the UK’s broader strategy to establish itself as a clean energy superpower. It complements the existing SAF mandate, which requires SAF to account for at least 2% of jet fuel in flights departing from the UK in 2025, increasing to 10% by 2030 and 22% by 2040.