A group of UK airlines and airports has called on the government to ramp up state support for the production of sustainable aviation fuels (SAFs).
“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 group wrote to transport secretary Mark Harper today.
Produced from the likes of solid waste and food scraps, SAFs reduce CO2 by 80 per cent over their life cycle.
They are considered the main tool the aviation industry has to become net-zero by 2050, as the development and adoption of hydrogen and electric planes is still several decades away.
Stakeholders – including Virgin Atlantic, British Airways and Heathrow – said the government should introduce a set price for SAF production as well as establish a “contracts for difference” scheme.
Used to incentivise investment in renewable energy such as wind, contracts for difference protect producers against wholesale prices by having the government pay back the difference if prices are too low.
On the other hand, if wholesale prices exceed the set cap, producers refund the government.
“Without action now, the UK risks losing out to countries in the European Union and the United States which are forging ahead in support of this emerging industry,” the letter – seen by City A.M. – read.
US and EU companies have already scaled up their production, with Finnish supplier Neste already boosting its annual production from 100,000 tonnes today to 1.5 million by the end of next year.
For its part, Washington recently passed a new SAF tax credit, which increased the existing $1 subsidy for green fuel production to between $1.25 and $1.75 per gallon.
A DfT spokesperson said the UK’s SAF programme was “one of the most comprehensive in the world.”
As it currently stands, the government has invested £165m to develop eight production plants by 2025. It also aims to have SAF make 10 per cent of airlines’ fuel consumption by 2030.
The airlines’ remarks echoed those of trade body Airlines UK – which last month said Britain’s net-zero targets could be out of reach with further government funding.
IATA’s director general Willie Walsh said in late September that anything shy of net-zero would be a failure, a few days before countries around the world adopted a zero-emission aspirational goal by 2050.
US supplier World Energy told City A.M. government support gives producers “confidence to take that risk and be leaders in the development of this relatively new industry.”
But according to Neste, government support – whilst fundamental – is not the only factor, as airlines, businesses and individual travellers can all play their part.
“Airlines can help grow the demand for SAF, despite it costing more than fossil jet fuel, by including SAF into their sustainability targets, which more and more airlines have done,” a company spokesperson told City A.M.
“They can also offer SAF to their customers as a solution to reduce the carbon emissions from their air travel, for a supplementary fee, as part of the booking process.”