Urgent action is needed to stop the UK falling behind its European and American counterparts in the development of critical green technologies, London airports and business groups have warned.
The aviation sector is banking heavily on so-called sustainable aviation fuels (SAFs), made from food waste such as cooking oil, to hit a looming 2040 goal of net zero emissions.
But a report from the London Chamber of Commerce and Industry (LCCI), shared exclusively with City A.M. and backed by London hubs including Heathrow, Gatwick and London City, warns that decarbonisation targets will be missed without speedier development of the domestic supply base.
“Progress towards developing sustainable fuels needs to move at a much greater pace,” the report says, arguing that “urgent action is needed to realise the benefits of developing a domestic SAF industry and prevent the UK from being left behind”.
Investing in the technology would provide £1.8bn in GVA — gross value added, a measure of economic productivity — to the UK, while supporting more than 10,000 jobs by 2030, the LCCI’s research shows.
However, President Joe Biden’s Inflation Reduction Act (IRA) and the EU’s “Fit for 55” policy, which offer generous subsidies for green tech, are “attracting investment in SAF at the expense of the UK” and will result in far greater reliance on imports in the future.
In its “Jet Zero” strategy, the government committed to supporting five SAF plants in the UK by 2025 but these are yet to materialise. Meanwhile, subsidies in the US have resulted in plants being “rapidly developed”.
Investment manager Summit Agricultural Group is planning to build the world’s largest ethanol-based SAF plant on the US Gulf Coast, crediting Biden’s IRA as the “catalyst” for the project.
The EU is also making billions of euros available to invest in SAF, while providing free allowances under its Emissions Trading System for airlines that purchase the fuel.
To scale up lagging domestic production and avoid overseas dependence, the aviation industry is calling for a price stability mechanism that would allow government to underwrite the price of SAF, as it does with offshore wind.
Matt Gorman, director of carbon strategy at Heathrow, told City A.M. that the industry is “acting and investing to deliver net zero, but this opportunity is at risk without action from the government too”.
Gorman said that a carbon neutral aviation sector is possible. “But this requires urgent action, by Heathrow, by the aviation sector and by the government,” he said.
“We look forward to working further with government to implement a price support mechanism for SAF to help meet the clear Jet Zero Strategy commitment of having at least five UK SAF plants under construction by 2025, he added.
The LCCI’s report will be formally released on 7 September.
The Department for Transport was approached for comment.