UK Government Proposes Industry-Funded Mechanism to Support Sustainable Aviation Fuel Production
Key Ideas
  • The UK government is launching a consultation on funding a revenue certainty mechanism (RCM) to support Sustainable Aviation Fuel (SAF) producers.
  • The RCM, funded by industry through a levy on jet fuel suppliers, aims to ensure stable income for producers, reduce costs for airlines, and attract big investors.
  • The aviation industry supports the RCM as a tool to drive SAF production, comply with the SAF mandate requiring a 10% mix by 2030, and minimize impact on passengers.
  • The government's preference for an industry-funded approach aligns with the 'polluter pays' principle, with estimated costs being relatively modest and the RCM acting as an insurance mechanism.
The UK government has initiated a consultation on a proposed revenue certainty mechanism (RCM) to support Sustainable Aviation Fuel (SAF) producers in the country. This mechanism, intended to reduce revenue uncertainty risks and ensure a steady income flow for SAF producers, is set to be funded by industry, particularly through a levy on jet fuel suppliers. The RCM is seen as a crucial step to keep costs down for airlines, attract potential large investors, and facilitate growth in the UK SAF industry. It complements the SAF mandate that requires a 10% mix of SAF in all jet fuel by 2030. The government's approach is rooted in the 'polluter pays' principle and aims to have the industry bear the costs of supporting SAF production. The consultation document outlines a funding model involving a variable levy on aviation fuel suppliers, with contributions based on market share. This funding mechanism is anticipated to encourage a competitive market, stimulate additional SAF production, and support the aviation sector's transition to net zero emissions. Industry stakeholders, including the UK airline industry and the Renewable Transport Fuel Association, have expressed support for the RCM, emphasizing the importance of driving SAF production domestically to create jobs, enhance fuel security, and minimize the impact on passengers. The government's proposed funding model aligns with existing schemes for renewable electricity and hydrogen, with the RCM acting as an insurance mechanism against SAF market price fluctuations. The consultation, which runs until the end of March, precedes the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill being laid in Parliament. The proposed legislation aims to have the necessary framework in place by the end of 2026, signaling a concerted effort to facilitate the growth of the UK's SAF industry and advance sustainable practices in the aviation sector.
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