Thursday 27 June 2024

London Chamber of Commerce and Industry (LCCI) has responded to the Department for Transport (DfT)’s consultation on designing a revenue certainty mechanism for sustainable aviation fuels (SAF). LCCI welcomes DfT’s consultation and calls for the immediate introduction of the guaranteed strike price to aid the growth of the UK’s SAF industry.

London’s air connectivity is crucial to businesses operating in all parts of the UK economy, particularly in the tourism and logistics sectors. LCCI supports the government’s efforts to establish the UK as a global leader in SAF production by 2030, and looks forward to working with the DfT to champion a growing industry which will play an important role in sustainably future proofing the aviation sector by providing net zero and reusable fuels for air travel.

In September 2023, LCCI published its Green Skies report, which outlines the significant contributions of the aviation sector to the UK economy, and the need to support the industry in its efforts to decarbonise. This paper called on the Government to introduce a Contracts for Difference scheme to crowd investment into SAF, and develop a domestic SAF industry capable of supporting up to 10,000 jobs by 2030 via a revenue certainty mechanism.

LCCI sees this mechanism as an essential step to meet the target set out in the Government’s SAF mandate for 10% SAF on all flights by 2030. As outlined in our response to the DfT, we welcome their plans for this in the form of a guaranteed strike price (GSP) mechanism, which would protect the cost of investment in SAF and prevent high costs for air travellers as the technology to develop SAF develops.

The government is currently proposing that the GSP will come into force in 2026, which would undermine domestic SAF investment and production in the meantime. LCCI urge the DfT to accelerate the plans as without a quick introduction of the mechanism the government is likely to miss its target of building five domestic SAF plants by 2025 and the UK will fall behind its peers in Europe and the United States in creating the domestic production for 10% SAF on flights by 2030.

Rather than waiting to consult further on the design of the chosen revenue certainty mechanism before legislating, as is currently the DfT’s plan, LCCI and its members are calling for the next government to begin preparing the legislation to introduce a guaranteed strike price mechanism for SAF as soon as the decision is made on which scheme is to be taken forward, to allow SAF production and use of SAF fuels to be quickly rolled out across the aviation sector. Alongside this, LCCI encourages the government to consider providing bridging finance to UK SAF plants so they can begin production and prove capacity to grow to future investors.

Karim Fatehi MBE, CEO of London Chamber of Commerce and Industry (LCCI) said: “We welcome the government’s decision to introduce a revenue certainty for SAF. With SAF, the UK has a significant opportunity to grow our aviation sector while at the same time supporting its efforts to decarbonise. We call upon the government to not delay its implementation which will be vital if the UK is to establish a competitive edge over the European Union and United States. We look forward to working closely with DfT on the development of the revenue certainty mechanism, and in building a UK SAF industry in the years ahead.”

ENDS

Notes to Editors

You can read the full LCCI's letter to the Department for Transport.

LCCI’s Green Skies report, which outlined the role that the aviation sector can play in supporting and enabling the use of SAF, was released last year.