Imagine a future where airplanes no longer emit thick black smoke, but instead soar through the skies using a near-zero-carbon fuel. This isn't science fiction—it's the vision that Sustainable Aviation Fuel (SAF) is striving to achieve. The UK is ambitiously advancing a world-first policy to incentivize domestic SAF production. However, the path to large-scale SAF production is proving far from smooth.
SAF: Aviation's "Green Savior" Faces Adoption Challenges
The aviation industry faces immense pressure to reduce emissions, with SAF seen as crucial to achieving 2050 net-zero targets. The International Air Transport Association (IATA) estimates SAF could contribute up to 65% of emission reductions. Yet SAF adoption lags significantly behind expectations. Why?
- High costs: Building SAF production facilities requires massive investment, deterring many potential investors.
- Price opacity: SAF prices fluctuate widely with little transparency, making cost assessment difficult for airlines.
- Policy delays: While European governments have implemented SAF usage mandates, corresponding production incentives haven't kept pace.
The U.S. has aggressively promoted SAF development through tax credits and other incentives. By contrast, the UK currently has just one commercial-scale SAF production facility, along with some test facilities planned for expansion within five years. Global SAF production reached 1 million metric tons (1.3 billion liters) in 2024—double 2023's output—but this represents just 0.3% of global aviation fuel and 11% of renewable fuels worldwide.
UK's Revenue Certainty Mechanism: Solution or Burden?
To address SAF production bottlenecks, the UK government proposed a Revenue Certainty Mechanism (RCM) guaranteeing producers a minimum income level to reduce investment risk and attract funding. Similar mechanisms successfully boosted the UK's offshore wind industry.
However, RCM funding sources have sparked controversy. The government plans to make the aviation industry (primarily airlines) bear RCM costs—adding financial pressure to carriers already struggling with high SAF prices.
Airlines' Dilemma: Paying Premium for Green Flights
Under current SAF mandates, European airlines must use SAF priced 3-5 times higher than conventional jet fuel—far exceeding policymakers' initial projections. This suggests suppliers are passing mandate costs directly to airlines, creating a significant gap between market prices and what carriers actually pay, ultimately harming both airlines and consumers.
Fuel typically comprises one-third of airline operating costs. UK carriers face additional pressures including air passenger taxes, higher airport fees, business taxes, and emissions costs under the UK Emissions Trading Scheme (ETS).
Carbon Trading as Potential Solution
Developing domestic SAF production is crucial to reduce import dependence and meet mandate requirements. While RCM could effectively incentivize production, its funding model remains problematic. Making airlines pay for new SAF facilities might increase ticket prices, affecting travel affordability.
IATA proposes using aviation's contributions to the UK ETS to fund RCM. The UK ETS, established in 2021 to reduce emissions in energy-intensive industries including aviation, is projected to generate £1-4 billion from the sector over the next decade—funds that could support SAF projects while aligning with the scheme's original purpose. The EU already uses ETS revenues to subsidize SAF and support low-carbon innovation.
Conclusion: Collaborative Path to Sustainable Aviation
SAF remains aviation's most viable decarbonization tool, but high costs and imperfect incentives hinder progress. While the UK's RCM addresses production challenges, its funding approach risks overburdening airlines. Utilizing ETS contributions could balance financial pressures while accelerating SAF development—supporting both environmental goals and economic sustainability.
Ultimately, achieving widespread SAF adoption will require coordinated efforts from governments, airlines, fuel suppliers, and technology providers. Only through such collaboration can the vision of truly green aviation become reality.