APPG urge Chancellor for to act on Sustainable Aviation Fuels
Today, Henry Smith MP, Chair of the APPG for the Future of Aviation has written to the Chancellor to urge him to make a British Sustainable Aviation Fuels industry a key part of the Government’s Green Industrial Strategy.
The full text of the letter is below.
Rt Hon Jeremy Hunt MP
Chancellor of the Exchequer
His Majesty’s Treasury
1 Horse Guards Road
London
SW1A 2HQ
Dear Chancellor,
In the recent Spring Budget, you warned about the risks of Britain falling behind in the global race to secure investment in rapidly growing clean energy markets.
Britain has enormous potential to lead the field in many of these markets: we have a highly skilled workforce, strong technological leadership, high levels of wind and investment plans in renewables that will help drive down energy costs, and extensive carbon storage capacity in the North Sea.
However, in the fast-growing market for Sustainable Aviation Fuel (SAF) – an industry which is vital for the future of global connectivity by air – we believe the Budget was a missed opportunity for Britain. We understand the Government plans this week to refresh its own green industrial strategy and we would urge you and your Ministers not to let another opportunity slip.
With demand for SAF likely to outstrip supply into the decade, Britain is well placed to lead the global field and take control of its own SAF supply. Our legacy of chemical industries and refining as well as abundant feedstocks gives us a head start but only if the right level of investment can be secured.
In the United States, the Inflation Reduction Act has fired the starting gun on the global race to provide revenue certainty and secure investment in domestic SAF production. The European Union has been quick to respond by recycling €1.6bn of EU ETS revenues into support for SAF.
The UK needs to respond. And quickly.While we welcome the Government’s mandate, requiring airlines to run aircraft on 10% SAF by 2030, and its ambitions to see five SAF plants under construction by 2025, investors and industry tell us that on its own, this will not be enough to drive investment into a British SAF industry.
When the Government introduced a contracts for difference scheme to encourage investment in offshore wind around the UK it laid the foundations for an industry which is now a world leader that employs tens of thousands of people.
There is a growing political consensus across parties that this is now required for British SAF – groups ranging from the Conservative Environment Network and the CBI to Chris Skidmore MP’s Net Zero Review and the Transport Select Committee have each and every one of them called for it. This call extends across the UK too, with the Cross-Party Group on Aviation in the Scottish Government also recently calling for action on SAF.
A price stability mechanism could be paid for through free allowances issued under the UK’s own ETS scheme: a cost neutral option for the British taxpayer. And would only be paid out once SAF is being produced on these shores.
Securing the right investment would speed production, bringing thousands of high-quality jobs to levelling up areas like Teesside, Grangemouth and Humberside. British SAF production would contribute almost £1 bn per annum to UK plc and the export potential is limitless.
Without urgent action to secure investment in a British SAF sector, this country risks missing out not just on a valuable domestic industry but also risks becoming reliant on expensive fuel imports, costing taxpayers an estimated £3bn a year.
The latest IPCC report stresses the need for swift action if we are to meet our net zero targets. The Government must act boldly, and it must act quickly. Failure to do so will leave Britain in the slow lane as the global race for SAF speeds up.
Yours sincerely,
Henry Smith MP