MPs call for subsidy of UK’s green aviation fuel producers

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Prime Minister Rishi Sunak is under pressure from MPs in his ruling Conservative party to subsidise manufacturers of low-carbon aviation fuel in the UK to help the industry cut emissions.

More than 60 parliamentarians, most of them Tories, have signed an amendment to the government’s energy bill calling on ministers to introduce financial support to create a UK industry producing so-called sustainable aviation fuels or SAFs.

These greener fuels form the basis of the aviation industry’s pledge to reach net zero emissions by 2050, given the huge technological challenges in developing hydrogen-powered airliners or electric propulsion systems that would allow aircraft to be powered by greener forms of energy.

The pressure comes amid internal debates in the Conservative and main opposition Labour party over their green policies before next year’s general election.

The wrangling started after voters handed the Tories an unexpected by-election victory in London last week in protest against a plan by Sadiq Khan, the capital’s Labour mayor, to extend a charge on heavily polluting vehicles across the capital.

The amendment to the energy bill, tabled by former Conservative transport secretary Chris Grayling, calls on the government to step in to create a “price stability mechanism” to incentivise fuel companies to produce more SAFs. This would mean the state agrees to a set price underwritten by the government for fuel, similar to schemes used to underwrite nuclear and offshore wind projects.

Industry executives believe such a system is critical to building production of the fuels at scale and bring down the huge cost difference with conventional jet fuel.

John Holland-Kaye, chief executive of London’s Heathrow airport, said a price stability mechanism would be “hugely important” in encouraging banks to provide the “cash flow” to new UK fuel producers.

SAFs are made from materials ranging from used cooking oil and fats to household waste and non-food crops, and can reduce overall carbon emissions by up to 80 per cent compared with conventional jet fuel, according to industry calculations.

The government has said it will mandate airlines to hit a global aviation industry target of 10 per cent use of SAFs by 2030, which would require 1.5bn litres of the fuels to be produced in the UK by the end of the decade.

Guillaume Faury, chief executive of the world’s biggest commercial aircraft maker Airbus, warned this week that the industry was “still falling short of that 10 per cent target”, despite a “significant acceleration” in investment over the past two years.

But environmentalists are sceptical about whether SAFs can replace conventional fuel, given the availability and sustainability of suitable feedstocks.

The former chair of the Climate Change Committee, the government’s independent advisory body, this week questioned the decision by ministers to base the UK’s aviation policy on “unproven” SAFs. “We have to think about the distinction between technological breakthrough and actually delivering,” John Gummer, also known as Lord Deben, told the Financial Times.

The government said its SAFs programme was already “one of the most comprehensive in the world”. It has pledged £165mn in funding to encourage manufacturers to open at least five plants producing the new fuel and hopes they will be under construction by 2025.

A government-commissioned report earlier year found that “further intervention” was needed to help support the UK SAF industry, but added that this would require “only a limited call on public finances”.