SAF Mandate: SAF supply and industry certainty in an evolving market

Full response

Overview

The SAF Mandate was introduced in 2025 to secure demand for the alternative aviation fuels with “the highest sustainability credentials” (as stated in the first consultation on establishing what would become the mandate, pg. 32). It is currently the UK’s main mechanism for reducing aviation’s emissions. Crucial to the SAF Mandate’s design are the ‘HEFA’ cap and power-to-liquid (PtL) sub-mandates, which both cap demand for fuels that rely on feedstocks that are predicted to be limited in supply in the long-term and promote demand for more advanced fuels that are at an earlier stage of development with the potential to scale up to far larger volumes. 

With the nascency of PtL – and other advanced alternative fuels – meaning production costs are significant and risks to investors for first of a kind (FOAK) projects high, both the HEFA cap and PtL sub-mandate are crucial pieces of regulation designed to promote supply of advanced fuels in the face of these challenges.  

However, the investment certainty and wider support that the mandate provides for advanced fuels, in particular PtL fuels, is at risk of being undermined if changes are made to the SAF Mandate. Indeed, the series of calls for evidence on the future of the SAF Mandate have had a destabilising effect already.  

The potential for UK PtL projects to come online in the coming years has been further put at risk by the long lead-in time and lack of dedicated budget envelope for PtL fuels planned for the first allocation round of the proposed revenue certainty mechanism (RCM). Combined, both send a signal to the PtL industry that the UK is pulling back its commitment to scaling demand and domestic production of PtL fuels in the coming years.  

Yet analysis of alternative fuel supplies suggests that there will be sufficient global supply to satisfy the mandates in the 2020s (including non-HEFA and PtL specific mandates). Rather than undermining decarbonisation efforts by reviewing the mandates in the name of supply shortages, efforts should instead remain focused on driving demand for high integrity alternative fuels and building the business case for their domestic production – maximising the supply security and industrialisation benefits alongside the climate benefits.  

The proposed RCM allocation strategy should also be reviewed, and a ringfenced budget for PtL fuels included in the first allocation round. Through standing firm on the PtL sub-mandate and sending a signal via the RCM that the UK will back domestic PtL projects, the government can send a strong message of commitment to its high integrity alternative fuel industry.  

Q1. Do you expect there to be sufficient non-HEFA SAF (either PtL or non-PtL SAF), domestically and globally, to meet the SAF Mandate targets until 2040? Please provide any supporting evidence including how you expect availability to change over time.

Analysis suggests that there will be sufficient global supply to meet the SAF Mandate targets in the coming years. Data from BloombergNEF, analysed by Transport and Environment, estimates that there could be as much as 4.7 megatonnes of advanced fuels produced globally by 2030, with 0.63 megatonnes of global aviation e-fuel production. This compares to mandated levels in the UK of 0.38 megatonnes and 0.07 megatonnes respectively.  

The ICCT further estimates that there will be sufficient bio-waste and residues in the EU to produce enough alternative fuel to meet double the expected demand from the UK and EU mandates (as well as demand from the shipping sector).  

Globally, production of alternative fuels, specifically PtL, has begun. In the US Infinium reached final investment decision (FID) on its 100MW e-fuel plant, while Twelve has begun operations on the first commercial-scale aviation e-fuel project in the country. Analysis from Transport and Environment further suggests that of the 64 large-scale PtL projects announced globally, 26 are due to be operational by 2030 – with European projects accounting for half the announced global production capacity.  

Taking into account all alternative fuel types, modelling by ICF suggests that global demand is expected to grow from 2.1 megatonnes in 2025 to 12.8 megatonnes in 2030 under current demand trends, as the number of mandates for alternative fuel, and other policy and regulatory levers, grows. While demand in 2030 remains below modelled fuel supply, the analysis suggests that post-2030 demand growth quickly overtakes forecast supply capacity. This is particularly true for HEFA fuels, with a HEFA ‘tipping point’ expected around 2030. This demonstrates the need for alternative pathways to be rapidly scaled, especially as HEFA fuels are expected to account for approximately 85% of expected global capacity in 2030.  

Indeed, the fact that the European Union (EU) is proposing to phase HEFA fuels out of its EU ETS allowance system by 2030 provides an international example of how policy is being designed to address this forecast shortcoming through incentivising use of alternatives to HEFA fuels.  

Some have suggested that extending the SAF Mandate to include crop-derived fuels is a way to alleviate pressure on global HEFA fuel supply and diversify feedstocks in order to achieve the mandated levels of alternative fuels. However, of the 182 billion litres of biofuel the IEA assessed were supplied in 2023, almost all was diverted to the road transport sector.  

While highlighting the pipeline of alternative fuels in development globally, the above overview does point to a shortfall in domestic supply in the early years of the mandate. The Royal Aeronautical Society has estimated that projects funded by the Advanced Fuels Fund, as of March 2025, would be capable of producing more than 1 billion litres of alternative fuel each year if all came to fruition.  

Retaining the current mandate levels, alongside other measures like the RCM, will play a significant role in supporting these projects to commercialisation. This will be vital to the UK satisfying its mandates from 2030 onwards in a manner that promotes security of supply and maximises the industrial opportunity that alternative fuel production could provide.  

Q2. In your view, what would be the likely consequences of maintaining the current approach (no policy change)? Please provide any supporting evidence. 

Maintaining the current approach would ensure that the SAF Mandate’s objective of encouraging supply of the alternative fuels with the highest sustainability credentials is best achieved.  

The call for evidence rightly recognises that long-term sustainable supply of HEFA feedstocks will be constrained and competition for what is available high, meaning that higher integrity alternative fuels need to be scaled up. Weakening or delaying the SAF Mandate’s HEFA cap and PtL sub-mandate would delay the scale up of these alternatives by reducing the legally obliged quantities of the highest integrity alternative fuels that fuel suppliers have to supply, while undermining the certainty that the mandate gives to investors that there will be guaranteed demand for these fuels.  

Retaining the current approach would also maximise the potential for the SAF Mandate to achieve its forecast carbon savings of up to 6.3 megatonnes a year by 2040. Reviewing the HEFA cap or PtL mandate risks seeing lower uptake of the fuels that come with greater potential to reduce emissions, in turn reducing the emission reduction potential of the measure. Emission reductions from alternative aviation fuel could be further eroded by the inclusion of crop-derived fuels into the mandate, with the International Civil Aviation Organization’s (ICAO) own default life-cycle emissions values giving a maximum emission reduction potential for crop-derived biofuels of only 63% in contrast to 91% for advanced production pathways.   

Finally, making changes to the mandate at such an early stage in its operation risks setting a concerning precedent that future unscheduled revues or changes could be brought about to the mandate, further undermining the demand certainty it is designed to provide.  

Q3. If you believe a change to the HEFA cap is required in 2027 or subsequent years to address insufficient supply, what type of change do you think is required? Please provide detail of the change and evidence to support it. If you do not believe a change is required to the HEFA cap, please state why. Please provide any supporting evidence as justification. Consider supply availability, and the impact on investment, industry and the environment in your answer.

Q4. What would be the impact on investment in non-HEFA production domestically and globally by any change in the HEFA cap? Please provide evidence including differential impacts of different approaches to changing the HEFA cap. How could a change be implemented that mitigated impacts on non-HEFA production most effectively?

There should not be a change to the HEFA cap. As stated above, as global demand for HEFA fuels ramps up, a HEFA ‘tipping point’ is expected in 2030, when global feedstocks are expected to become significantly constrained. This shortage of supply risk reflects the fact that, as demand grows, there will not be a commensurate growth in truly waste oil and fat feedstocks. Indeed, HEFA feedstocks have already been subject to cases of mislabeling and fraud.  

The UK’s reliance on imported feedstocks will also make it vulnerable to shortages in supply as demand grows. Across the EU and UK in 2022, 68% of net UCO imports came from China, Malaysia and Indonesia alone, reflecting the shortage in domestic feedstocks for this fuel type.  

It is for these reasons that the HEFA cap was rightfully introduced in the first place. Therefore, as there has been no material change in the initial assumptions – demand is still expected to outpace waste feedstock supplies – it is necessary that the HEFA cap remain as it is. Without the impetus that the HEFA cap provides to accelerate commercialisation of non-HEFA alternative aviation fuels, there is a risk that these fuels will not be available in the necessary quantities from 2030 onwards, at the point when HEFA fuel supply constraints are likely to accelerate.  

Q5. If you believe a change to the Power-to-Liquid (PtL) obligation is required in 2028 or subsequent years to address insufficient supply, what type of change do you think is required? Please provide detail of the change and evidence to support it. If you do not believe a change is required to the PtL obligation, please state why. Please provide any supporting evidence as justification. Consider supply availability, and the impact on investment, industry and the environment in your answer.

Q6. What would be the impact on investment in non-HEFA production domestically and globally by any change to the PtL obligation? Please provide evidence including differential impacts of different approaches to changing the PtL obligation. How could a change be implemented that mitigated impacts on non-HEFA production most effectively?

There should be no changes to the PtL sub-mandate. Scaling up PtL demand – and, ultimately, PtL production – is crucial for the integrity of the SAF Mandate as these fuels will provide longer-term sustainability of supply by not relying on finite waste resources, greater potential to reduce emissions and fewer risks to biodiversity and the environment.  

Changing the PtL sub-mandate at this early stage risks weakening the case for investment into UK PtL projects, at a time when none have yet reached FID. While the SAF Mandate is n

ot the only measure designed to promote PtL production, with the RCM not planned to be introduced until the end of 2028 and with no dedicated budget envelope for PtL fuels in the first allocation round, the sub-mandate is currently the strongest market signal for PtL production in the UK. Reneging on the ambition of the sub-mandate now, combined with the shortcomings of the proposed RCM contract allocation approach, risks sending a messaging to the UK PtL production industry that government commitment to the sector is waning. This in turn could have a strong impact on investment.  

With global production of PtL fuels having already begun, it is also important that measures to incentivise domestic production of PtL fuels are not delayed if the UK is to capture the wider benefits of being a first-mover in this field. According to recent analysis, satisfying the 2040 PtL sub-target with domestically produced fuels has the potential to generate more than £12 billion in gross value added during the construction phase, £900 million a year once production is operational and support nearly 3,000 long-term jobs across the UK. Yet, if the PtL sub-mandate is pushed back, so too could investment into UK projects – putting the potential to capture a share of the production market at risk.  

Q7. Do you think there are additional options for flexibility within the SAF Mandate that should be considered to help support delivery of the mandate while not undermining investment in SAF production? If so, what are these options and what would be their pros/cons. Please provide evidence. Consider supply availability, and the impact on investment, industry and the environment in your answer.

There should not be additional options for flexibility within the SAF Mandate. As currently designed, the mandate provides two forms of compliance: supply of alternative aviation fuels and the buy-out price.  

In the event that sufficient alternative aviation fuel is not available to UK fuel suppliers then paying the buy-out price should be the default avenue of compliance. To help support development of alternative fuel projects, particularly PtL projects, revenues from the buy-out price payment should be re-invested into fuel production via the upcoming Low Carbon Fuels Fund. This will help ensure that long-term mandates can be fulfilled with domestic fuel produced in FOAK projects – in turn supporting the industrial opportunity that alternative fuel production presents in the UK.  

Alongside retaining the mandated levels, the UK Government needs to reaffirm its commitment to making the UK a welcoming environment for investment into PtL projects in order to encourage FOAK projects to reach commercialisation domestically and in turn support the scaling of these technologies. By grouping all production pathways together, there is a risk that PtL fuels will not be competitive with other production pathways due to being assessed against projects at different stages of development and points on their cost curves.  

If no PtL projects are awarded support in the first allocation round due to different technologies being assessed at different points on their cost curves, the revenue certainty mechanism risks delaying investment into these technologies, something that the industry cannot afford to wait for if PtL sub-mandates are to be met in the coming years.