LONDON, UNITED KINGDOM — As the aviation sector races to decarbonize, Sustainable Aviation Fuels (SAF) remain a linchpin for reducing emissions without requiring wholesale changes to existing aircraft fleets. The UK government, under Aviation Minister Mike Kane, is doubling down on this technology with its Revenue Certainty Mechanism (RCM), a policy designed to stabilize revenue streams for SAF producers and attract the hefty investments needed to scale production. Unveiled as part of a broader consultation launched on March 3, 2025, the RCM’s funding approach—a levy on jet fuel suppliers—marks a pragmatic shift toward industry accountability. For an audience well-versed in SAF dynamics, this “insights” piece delves into the mechanism’s structure, its economic ramifications, and the broader context shaping its rollout.

The RCM emerges against a backdrop of formidable challenges. SAF production, particularly for advanced, non-HEFA (hydroprocessed esters and fatty acids) pathways, is capital-intensive, with commercial plants costing between £600 million and £2 billion. Early-stage facilities often operate at a loss, and first-of-a-kind projects face investor skepticism due to price volatility and regulatory uncertainty. The SAF Mandate, effective since January 2025, mandates a 2% SAF blend in UK jet fuel, rising to 22% by 2040, but alone, it doesn’t guarantee the financial stability producers need to bridge the lab-to-commercial gap. Enter the RCM, which promises a guaranteed strike price (GSP) model—think Contracts for Difference (CfD) adapted for aviation fuels—where producers receive payments when market prices dip below a set threshold, or repay the difference when prices exceed it.

The funding crux lies in its industry-led approach. The government proposes a variable levy on aviation fuel suppliers, defined as those handling 15.9 terajoules or more of aviation turbine fuel (avtur) annually, mirroring the SAF Mandate’s obligated parties. This levy, adjustable based on SAF market dynamics, aims to cover GSP payments and administrative costs, spreading the burden across the supply chain—fuel suppliers, airlines, and ultimately passengers. The rationale is twofold: it adheres to the “polluter pays” principle enshrined in the Environment Act 2021, and it mirrors successful precedents like the CfD scheme for renewable electricity, funded via electricity supplier levies.

Cost estimates provide a window into the levy’s scale. For a single 100-kilotonnes-per-year non-HEFA plant (excluding power-to-liquid, PtL) over a 15-year contract, the levied industry might face £100–150 million annually if SAF prices lag the strike price, totaling up to £2 billion. Conversely, high SAF prices could see producers repaying £1–2 billion. Scaling to meet 70% of the 2035 SAF Mandate’s non-HEFA, non-PtL needs—roughly six such plants—could mean £10 billion in payments or £7 billion in producer repayments over 15 years, depending on price swings. These figures, while indicative, underscore the RCM’s role as an “insurance mechanism”—a buffer against volatility rather than a constant subsidy.

The levy’s design prioritizes flexibility and fairness. Costs will be apportioned by market share (e.g., a supplier with 20% of UK avtur sales pays 20% of the levy), with forecasts setting initial rates and reconciliation periods adjusting for actual costs. This adaptability is key in a nascent SAF market prone to external shocks, especially in its early years when production volumes are low. The government pledges further consultation to refine details—how contributions are calculated, collection enforced, and suppliers defined—ensuring industry input shapes a workable system.

For SAF producers, the RCM could lower the cost of capital by de-risking projects, a point echoed by Andrew Symes, CEO of OXCCU, a climate tech firm focused on synthetic SAF (eSAF). Symes notes, “The newly announced Revenue Certainty Mechanism signals that the government recognises a core challenge in SAF: price volatility and investor uncertainty. By ensuring predictable revenue streams, the UK is taking a pragmatic step towards creating a viable SAF industry, attracting capital, and securing a domestic supply chain.” His perspective highlights the RCM’s potential to unlock investment, though he cautions that technology must drive down costs—eSAF, for instance, remains nearly ten times pricier than fossil kerosene, per EU benchmarks.

“The UK is taking a pragmatic step towards creating a viable SAF industry, attracting capital, and securing a domestic supply chain.” — Andrew Symes, CEO, OXCCU

The broader SAF landscape adds urgency. The EU’s ReFuelEU Aviation rules, updated in 2025, set eSAF guide prices at €7,600 per tonne and impose penalties over twice fossil fuel costs, exposing a persistent price gap. Meanwhile, a General Court ruling upheld curbs on crop-based SAF due to land-use concerns, pushing reliance on advanced biofuels and eSAF—both of which the UK’s RCM aims to bolster. Domestically, the £63 million extension to the Advanced Fuels Fund complements the RCM, targeting innovation, but the levy’s success hinges on balancing producer support with minimal consumer impact. Initial estimates suggest ticket price hikes will be modest, absorbed within typical fare fluctuations, though continuous monitoring is pledged to avoid disproportionate burdens.

Challenges linger. PtL SAF, a high-potential pathway, faces production costs exceeding the £5-per-litre SAF Mandate buy-out price, signaling hurdles for UK competitiveness. And while the RCM is time-limited—meant to kickstart first-of-a-kind plants—its interplay with global SAF supply and mandate targets remains fluid. The government’s commitment to legislate via the SAF Revenue Support Mechanism Bill by late 2026, following the King’s Speech in July 2024, keeps the timeline tight but actionable.

Ultimately, the RCM could cement the UK as a SAF powerhouse, aligning economic growth with decarbonization. By leaning on industry funding, it sidesteps taxpayer burdens, offering a model other nations might emulate. For stakeholders, the consultation—open until March 31, 2025—invites critical input on levy mechanics, ensuring this bold step forward doesn’t falter in execution.

Source: www.gov.uk and OXCCU.