The UK Sustainable Aviation Fuel Act 2026 received Royal Assent on 5 March, placing two major instruments on the statute book: a Contract for Difference-style revenue certainty mechanism for SAF producers, and a levy on aviation fuel suppliers to fund it.
The Act places a legal obligation on aviation fuel suppliers operating in the UK to ensure a proportion of the fuel they supply is SAF. The blend obligation begins at 2% in 2025, escalating to 10% by 2030 and rising further to 22% by 2040 — one of the most ambitious long-term SAF mandates of any jurisdiction.
The legislation matters because it pairs mandate obligations with a financing mechanism that no other country has yet enacted at comparable scale. The revenue certainty contract works similarly to the UK’s existing Contracts for Difference for offshore wind: when the SAF market price falls below a government-set strike price, a designated government-owned counterparty makes top-up payments to the producer; when the market price rises above it, the producer repays the difference. This two-way price guarantee is designed to de-risk investment in new SAF production facilities by providing revenue visibility regardless of jet fuel price volatility.
“The Act places an obligation on aviation fuel suppliers to ensure a proportion of their fuel supplied is SAF — starting at 2% in 2025 and rising to 22% by 2040.”
The designated counterparty — a government-owned company yet to be publicly named — will be directed by the Secretary of State to offer revenue certainty contracts to individual SAF producers. The Act gives the Secretary of State 10 years to issue such directions, with the option to extend by up to five years at a time via secondary regulations. Contracts, once registered, may be published subject to commercially sensitive redactions.
To fund the revenue certainty payments, the Act empowers the Secretary of State to impose a levy on UK aviation fuel suppliers through secondary legislation. Levy amounts can be tiered by market share, and the designated counterparty may hold reserves against future obligations. The government has indicated that all required secondary legislation — including specific levy rates and contract terms — will be in place by end of 2026.
Only UK-produced SAF qualifies for revenue certainty contracts. The Act defines UK-produced SAF broadly: any fuel where “any part of the process for converting any feedstock into the fuel takes place in the United Kingdom.” This allows producers using imported feedstocks processed domestically — a common model in HEFA production — to access the scheme.
The SAF Act has been in Parliament since 2024–25, and its passage has been closely watched by the UK SAF industry as a prerequisite for bankable project finance. Several domestic SAF projects have cited the absence of a price certainty mechanism as the key obstacle to financial close. With the Act now law, the drafting of secondary legislation becomes the critical next milestone — and the industry will be watching closely for the designated counterparty announcement and the first direction to offer a revenue certainty contract.
Source: legislation.gov.uk
