The UK ETS Authority launched a formal consultation on 23 March 2026 asking whether sustainable aviation fuel should continue to receive zero-rated status under the UK Emissions Trading Scheme — and whether the scheme’s eligibility rules should expand beyond biofuels to cover recycled carbon fuels and power-to-liquid. Responses close on 15 June 2026.
The consultation is a direct consequence of a policy gap that opened when the SAF Mandate took effect on 1 January 2025. The Mandate uses a 40% lifecycle GHG emissions threshold against an 89gCO2e/MJ fossil fuel comparator, and it covers biofuels, recycled carbon fuels (RCF), and power-to-liquid (PtL) fuels. The UK ETS, by contrast, still uses the older Renewable Transport Fuel Obligation criteria: a 65% threshold, a 94gCO2e/MJ comparator, and eligibility limited to biofuels only. That means some SAF eligible under the Mandate earns no ETS credit for airlines burning it.
SAF eligible under the Mandate is not necessarily eligible under the ETS — and the Authority is now asking whether that gap should close.
The consultation covers five specific areas. First, eligible fuel types: should RCF and PtL fuels qualify for ETS emissions reductions, as they do under the Mandate? Second, sustainability criteria: should the ETS align with the Mandate’s criteria rather than the RTFO’s older framework? Third, the GHG savings threshold: maintain 65% or drop to 40%? Fourth, the fossil fuel comparator: update from 94 to 89gCO2e/MJ? Fifth, and most structurally significant, how SAF is recognised: continue zero-rating the fuel, credit it proportionally to its actual lifecycle savings, or remove ETS recognition entirely.
That fifth question matters most. Zero-rating is currently the double incentive that makes SAF attractive beyond the Mandate alone — airlines reduce their ETS surrender obligations when they blend SAF, on top of Mandate compliance. Switching to proportional credit would make the ETS benefit more accurate but also more complex; removing it entirely would strip away one of the few existing financial reasons for airlines to blend beyond the mandatory floor. The UK ETS covered approximately 9.0 million tonnes of CO2 equivalent in aviation in 2024.
The Authority also flagged the UK-EU ETS linking process — announced at the UK-EU Summit in May 2025 — as a complication. Any changes made to SAF treatment now will need to be reviewed once linking negotiations conclude, meaning the rules could shift again as the two schemes converge.
The consultation is jointly published by the UK Government, the Scottish Government, the Welsh Government, and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland. Responses can be submitted by 15 June 2026.
Source: UK Government — GOV.UK
