Airlines flying from UK airports paid USD $1.3 billion in excess compliance charges during the first year of the UK SAF mandate, enough to purchase an additional 1.2 million tonnes of SAF, according to a new industry report from the Jet Zero Taskforce’s SAF Task and Finish Group. Published on 17 March 2026 and chaired by Steven Gillard of Boeing, the report also found that only one UK site, Phillips 66’s Humber refinery, is currently producing commercial SAF volumes. That combination of unexpected costs and near-absent domestic production frames the report’s central question: whether the UK can move fast enough to avoid becoming a price-taker in a market the United States is moving to dominate.
The mandate is set to rise from 2% in 2025 to 10% by 2030 and 22% by 2040, adding more than £11 billion to aviation fuel costs through 2040 in the central scenario. Over 70% of announced global SAF production capacity is now expected in the US. The task group’s diagnosis of what is holding the UK back is blunt: “The core bottleneck is not technology, it’s bankability.”
The core bottleneck is not technology, it’s bankability.
The pricing dispute is contested and consequential. IATA described compliance fees charged by fuel suppliers as a “major impediment,” noting that the $1.3 billion in excess surcharges paid during 2025 alone was enough to buy 1.2 million tonnes of additional SAF. Ninety-four percent of airlines surveyed reported additional supplier costs on top of the SAF cost itself. Fifteen out of 16 said those charges exceeded expectations. Mandated SAF is running 30-40% higher than voluntary SAF purchases; some airlines reported paying twice as much. One carrier described the experience as “both very opaque and expensive.” Fuel suppliers, for their part, reported that pricing is functioning exactly as expected. The mandate’s 10% level in 2030 would add £2 billion to a major airline’s annual fuel bill, one carrier told the SAF Bill Committee, based on a £2,000-per-tonne premium for approximately 1.2 million tonnes. With jet fuel costs already elevated by broader market pressures, the pricing transparency gap is pushing airlines toward maximum friction with a mandate they cannot opt out of.
The production gap compounds the cost problem. Advanced SAF plants require between £0.3 billion and £1.5 billion in capital expenditure per facility. The UK’s Advanced Fuels Fund was launched with £165 million and has awarded more than £80 million in first rounds, backing projects from developers including Velocys/Altalto, Alfanar’s Lighthouse project, LanzaTech/LanzaJet, OxCCU, and Abundia/ABLC. None has yet reached Final Investment Decision. The task group’s primary recommendation is to execute 1-2 “Pathfinder Projects” brought to FID as early as possible in 2026, with UK Export Finance (UKEF) and the National Wealth Fund (NWF) as lead financiers and the Department for Transport as sponsor.
The report also identifies a structural disadvantage in the UK’s ETS framework. The EU made 20 million ETS allowances (approximately €1.6 billion) available from January 2024 to support SAF producers. The UK has no equivalent mechanism. The ETS zero-rating of SAF does generate roughly £2.2 billion in savings against the £11 billion fuel cost figure, but a certification problem is currently preventing airlines from claiming those savings. The fix the task group recommends: a centralized Digital SAF Registry and a book-and-claim method, implemented as quickly as possible.
Two broader structural asks round out the report: a SAF Delivery Council modeled on the offshore wind sector, and a SAF Value-Chain Action Plan covering feedstock strategy. On the Revenue Certainty Mechanism (RCM), introduced to Parliament in May 2025, the report is specific: the first auction should be held in 2026, and contracts must be awarded no later than end-2026. Miss that window and the financing signal to banks dissolves.
The UK SAF Act received Royal Assent on 10 March 2026, one week before this report’s publication. The policy architecture is in place. What remains is execution: first RCM contracts signed, Pathfinder Projects at FID, and a pricing transparency process that bridges what airlines and suppliers are currently saying to each other. The report is direct about what is at stake: “Put simply, SAF in the UK has to succeed. It is critical to the future of aviation (an engine of growth) and it represents a generational opportunity for the country.” The UK SAF industry could generate £1.8 billion in annual GVA and 10,000 jobs by 2035, and £16.7 billion in exports by 2050 supporting 165,000 jobs. The EU’s broader investment strategy has put state-backed financing for alternative fuels on the table in ways the UK has yet to match. As this report concludes: “The world is watching and whatever happens in the UK will have implications beyond its shores.”
Source: Jet Zero Taskforce SAF Task and Finish Group 2025 Report
