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Ministerial forewordÌýÌý

Decarbonising transport directly supports the government’s mission to make Britain a clean energy superpower and will accelerate our journey to net zero. By 2050, aviation is expected to become one of the largest emitters of greenhouse gases in the UK. We need to tackle this challenge through advancing the transition to a greener aviation sector.ÌýÌý

Sustainable aviation fuel (SAF) will play an important part in reducing emissions from aviation and is already being used in aircraft today. I am proud that the SAF Mandate entered into force on 1 January 2025, to drive demand for SAF in the UK and deliver emissions reductions up to 2.7Ìýmegatons of carbon dioxide equivalent (MtCO2e)Ìýin 2030 and up to 6.3ÌýMtCO2eÌýin 2040.Ìý

The UK can face challenges sourcing investment into UK SAF production facilities, in part due to uncertainty over future revenues. A revenue certainty mechanism will help to address this uncertainty and drive investment in SAF plants across the UK. A thriving SAF industry will drive economic growth, create good green jobs, and secure a domestic supply to meet the SAF Mandate. The previous consultation response confirmed that the revenue certainty mechanism will use a guaranteed strike price (GSP), with the first tranche of contracts expected to be allocated to UK projects producing SAF using non-hydroprocessed esters and fatty acids (HEFA) technologies and feedstocks. This consultation response offers stakeholders additional clarity on the government’s approach to funding the revenue certainty mechanism.Ìý

The revenue certainty mechanism, alongside the newly introduced UK SAF Mandate, the Advanced Fuels Fund and the government’s modern Industrial Strategy, will provide a launchpad for this sector to drive growth and investment.ÌýÌý

This will deliver on our manifesto pledge to secure the UK aviation industry’s long-term future, through promoting sustainable aviation fuels and encouraging airspace modernisation.Ìý

Mike Kane MPÌý

Minister for Aviation, Maritime and Security

Overview of consultation proposals and responseÌý

Implementing an industry-funded revenue certainty mechanismÌý

The consultation presented the case for intervention through a revenue certainty mechanism that can address important barriers to projects reaching financial investment decision (FID) in the UK. These barriers are:Ìý

• there being no clear UK or global market price for advanced (non-HEFA) SAFÌý
• policy and regulatory uncertaintyÌý
• projects competing for finance with other emerging low carbon technologiesÌýand in other countries

The government have committed to delivering a revenue certainty mechanism to support a UK SAF industry that is industry funded. We have previously confirmed our intention to proceed with the GSP mechanism. This mechanism is based on a private law contract and works in a similar way to elements of the existing contracts for difference scheme for low carbon electricity generation.

Funding mechanismÌýÌý

The consultation focused on how the revenue certainty mechanism will be funded. It stated that industry will fund the costs that include payments issued under the GSP mechanism and the costs incurred by the counterparty to administer the scheme. The aviation industry and its passengers, rather than the general taxpayer, will benefit the most from increased SAF production that the revenue certainty mechanism intends to support. Therefore, we retain our position that industry should fund the revenue certainty mechanism, rather than the general taxpayer.Ìý

In the consultation, the government proposed that industry should fund the revenue certainty mechanism through a variable levy on aviation fuel suppliers. Following the analysis of consultation responses, the government intends to proceed with this option. A levy mechanism offers flexibility on the amounts collected compared to flat rates.

By placing a levy on aviation fuel suppliers, it may allow costs to be widely spread across the supply chain. Suppliers have the potential to benefit from the additional SAF available and lower prices that the revenue certainty mechanism could provide. This option is also less administratively burdensome than other options.Ìý

To achieve a levy that operates with minimal additional burden and disruption to stakeholders, the government is committed to working closely with industry on the detailed design of the funding mechanism. The consultation feedback will help shape engagement on the detailed levy design considerations.

IntroductionÌý

In this response, we:

• outline the proposed approach to industry funding of the revenue certainty mechanism to support the UK SAF industry
• provide a high-level summary of the responses received, highlight the main comments from respondents and provide the government’s response to each question

Responses to the consultation questions were made via online survey, email and post. Where respondents did not structure their responses around the specific questions posed, we have considered those responses by reference to the consultation question and position that they are considered most applicable to.ÌýÌý

Responses to each of the consultation questions were analysed individually, before being grouped into themes, summarised and anonymised. Responses that did not explicitly express their support or disapproval for the specific question were logged but classified as neither supportive nor non-supportive. Where information provided by a respondent related to a different question, we have summarised it under that other question.

Total responses receivedÌý

A total of 76 responses were received from a range of organisations and individuals. The summary contained in this response describes the main themes set out in the responses. For the sake of brevity, it does not repeat the full details contained in every response we received.ÌýÌý

The following table provides a breakdown of those who responded. Where certain organisations have multiple roles in the sector, we have assigned them a stakeholder group most appropriate based on their primary operations or the framing of their response.

Table 1: total responses received and stakeholder group

Stakeholder group	Number respondents
Academia and consultancy	7
Airlines	9
Airport	4
Energy company	4
Feedstock supplier	4
Fuel supplier	9
Investor	1
Original equipment manufacturer	2
Other	8
SAF producer	8
Trade association/body/coalition	18
Trade union	2
Total	76

Implementing a revenue certainty mechanism

Levy on aviation fuel suppliersÌý

Consultation proposalÌý

The proposed approach places a levy within the industry on aviation fuel suppliers. For aviation fuel suppliers obligated to pay the levy, individual contributions will be determined by market share. The period for calculating market share and scheme costs would be predetermined.Ìý

The government set out the rationale behind placing the levy on aviation fuel suppliers. This includes:ÌýÌýÌý

• placing the levy higher up the supply chain, for example, on aviation fuel suppliers,Ìýmay allow costs that are passed on to be distributed across more of the supply chain – including airlines, freight companies and passengersÌý
• aviation fuel suppliers benefitting from the additional SAF production that the revenue certainty mechanism is designed to stimulate, since the SAF Mandate obligation is to supply a minimum amount of SAF is also placed on suppliers
• the revenue certainty mechanism lowering project risk and the cost of capital for producers, which will lower the cost of domestically produced SAF for aviation fuel suppliersÌý
• the SAF Mandate obligation is expected to fall on around 20 aviation fuel suppliers – this means fewer obligated parties are affected than the other options considered

Reporting requirements will be standardised where possible to reduce the burden for providing information and administering the levy.

The consultation also provided context on what details of levy operation will be subject to further engagement with industry ahead of introducing regulations. The main areas included how the:

• total amount and individual contributions are calculated
• levy will be collected and enforced

Summary of responses for question 1

Table 2: number of responses received to question 1

Answer	Number of responses
Agree	44
Neither agree nor disagree	9Ìý
Disagree	14
Don’t know/No comment	9Ìý
Total	76

58% of respondents agreed that the revenue certainty mechanism should be funded by placing a levy on aviation fuel suppliers for the reasons the consultation presented.

Out of the respondents who agreed, someÌýdid so based on the option being the most optimal approach to industry funding the scheme, as opposed to necessarily supporting the concept of industry paying for the costs of the scheme.Ìý

For those organisations that disagreed or partially disagreed, they raised the following points:Ìý

• the levy could impact the competitiveness of manufacturing operations in the UK, adding to concerns about issues such as labour and energy costsÌý
• costs will be passed down to airlines and consumers, impacting the competitiveness of the UK aviation sector. These costs are in addition to Air Passenger Duty (APD) increases, new charges under the Emissions Trading Scheme (ETS), changing business rates at airports and the cost of meeting the SAF MandateÌý
• there is a risk of some organisations paying twice for SAF if they are already investing in UK projects and are subsequently required to contribute payments through the revenue certainty mechanismÌý
• concerns were raised regarding how the revenue certainty mechanism interacts with the UK’s obligations as a World Trade Organisation (WTO) member, as well as the UK’s other international trade and civil aviation obligations

Other points raised included how the government and contractual parties (counterparty and the SAF producer) can provide transparency on the costs of the levy to allow actors through the supply chain to understand the costs that are passed through. There were also requests to ensure that downstream supply chain actorsÌýcan benefit from any reconciliation or rebates of the levy.

Government response to question 1

The government’s position remains that the revenue certainty mechanism should be funded by the aviation industry to stay consistent with the polluter pays principle.ÌýAviation fuel suppliers are part of the industry’s supply chain.

As set out in the consultation, placing a levy on aviation fuel suppliers allows costs to be spread across the supply chain, including airlines, freight companies and passengers. The government has assessed the option as less administratively burdensome than others because:

• the number of aviation fuel suppliers operating in the market is relatively small
• reporting requirements for aviation fuel suppliers have already been set up through the SAF Mandate
• assessing the market share for other parts of the industry (for example, airlines) for a variable rate levy would also be challenging

Aviation fuel suppliers also have the potential to benefit from the additional SAF available and lower prices that the revenue certainty mechanism could provide. The revenue certainty mechanism is intended to provide first-of-a-kind UK SAF projects with a guaranteed price for their SAF over a defined period. In this way, the revenue certainty mechanism can lower the costs of capital and increase the chances of first-of-a-kind projects reaching successful final investment decisions. This is anticipated to pave the way for lower-cost UK SAF plants in the medium term, when investors will have confidence in the market price and the first-of-a-kind technology has proven itself at commercial scale.ÌýÌý

Further, the levy will only be required if the price of SAF in the UK is low and SAF Mandate costs have reduced, for example, the 2 costs have a negative or inverse relationship. As set out in the consultation, higher revenue certainty mechanism costs would imply a global abundance of SAF and the possibility of reducing the need to sign any additional contracts under the scheme.Ìý

The total liability of the scheme can be managed by limiting the support to a pre-determined volume of SAF and negotiating acceptable strike prices within contracts. There is no obligation on the government to enter a defined number of contracts, or to agree contracts at any cost. As set out in the consultation, the revenue certainty mechanism is intended to be a time-limited measure, to support the establishment of first-of-a-kind plants.Ìý

These controls within the revenue certainty mechanism and industry levy are intended to help maintain the UK aviation sector’s competitiveness, while supporting a measure to scale up the domestic industry. With the SAF Mandate driving the demand for SAF in the UK, it is important that the introduction of the revenue certainty mechanism will help lower the cost of capital for domestic production. Therefore, SAF producers could sellÌýSAFÌýat a lower price than in the absence of the revenue certainty mechanism. Once implemented, we will continuously monitor the impacts of the scheme.Ìý

Regarding concerns related to the UK’s obligations under the WTO and UK-EU agreements, a full subsidy control assessment will be conducted to ensure the revenue certainty mechanism is compliant with both domestic and international subsidy control frameworks. Throughout the policy development to date, we have considered design features impacting subsidy control.

Therefore, the government has decided that levying aviation fuel suppliers remains the most effective way of funding the revenue certainty mechanism.Ìý

The government has noted concerns raised about the transparency of costs associated with the levy through the supply chain and this feedback will be considered when designing the levy.ÌýÌý

Alternative funding optionsÌýÌý

Consultation proposalÌý

Funding options were considered and assessed against the principles of solvency, simplicity, affordability and fairness, policy coherence, market stability, flexibility and compliance. This led the consultation to present a minded-to option of the variable levy on aviation fuel suppliers.

Summary of responsesÌýto question 2Ìý

Table 3: responses received to question 2

Responded	No comment	Total
34	42	76

55% of respondents did not respond with alternative suitable options to the variable levy on aviation fuel suppliers. For those who responded, we have captured the suggestions from stakeholders. The following options were raised in responses.

Redirecting existing and scheduled revenues

Redirecting existing and scheduled revenues, such as from the UK Emissions Trading Scheme (ETS) or Air Passenger Duty (APD) andÌýSAFÌýMandate buy-out funds (as the first port of call):

• the aviation sector currently receives free allowances under the ETS to mitigate the likelihood of carbon leakage. These will be removed from 2026, following research that concluded carbon leakage is low risk for aviation, so airlines will need to purchase all their emissions allowances
• APD contributes to mitigating the environmental impact of air travel by charging a duty on air passengers leaving from UK airports, based on a band structure depending on destination and class of travel
• the UK SAF Mandate permits aviation fuel suppliers to buy out of their obligations. Any revenues generated are directed into the consolidated fund, as per Section 128(10) of the Energy Act 2004. Without changing legislation, contributions to the buy-out fund would require a form of soft hypothecation (where there is a commitment to spend any additional revenues from a given tax to a specific cause)

Levy on alternative parts of industry

Levy on airlines, airports or air traffic control:

• a levy could be placed on different parts of the supply chain, including airlines, airports or air traffic control
• the principle of charging based on market share would stay the same
• a levy could be placed on airlines in proportion to the amount of APD they pay
• a levy could be added to the fees that airports and air traffic control place on airlines

Singapore levy on air passengers

Use a similar approach to the Singapore levy on air passengers:Ìý

• from 2026, Singapore will meet its 1% uplift of SAF target by centralising the procurement of SAF and funding it from a levy on air passenger fares departing the country. This levy is fixed for at least 12 months

Rate applied directly on fuel

Rate applied directly on fuel, such as National Oil Reserves Agency (NORA) stock reserve for the Republic of Ireland:

• this is a fixed rate per litre charge on oil products, excluding international aviation or maritime transport, which funds the maintenance of national strategic reserves. The levy appears as a list item on customer invoices

Two-sided auction

Similar to the German H2Global approach to hydrogen, on the:

• producer side, the government agency signs a long-term contract with the producers of SAF
• consumer side, the government agency holds auctions to sell SAF to the agents (suppliers, airlines or others) willing to pay the most

Government response to question 2

Redirecting existing and scheduled revenues, such as UK ETS from 2026, APD and SAF Mandate buy-out funds (as the first port of call)

The UK ETS, APD and UK SAF Mandate buy-out revenues flow directly into the consolidated fund. We generally do not hypothecate taxes to particular spending programmes as it can reduce flexibility in spending decisions and lead to a misallocation of resources with reduced value for money for taxpayers.

The SAF Mandate is designed to provide carbon savings by building SAF demand. In cases where suppliers are unable to secure SAF supply, the SAF Mandate’s buy-out mechanism provides a way for suppliers to discharge their obligations. It is an element of the SAF Mandate designed to prevent excessive costs being passed on to consumers. Given that the buy-out mechanism does not lead to emission reductions, it is not intended to be a tool to stimulate government revenues, nor be a long-term form of compliance.

The SAF Mandate’s buy-out mechanism is not expected to generate a significant or predictable amount of revenue. Therefore, even if funds raised from any potential SAF Mandate buy-out were used as a first port of call, we still consider that a levy would need to be introduced to ensure that costs from the revenue certainty mechanism could be met.

There are other potential issues with re-purposing any revenues from the mandate buy-out, such as the timing of any revenues and potentially creating unintended incentives in relation to the buying out mandate obligations. Therefore, we do not support this option but will keep it under review.

Levy on airlines, airports or air traffic control

The consultation sets out the rationale for using a variable levy to fund payments under the revenue certainty mechanism. The cost of the mechanism will vary over time, in line with variations to the changing price of non-HEFA SAF in the UK. The consultation sets out why we consider aviation fuel suppliers to be the most appropriate actor to place the levy on.Ìý

There are a number of reasons why levying airlines would be challenging, including, from an administrative perspective, for example, determining the varying market share of airlines as a means of distributing the levy. This would be challenging given the number of airlines active in the UK market. There would likely also be challenges in differentiating airlines’ use of SAF from fossil kerosene and calculating market share based on other metrics could disincentivise airlines to increase their market share based on increased SAF use. It would be particularly challenging if attempting to spread the cost of the levy across both passenger and freight airlines.

Placing the levy on airports and air traffic control could result in levy costs being added to existing charges and fees. However, airports are typically not involved in the commercial arrangements for purchasing aviation fuel, more often acting as a facilitator of fuel uplift. Similarly, while air traffic control has an existing way of charging fees to airlines, they are not involved in the purchasing of fuel.Ìý

Airports’ business models differ depending on where they sit geographically. Therefore, the pass through of the levy costs will differ between airports. Current reporting arrangements would need to be changed, as not all airports are obligated to disclose the charges imposed on airlines under the .

Use a similar approach to the Singapore levy on air passengers

Some organisations felt strongly about applying learnings from the Singapore levy on air passengers.

This option limits its focus to one group of end-users, for example, commercial air passengers. This would have the effect of increasing the level of APD and then hypothecating that increase to fund the revenue certainty mechanism. The government generally does not hypothecate taxes to particular spending programmes as it can:

• reduce flexibility in spending decisions
• lead to a misallocation of resources, with reduced value for money for taxpayersÌý

The GSP mechanism may not always generate significant difference payments and in some scenarios, there may be minimal levels of funding required. Levy collection can be adjusted to reflect changing costs, whereas a fixed rate on fuel volumes or on air passengers is limited in flexibility.Ìý

In respect of centralising the procurement of SAF in government, this presents significant challenges in the UK. Singapore’s aviation landscape differs to the UK’s, including in terms of the number of civilian airports, the volume of air traffic and the makeup of operating airlines and suppliers.ÌýÌý

The UK government is not currently set up to be a central SAF purchaser and supplier. Procuring and supplying fuels is currently effectively performedÌýby industry and the market and there is substantial risk of government distorting the market by adopting this additional function. Additionally, the government would be required to develop an entirely new system of administration to take on this function and would be unlikely to present value for money, given the scale of such a scheme. There are additional risks in government being able to secure and supply fuel at favourable rates, given this would be a novel function for the government to undertake with limited experience. Therefore, we have assessed that this option does not align with the funding mechanism design principles of simplicity, affordability and fairness and market stability.

Rate applied directly on fuel, such as National Oil Reserves Agency (NORA) stock reserve for Republic of Ireland

Fixed levy rates on aviation fuel lack the flexibility offered by a variable levy and could lead to over- or under-collection. The GSP mechanism may not always generate significant difference payments, and in some scenarios, there may be minimal levels of funding required. Levy collection can be adjusted to reflect changing cost, whereas a fixed rate on fuel volumes is limited in flexibility.

Two-sided auction, similar to the German H2Global approach to hydrogen

As with the Singapore approach, this involves government buying and selling SAF and, therefore, has the same drawbacks.ÌýÌý

The previous consultation and engagement with industry demonstrated that a major benefit of the GSP mechanism is that investors in UK markets are familiar with it due to similarities with the ‘Contract for Difference’ scheme for renewable electricity.

Definition of aviation fuel supplier

Consultation proposal

The government proposed the definition for an obligated fuel supplier to be consistent with the UK SAF Mandate. That is a supplier owning 15.9 terajoules (TJ) or more of aviation turbine fuel at the assessment point (the ‘duty point’) for use in the UK, during a UK SAF Mandate obligation period.

Summary of responsesÌýto question 3

Table 4: responses received to question 3

Answer	Number of responsesÌý
Agree	45
Neither agree nor disagree	3
Disagree	4
No comment	24Ìý
Total	76

59% of respondents agreed with the definition and the consistency with the UK SAF Mandate. 36% of respondents chose either not to comment or share whether they agreed or disagreed.

5% of respondents disagreed with the consultation’s proposed definition. Their comments highlighted that some SAF producers may take fuel through the SAF Mandate assessment point and therefore also fall under the definition of aviation fuel supplier for the purpose of the SAF Mandate and proposed levy.Ìý

A few respondents wanted further clarity on how an aviation fuel supplier obligated under the definition would have their volumes of SAF, either from blending or importing, accounted for in the levy calculations.Ìý

A concern was raised that aviation fuel suppliers could attempt to avoid meeting the minimum threshold of supply to be defined as an obligated party for both the SAF Mandate and the proposed revenue certainty mechanism levy. This would be through the creation or utilisation of subsidiaries, which would mean that each entity would own less than 15.9 TJ of SAF at the assessment point in an obligation year.

Government responseÌýto question 3

The majority agree that alignment with the SAF Mandate is a sensible approach to determine the obligated aviation fuel suppliers.Ìý

Other points to consider:Ìý

• the levy proposal will only be calculated based on the market share of the fossil aviation turbine fuel supplier and there is no current intention to reduce liabilities based on that company’s SAF supplyÌý
• it is unlikely that suppliers would choose to establish or utilise existing subsidiaries owning less than 15.9 TJ of SAF at the assessment point in an obligation year to avoid any obligations under the SAF Mandate (or the proposed levy to fund the revenue certainty mechanism) – however, we will ensure this point is further testedÌý
• our proposal is that any organisation that is subject to an obligation under the SAF Mandate for supplying aviation turbine fuel in the UK will be liable to pay the levy^{[footnote 1]}. The SAF Mandate will be continuously monitored, therefore, its definition of a relevant aviation fuel supplier can be changed through legislative amendments if no longer considered fit for purpose

Government engagement

Consultation proposalÌý

The consultation highlighted that further engagement with industry is expected to take place ahead of introducing legislation. Therefore, the consultation included an open question that sought views on the format, frequency and duration of engagement we should provide when designing the details of the revenue certainty mechanism.Ìý

Summary of responses to question 4

Table 5: responses received to question 4

Responded	No comment	Total
64	12	76

84% of respondents were interested in further government engagement on the design of levy.

Some responses cited the form of engagement that would facilitate the best contributions from industry into policymaking. This included:

• regular conversations with industryÌý
• expert and advisory groupsÌý
• an independent body to provide oversight and governanceÌý
• continue with formal consultationsÌý
• further access to analytical data modelling and its assumptionsÌý

A few stakeholders wanted stakeholder engagement to increase in terms of frequency and to take place as soon as possible to help accelerate delivery timelines.ÌýÌý

Looking further ahead, once the revenue certainty mechanism is implemented and the funding mechanism is in operation, it was highlighted that ongoing engagement will be essential to ensure effective delivery.

Government responseÌýto question 4

The government highly values this feedback, which will ensure that we account for the insights, evidence and suggestions from industry and wider stakeholders in the most efficient and productive way.ÌýÌý

We have recorded those organisations that have expressed interest in further engagement to design the levy to fund the revenue certainty mechanism. Outside of consultation periods, we welcome further evidence and views and will develop appropriate engagement forums based on stakeholder feedback.

Further considerations

Consultation proposalÌý

The consultation presented the government’s rationale for proposing a variable levy on aviation fuel suppliers to cover the costs of the SAF revenue certainty mechanism.ÌýÌý

In addition, the consultation presented the results of the modelling on potential revenue certainty mechanism payments, to provide industry with an understanding of the possible extremities the payments across the duration of contracts and in different price paths.ÌýÌý

The consultation also noted that updated analysis highlighted that UK Power-to-Liquid (PtL) SAF could face significant challenges in the UK.ÌýÌý

At this stage, the consultation offered stakeholders the opportunity to voice wider considerations related to this approach to funding.

Summary of responsesÌýto question 5

Table 6: responses received to question 5

Total	Responded	No comment
76	71	5

There was a wide range of responses to this question. These addressed both the rationale, design and operation of the proposed levy as well as wider considerations relating to the revenue certainty mechanism. The comments included:Ìý

• Some raised concerns about the transparency and openness of the levy calculations and associated costs, calling on government to put protections in place that ensure clarity over how levy costs are passed down the supply chain. Some also called on government to publish the levy cost so that this can be referenced in aviation fuel supply agreements.
• There was a suggestion to ensure that revenues raised through the revenue certainty mechanism (where producers with a revenue certainty contract are receiving market prices in excess of the guaranteed strike price and are required to pay to the counterparty) are ringfenced to fund future liabilities under the scheme.
• The risk of retrospective pricing was raised and the difficulties of fuel suppliers being able to administer pricing retrospectively.
• The administrative burden of reporting volumes and paying the levy should be minimised.
• A few respondents outlined how fuel tankering could be incentivised if the levy is adding to the cost of aviation fuel in the UK. This practice involves airlines flying with more fuel than is required for a specific journey, so that it can provide fuel for the onward journey and avoid the need to refuel in certain jurisdictions.
• Others sought further reassurance that the revenue certainty mechanism will comply with international subsidy control frameworks.
• Some responses provided views on SAF supported by the revenue certainty mechanism being permitted for export.
• The acknowledgement that there are challenges relating to the PtL SAF production in the UK was welcomed. Some suggestions for how this could be addressed were put forward:Ìý
  • reviewing the position that producers cannot claim certificates under the SAF Mandate for fuel made from hydrogen subsidised by the hydrogen production business modelÌý
  • a few respondents proposed the consideration of allowing a strike price above the buyout price for PtL fuels

Government responseÌýto question 5

The government intends to keep the revenue certainty mechanism and its funding in alignment with our main design principles:Ìý

• solvency – the funds raised by the levy should provide a robust funding stream to the scheme, allowing for long-term certainty on revenue supportÌý
• simplicity – the levy must be simple to deliver to accelerate implementation and minimise the administrative burden.
• affordability and fairness – the levy should minimise the cost to end usersÌý
• policy coherence – the levy should align with wider government decarbonisation, fuel supply and affordability objectivesÌý
• market stability – the levy should not create perverse incentives or destabilise aviation fuel marketÌý
• flexibility – the levy should be flexible to future changes in the aviation fuel marketÌý
• compliance – the levy should minimise the likelihood of non-compliance

Once a counterparty is appointed, we will work with stakeholders to include transparency features to aid understanding of the costs associated with the mechanism. Any government backed counterparty will also be subject to National Audit Office (NAO) audits.

There will be collaboration and consultation with industry to design the most appropriate payment collection mechanism, noting various issues raised, including retrospective pricing.

During the design process of the SAF Mandate, we closely examined the potential for unintended consequences. We will need to ensure that both the SAF Mandate and revenue certainty mechanism interact positively to avoid unintended consequences or perverse incentives when designing the revenue certainty mechanism and its funding mechanism. We will continue to consider this in more detail.

Regarding the point raised on tankering – where airlines take on additional fuel on inbound trips to the UK to cover the outbound trip from the UK – it is important that UK SAF policies do not result in an increase in carbon elsewhere.

Previously, we committed to further research into the extent of tankering once the SAF Mandate was operational and, if required, carry out an assessment of mitigation options beyond a minimum uplift requirement. As part of this further research, we can explore whether the revenue certainty mechanism could potentially impact the risk of tankering and, if needed, how it could be designed to mitigate this risk.ÌýWe will continue to engage with the aviation and fuels industry and welcome any further evidence or analysis.

On the specific point of permitting exports under the revenue certainty mechanism, we have not finalised a policy position. But, we want to ensure the benefits of the revenue certainty mechanism are realised in the UK in terms of volumes to help meet the UK SAF Mandate targets, as well as job creation and growth.Ìý

As set out in response to question 1, a full subsidy control assessment will be conducted to ensure the revenue certainty mechanism is compliant with both domestic and international subsidy control frameworks. Throughout the policy development to date, we have considered design features that impact subsidy control.Ìý

We will engage with stakeholders on the issue of challenges facing PtL production in the UK to collect views and keep them informed of any next steps.

Next stepsÌý

The SAF Bill introduced on 14 May 2025 provides primary powers required to deliver a GSP-style mechanism for SAF production in the UK. It also includes provisions on how the revenue certainty mechanism will be funded.ÌýÌý

We expect legislation for a revenue certainty mechanism to be in place by the end of 2026. Collaboration with industry will be crucial in providing an effective revenue certainty mechanism as soon as possible. This is likely to include further engagement on the operational design of the funding mechanism option and key contract considerations.