Sustainable Aviation Fuel Bill (First sitting)

The Committee consisted of the following Members:

Chair: Mark Pritchard

† Atkinson, Lewis (Sunderland Central) (Lab)

† Buckley, Julia (Shrewsbury) (Lab)

† Collins, Tom (Worcester) (Lab)

† Dearden, Kate (Halifax) (Lab/Co-op)

† Downie, Graeme (Dunfermline and Dollar) (Lab)

† Hack, Amanda (North West Leicestershire) (Lab)

† Kane, Mike (Parliamentary Under-Secretary of State for Transport)

† Kohler, Mr Paul (Wimbledon) (LD)

† Macdonald, Alice (Norwich North) (Lab/Co-op)

Mayhew, Jerome (Broadland and Fakenham) (Con)

† Minns, Ms Julie (Carlisle) (Lab)

† Reed, David (Exmouth and Exeter East) (Con)

† Robertson, Joe (Isle of Wight East) (Con)

† Smith, Greg (Mid Buckinghamshire) (Con)

† Stainbank, Euan (Falkirk) (Lab)

† Taylor, Luke (Sutton and Cheam) (LD)

† Vince, Chris (Harlow) (Lab/Co-op)

Lucinda Maer, Dominic Stockbridge, Committee Clerks

† attended the Committee

Paul Greenwood, Council Member (and CEO of Esso UK), Fuels Industry UK (FIUK)

Rob Griggs, Policy and Public Affairs Director, Airlines UK

Gaynor Hartnell, Special Adviser (former CEO), Renewable Transport Fuels Association (RTFA)

Jonathon Counsell, Group Sustainability Director, International Airlines Group (IAG)l

Luke Ervine, Head of Sustainability, Virgin Atlantic

Lahiru Ranasinghe, Director of Sustainability, EasyJet

Sophia Haywood, Director EU and UK Government Affairs, Policy and Sustainability, LanzaJet

Noaman Al Adhami, Country Head UK, Alfanar

Public Bill Committee

[Mark Pritchard in the Chair]

Sustainable Aviation Fuel Bill

I remind Members to switch off or silence electronic devices. As Members know, tea and coffee are not allowed during our sittings.

We will first consider the programme motion on the amendment paper; we will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions, before the oral evidence sessions. In view of the time available, I hope that we can take those matters formally, without debate.

I call the Minister to move the programme motion standing in his name, which was discussed yesterday by the Programming Sub-Committee for the Bill.

That—

1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 15 July) meet—

(a) at 2.00 pm on Tuesday 15 July;

(b) at 11.30 am and 2.00 pm on Thursday 17 July;

(c) at 9.25 am and 2.00 pm on Tuesday 22 July;

2. the Committee shall hear oral evidence in accordance with the following Table:

Copies of written evidence that the Committee receives will be made available in the Committee Room.

That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Mike Kane.)

The Committee deliberated in private.

Before we hear from the witnesses, does any Member wish to make a declaration of interest in connection with the Bill?

I made this declaration on Second Reading as well; I do not think it is strictly relevant, but I wish to be very transparent: I got a donation of sustainable fuel, to use in a road car, from a company that does not produce sustainable aviation fuel. It is recorded in the Register of Members’ Financial Interests.

That is noted and recorded.

As the chair of the all-party parliamentary group for the future of aviation, travel and aerospace, I have met a number of the groups that will be presenting today. In fact, I met Rob only yesterday for information on the Bill and its content.

That is noted and on the record.

Examination of Witnesses

Paul Greenwood, Rob Griggs and Gaynor Hartnell gave evidence.

We will now hear evidence from Paul Greenwood of Fuels Industry UK, Rob Griggs of Airlines UK and Gaynor Hartnell of the Renewable Transport Fuel Association. You are all welcome.

I remind hon. Members that questions should be limited to matters within the scope of the Bill. I will call colleagues to order if they wander outside the scope of the Bill. We must stick to the timings in the programme order that the Committee agreed; for this session, we have until 10.10 am.

Before I ask the witnesses to introduce themselves briefly for the record, let me say that if I say, “Order, order” at the end, it is because we are on a very tight timetable, so please forgive any abruptness in calling you to order. Over to you.

Rob Griggs: Good morning, everyone. I am Rob Griggs, the director of policy and public affairs at Airlines UK. We are the trade association representing UK airlines.

Gaynor Hartnell: My name is Gaynor Hartnell. I am the senior adviser to the Renewable Transport Fuel Association and am its former chief executive. The RTFA is a trade association representing UK producers of renewable fuels.

Paul Greenwood: Good morning. My name is Paul Greenwood. I am the UK chair of ExxonMobil, ultimately responsible for all of Esso’s activities in the UK. I am here on behalf of Fuels Industry UK, the trade association for fuel producers and suppliers in the UK.

I call the shadow Minister.

Q Good morning, witnesses. From the Second Reading debate and most of the written evidence that we have seen, we know that there is a fair amount of consensus on the price mechanism in the Bill, but the only point of having Committees like this is to seek to make a Bill better, so my straightforward question to all of you is: “How could the Bill be made better?”

Rob Griggs: Our starting position as UK airlines is that we recognise that the Bill is principally an enabling Bill. Of the issues that we really care about, the revenue certainty mechanism is really important. We fully support the RCM: it is a critical way to drive the investment that we think we will need in the UK sustainable aviation fuel sector to support the advanced SAF industry in particular and that part of the mandate, which starts to become considerable by 2030.

We need to get the RCM right. The design matters to make sure that we get the most from it and deliver the most cost-competitive, efficient decarbonisation of the sector while supporting and protecting UK consumers as well as fliers. We think that we can do that with a well-designed RCM. We know that many of the design elements will come through in secondary legislation and further consultation after this point, so we do not see anything in the Bill that is particularly problematic.

At this point, we would not proactively suggest that any amendments are necessary. We recognise some of the important elements. We know that the levy will be on fuel suppliers, but we think it is really important that there is accountability in what happens to the money. In all likelihood, the costs of the levy will be passed through to airlines and ultimately to consumers and to the UK public, so there needs to be accountability about the levy and the funding mechanism. The Bill does not prevent that, but it will be important to get it right in future.

Q That is very helpful. Before we move on to the next witness, may I probe two elements of what you said? On your last point about costs ultimately being passed to the consumer, the Government stated clearly—the Minister said it from the Dispatch Box on Second Reading—that the Department for Transport believes that any addition to, or indeed subtraction from, airfares as a result of the Bill will be no more than £1.50. Do you agree with that point?

Secondly, you have talked about advanced SAF. Does the Bill do enough to safeguard any state involvement in encouraging the right long-term technology, rather than standing up earlier technologies that we can all see might well need to be stood down in 10 or 20 years when something better has come along?

Rob Griggs: We recognise the £1.50, and we absolutely welcome the commitment through the mandate that if there were price spikes as a result of SAF policy, steps would be taken to address that. For us, it is probably a little too early to say definitively what the price impact of the RCM will be. A lot of it depends on its ultimate scope and design, as well as the costs in the 2G market and the strike price.

We have to bear in mind that ultimately it is the market price of SAF that will drive the biggest impact on ticket prices and the costs borne by the sector. With the RCM, the costs relate essentially either to paying the difference between the cost of SAF and production or to the fact that money can come back the other way. Relatively speaking, although the RCM costs are very important and we need to do everything we can to make sure that they are kept as low and as efficient as possible, they are part of a bigger picture. There are a number of factors that will determine the cost of SAF for the UK. We need to get everything right; the RCM is just one part.

You asked whether the Bill will support the advanced 2G SAFs. The UK has taken a fairly unique route with SAF and the mandate. We have the sub-mandate for advanced SAF, which is about 300,000 tonnes by 2030. We think that it could be a pretty smart move for the UK to do that, because at some point 1G SAF will become feedstock-constrained. That could happen sooner rather than later. We could put ourselves in a really good position by having a domestic advanced SAF industry producing the scalable SAFs that will play an increasingly big role.

Q To pick up on an item raised by Mr Greenwood, we have heard the Government talking about how this is the first legislation of its kind in the world. What impact do the other members of the panel feel it will have on the global market for SAF, and for airlines more generally?

Rob Griggs: One of the key reasons why we support the RCM and see it as necessary is that we have a mandate that—unlike the EU mandate, for example—has an advanced subsection. We therefore require advanced SAF. At the moment, something like 85% of all the SAFs produced in the world are first-generation HEFA—hydro-processed esters and fatty acids. That is used cooking oil-type SAF; it is perfectly legitimate, but it is ultimately feedstock-constrained. The world will be drawing on more and more SAF, and at some point we will be likely to reach what people are calling a HEFA tipping point, where there just will not be enough of it.

The UK, through its policies, is focusing on second-generation advanced SAFs, which are technically more challenging and more expensive, but also more scalable. As airlines, the absolute worst-case scenario that we are trying to avoid, and that we think the RCM is really important in helping us avoid, is a situation whereby in 2030 the suppliers who are the mandated party simply cannot access through the market the advanced SAF they need to fulfil their mandate obligations. It is not being made anywhere at the moment. A lot of HEFA is being made, but not advanced SAF.

We need advanced SAF here in the UK. The US is making some advanced SAFs, but they have feedstocks that are not for our mandate—they are often crop-based. Without the RCM driving the production of advanced SAFs, we are concerned that we simply will not be able to access it. If that happens, the buy-out price kicks in for the suppliers, which is likely to be passed on to airlines.

The worst case scenario is that, in 2030, the mandate essentially fails because there is high buy-out, all the cost gets passed on to airlines, there are no SAFs, which means no decarbonisation, and then we are unable to claim our SAF against the emissions trading scheme obligations, for example. To be clear, we do not think that the RCM should cover all mandated volumes of advanced SAF; there needs to be competition. It should be there to get those first plants built, and to provide a quantity of that mandate—potentially a substantial quantity, but part, not all, of it.

Q Thank you for joining us. I think we are in a slightly unusual position, in that we are all competing to try to make slight improvements to legislation that we all agree is necessary and positive. My question is about the source of the funding for the RCM. The Government made it clear that their preference is that it comes from a levy on users. An alternative, which we see in other jurisdictions, is that it comes from ETS sources, which would slightly more directly couple the emissions component to the consumption. The intention to not predicate the source of funding on the money being provided is clear. Do any of the panellists have an opinion on those two options and the path that the Government have taken for the funding source?

Gaynor Hartnell: There are really only two options for the levy: airlines or aviation fuel suppliers. A large part of why aviation fuel suppliers were chosen may have been because, administratively, they are the obligated party when it comes to the mandate. They are expected to pass the cost of the mandate through to airlines—their fuel customers. They would be expected to pass the cost of the levy to airlines, or indeed, if the levy actually brings in money—these are very small balances of money in comparison with the balances to do with the mandate—they would be expected to pass those costs back to the customers. The aim is to deal fairly with a fairly small amount of money. It is not the additional cost of the sustainable aviation fuel; it is just the cost of levelising and stabilising it, which is a sliver in comparison.

Rob Griggs: For us as airlines, the funding is a critical issue about fairness and accountability. As Gaynor said, the understanding is that the levy will be on the supplier. The issue for us is that we understand that the costs are likely to be passed through to airlines. We just want to make sure that that is transparent. We have seen through the early stages of the mandate that there is some concern that excessive compliance fees are perhaps being put on to the SAF. Voluntary SAF seems to be a lot cheaper than mandated SAF and there is not necessarily a clear reason for that. We want transparency in terms of how the levy is passed through.

Q I thank the panel for coming to give evidence. Rob, in your opening statement you spoke about this being an enabling Bill. Could you touch on what you think the next steps would be were the Bill passed? I also have a basic but important question: what do you all see as the impact of this Bill, whether positive or negative, in terms of environmental and economic benefits? Is there a risk in not getting on with it?

Rob Griggs: To take the second point first: on the environmental side, UK aviation is committed to net zero 2050. We have not wavered from that commitment, and SAF is a hugely important part of that. It is doing the physical and metaphorical heavy lifting for our road map to get there. We need to do a lot of things—there is no silver bullet—but the last industry road map we all agreed had SAF at around 40% of the decarbonisation to 2050. That number will obviously change, but it is hugely important. The UK has a world-leading aviation industry, which does a huge amount for the UK economy. We believe we can grow and decarbonise, but we cannot do that without SAF. It is hugely important for both its economic and social benefits.

In terms of next steps, we fully support the Bill, and we hope the process can go as quickly as possible to get that certainty for investors and help to get those first plants built. For us, it is then down to the importance of scheme design and ensuring that we look to get that balance right for the most cost-effective decarbonisation to meet all those objectives: what size of scheme, how many and what type of projects are supported, what proportion or volume of SAF it would be looking to support and, through that, how you ensure there is competitive tension between those projects that are bidding for support and those projects that do not think they need support. It is about getting that right to ensure that we are getting best value from the projects that will deliver best bang for their buck and can produce the volumes that we need quite quickly. There are a lot of different technical elements.

Q Yes—I recognise that there are a lot of benefits of SAF, but I am wondering how the Bill can help that along.

Gaynor Hartnell: I think it is worth mentioning some of the environmental benefits specifically of producing SAF in the UK. They are focused on the second generation—that is, SAF that comes from waste. We have problematic waste to deal with in the UK, and it is better in terms of the proximity principle if we deal with our own waste domestically. There are various different feedstocks that the SAF mandate is seeking to encourage that have not traditionally been used, so it is aiming to expand the feedstocks to things such as end-of-life tyres. We currently export a lot of that waste to India, and we have heard in the news about the devastating environmental and health impacts that that has. If we deal with our own waste domestically, that is an environmental benefit; we will import somewhat less, but the aviation fuel we use at the moment is largely imported.

The main benefits of producing the SAF in this country are economic. The Government have realised that and they support it as part of their growth agenda, which it plays to.

Paul Greenwood: To round that out, if you listen to Rob’s comments, which I thought were very insightful, about the complexity of this and the need to ensure you get the right projects, with the right feedstock, at the right size and with the right basis, that to my mind is classic market distortion. Fundamentally, you are intervening in a market and saying, “I’m going to decide what is going to happen in this marketplace and I’m going to incentivise it to happen with a tariff.” The best way to do that is effectively to set a very clear demand signal, which happens through the SAF mandate, and let the market go and work that.

I do not buy into this idea that the market is incapable of supplying second-generation SAF; I had breakfast this morning—not because I was coming here today—with an Asian supplier who I deal with, who let me know that they had taken a final investment decision on a second-generation SAF plant in Asia that will be starting up in 2028. These things are happening; the market is responding. You are deliberately intervening in the marketplace with very good intentions, but it will distort that market signal. There is no doubt about it.

Q Mr Greenwood has made a compelling critique of the basics—“We have a mandate; why do we need the RCM? There might be unintended consequences.” I know you disagree with him, but I would like to hear why you disagree with him.

Gaynor Hartnell: These projects are first of a kind, pretty much. This waste-based stuff is not being produced at scale anywhere in the world yet. It is very challenging to build one of these projects. There are numerous risks. You have Philip New coming later to give evidence; he has written a report on that, so you could ask him what those risks are. This addresses the showstopper risk if you like, which is the revenue certainty that a SAF producer can rely on when going to a bank and asking to borrow the millions or billions of pounds that it costs to build one of these projects.

In the UK, we now have many precedents of other large-scale projects that are driven by environmental requirements, from renewable electricity generation to carbon capture and storage. Those various different projects are all supported by some sort of equivalent to the contracts that will be let under this revenue certainty mechanism, whether it is a contract for difference for electricity or whatever. It is par for the course. We are not asking for this just because everyone else gets it so we should get it too. There is a competition for capital, among other things. If there are supported projects in terms of revenue stability, it will be easier for the capital to flow to those projects. This is a new mechanism. We are seeking new types of SAF production pathways. It is incredibly complex, and it is necessary.

Underlying all of this, the SAF mandate creates a market for greenhouse gas certificates, and the price of those certificates will be variable. It is very much built on a preceding policy—the renewable transport fuel obligation for road transport. That was just a demand mechanism without any accompanying equivalent to this revenue certainty mechanism. We import 85% of our road fuels, and we are not doing a very good job, I must say, given the opportunity, at preserving those early movers of projects that were built in the early days. Getting project funding is challenging, and it is not made easier by the fact that we have some early movers that are not managing to keep their renewable fuel projects going. I am talking about the bioethanol producers.

Q And issues such as tankering?

Rob Griggs: We think it is probably too early to say. We need to keep an eye on that and whether there are unintended consequences of the way that this is set up. It is one to monitor.

We have six minutes left and two other Members want to ask a question. Mr Greenwood.

Paul Greenwood: I would take a look historically at the energy industry, which is a trillion-dollar industry. We have risen to the challenge of any technology that has been set and have managed to move from leaded gasoline to unleaded gasoline, and from high-sulphur fuel oil to low-sulphur fuel oil. New technologies come in all the time. We have the capability to deliver those if the market signals are right. I see no reason at all, as I look around the world, why sustainable aviation fuel, second generation, would not be the same.

Because of the pressures of time, unusually, I will ask Euan and David to ask their questions together.

Q Thank you, Mr Pritchard. Both Airlines UK and RTFA touch on this in their written submissions, but using municipal solid waste will give a substantially higher greenhouse gas saving than incinerating it, as is currently done. What do you think the Government could do further to incentivise use of the feedstock in that way, rather than seeing more energy go towards waste projects and incineration, or do you anticipate that the revenue certainty mechanism and the sub-mandate will be sufficient?

To pick up on Mr Greenwood’s point about unintended consequences, at a time of increased international instability, the need to produce things domestically in the coming years has become more and more apparent. Do you think this will impact our traditional ways of producing those fuels that we will probably need in the UK?

Paul Greenwood: First, from an energy security point of view, and as Gaynor rightly pointed out, a very significant amount of the road fuels in the UK are imported. They are imported rather than refined here, as it is not economic to refine them here, because of all the cost issues we face in energy, labour and carbon dioxide. That has effectively driven refineries to not invest or expand, and in some places, to go bust. That is the major driver here.

If you are prepared to import 70% of your jet fuel now, I do not see why you need to increase local production of SAF. There is a very good reason for doing that—the creation of jobs—but there are unintended consequences in the costs and how you are going to pay for that, which need to be thought through seriously. I do not think this is an energy security issue, given the amount of product that you are importing into the country now. By layering cost on to refiners and fuel suppliers as you are doing now, you actually risk precipitating the decline and demise of the refining sector even more, which will mean importing significantly more fuel across the piece. To my mind, that is a quid pro quo.

Gaynor Hartnell: We import about 85% of our road fuels. Lamentably, that figure is going to go up, because existing biofuel and renewable fuel production facilities are falling away. There was a Greenergy announcement last week about the closure of the Immingham plant, and two bioethanol producers are at risk of closure. They are linked into the UK in so many different ways, from CO₂ production to the market for grain that does not meet the required grade for milling, so it has to be used as feed wheat instead. We will suffer the consequences of not taking care of our domestic industry. We need production in the UK.

Mr Griggs, I am sorry—you have 35 seconds.

Rob Griggs: We fully support the changes to the waste hierarchy. On municipal solid waste, our key point is that our analysis suggests that there are plenty of UK feedstocks across the different technology pathways, of which municipal solid waste is a huge potential advanced pathway. The way the waste hierarchy and local authority contracts are set up, it is just not working as we think it could be to maximise your decarbonisation bang for your buck. When there are cheaper and better ways of making electricity, decarbonising is tough, and we think that we should be prioritising that.

That links to the question about domestic production. Again, we think that the UK is advantaged in that we have a lot of potential to be producing advanced SAFs through the wastes that we have available, and through the technology infrastructure that we already have in the UK.

Order. That brings us to the end of the allotted time. On behalf of the Committee, I thank all the witnesses for their evidence.

Examination of Witnesses

Q We will now hear oral evidence from Jonathon Counsell from the International Airlines Group, Luke Ervine from Virgin Atlantic and Lahiru Ranasinghe from easyJet. We have until 10.55 am. I welcome our witnesses. If we run out of time, I will interrupt at the end by saying, “Order.” Forgive me if it is abrupt. Please could you introduce yourselves for the record?

Jonathon Counsell: Good morning. I am Jonathon Counsell, group sustainability director at IAG. For those who do not know it, IAG is the owner of five airlines—British Airways, Aer Lingus, Iberia, Vueling and Level. We also have a loyalty and a cargo business.

Luke Ervine: I am Luke Ervine, head of sustainability at Virgin Atlantic. We operate a fleet of wide-bodied transatlantic aircraft. We also have a cargo business and a holidays business. For us, having invested in decarbonising our fleet over the past 10 years, SAF is vital. It is now the only opportunity we really have to decarbonise further in the foreseeable future.

Lahiru Ranasinghe: Good morning. I am Lahiru Ranasinghe, the director of sustainability at easyJet. We operate an entirely short-haul network, with about 350 aircraft around Europe, more than 150 of which are based in the UK.

Q Good morning to our witnesses. It is impossible to consider the Bill without also considering the mandate, side by side. What impact do you feel the Bill will have not just on your businesses but on the fares that you charge passengers on your aircraft, and, for those of you who have cargo operations, the impact on the cost of shipping goods by air?

Jonathon Counsell: We are huge supporters of the Bill. As Luke has said, SAF is critical to decarbonising aviation. There is no silver bullet, but this gets pretty close. We think that by 2050, 70% of our fuel will be SAF.

There are three types of SAF: first, second and third generation. Quite clearly, the first generation is all that you can buy today, and 95% of it is from hydroprocessed esters and fatty acids—used cooking oil. However, that will hit feedstock constraints in the early 2030s, so we are going to start to cap out on the amount of 1G SAF we can produce. That is why 2G and 3G are critical if we are to meet long-term decarbonisation targets. We expect that by 2050, 90% of SAF will be 2G and 3G, so it is critical that we have a policy mechanism that incentivises 2G SAF.

That is why I disagree with some of the comments from the oil company representative in the previous witness panel, who said that we do not need this policy intervention. We absolutely do, because without it we will not get 2G SAF on the mandate alone. That was shown in the work done by Philip New, the chief executive officer of BP renewables. He knows a lot about this market, and he wrote an extensive paper for the Government, which said that we will not get these SAFs without the revenue certainty mechanism. For that reason, we support it.

I will come on to the impacts shortly. We have no amendments to suggest at this stage, but we think that there are two points that could make it better in the next phase. One is that it has to be targeted. Not all 2G projects will need the revenue certainty mechanism; some of them will get funding without it, so it has to be targeted at the early-stage, first-of-a-kind projects that need it. That is how we can contain the total cost of the scheme.

Q If I can probe that a little more, you say £1.50 is a conservative estimate. Does IAG have its own estimate?

Jonathon Counsell: No. We have not at this stage managed to fully analyse that number. We think there are potentially some elements that have not been included in that calculation, but £1.50 per passenger feels quite low when you think the costs of the SAF itself will be nearer to £10. We can take a close look at that, but I think the key principle is we should not be paying for that plus the SAF, hence we need to net that off against the UK emissions trading scheme costs.

Luke Ervine: I fully support Jonathon’s comments. We are fully supportive of the RCM, as we have been for the mandate. The mandate drives demand and the RCM drives the supply, and we do see a massive shortage in the 2G that we need. It is interesting from an oil producer’s perspective to state that the polluter must pay. Well, the oil companies are also part of that problem and must pay. We believe that our consumers will pay the price of SAF but we do not believe we should pay to underwrite the logistics and the production facilities. That is why there should be differentiation between paying for SAF and paying for the RCM.

We as a company have fully supported some of the potential producers in the UK and they are the ones saying to us, “We need an RCM; we need a level playing field to attract investment into producing 2G SAF in the UK.” When we say, “Let the market do what it wants to do,” we are hearing from the market and from producers, some of which do not want an RCM but some of which definitely do. In creating this Bill, you are allowing that opportunity for those that do need it. I do not think we need 100% of SAF covered by RCM for 2G production. We do need imports and to make sure that SAF in the UK remains competitive. That means balancing that need for investing in first of a kind 2G plants that require the investment certainty with the ability to create a competitive market and allow imports into the UK as well.

Q You have all mentioned how essential SAF is to decarbonisation. Could you expand on its environmental impact? When and how will you be able to track the impact of the mechanism on your emissions? How will you directly be able to link it, or SAF more broadly, to any reduction in emissions?

Jonathon Counsell: This is very important. Generally, with 2G SAF there is an opportunity to have much lower carbon emissions than with 1G SAF, and that is one of the reasons that it is very attractive. We have a project up in Teesside, Project Speedbird, with LanzaJet and Nova Pangaea, that takes waste biomass, creates bioethanol and converts that into jet fuel; it also creates a co-product that goes into the ground, which is used by farmers to enhance the soil properties. The emissions from that whole life cycle are negative, because you are getting the benefits of the sequestration. That is a good example of the environmental advantages of 2G SAF.

When you start linking that with carbon capture technology as well, it can be even better. That is why we are funding it. There will not be enough 1G SAF to meet all our decarb requirements, and 2G is much lower emission. Then you get to 3G SAF, or power to liquid—the ultimate SAF, where you capture CO₂ from the atmosphere and mix it with green hydrogen. That is where we ultimately want to get to, but we accept that that is a bit further away. Generally, 2G SAF is a lot better for the environment than 1G SAF, and that is why it is critical for us.

Another thing worth mentioning is that there is also a non-CO₂ environmental impact, typically from contrails—the white lines that you see in the sky. They are believed to have a significant warming disbenefit. Early evidence has shown that using high ratios of SAF reduces the incidence of contrails, so there is a secondary benefit from using SAF. Many more trials need to be done, but that is another environmental plus from SAF.

Q I want to pick up on the monitoring point. For example, say a consumer feels that they have had to pay a little more for a flight that is more environmentally friendly; how soon would you be able to quantify whether that mechanism had had an effect? In a year’s time, would you be able to say that it has meant that the carbon has been decreased by x amount?

Jonathon Counsell: Definitely. All SAF has to be independently assessed for its life cycle emission savings. Before we purchased it, we have to prove that, and as I said, get an independent authority to test the life cycle emissions. We will be able to declare publicly, of any SAF that we use, the independent assessment of its life cycle savings.

Lahiru Ranasinghe: If you look at the mechanics of how it works for meeting the mandate, there is a minimum threshold that we set when buying compliant fuel. In this case, compliant fuel is kerosene: fossil-based kerosene blended with SAF. When we pay for the supply, we get the product transfer documents, which have the sustainability criteria associated with that specific batch of SAF. At that point we can very accurately calculate the emissions saving. In terms of planning, we have to set a range, because there is some variation depending on the pathway and the SAF provided. Building on what my colleagues here have said, there is an opportunity for the UK both in home-grown production and up and down the value chain in the development and export of the technology and the financing and trading of SAF in the longer term. We have what is seen as a gold standard for sustainability criteria, especially going to 2G SAF and the conversion of waste into usable fuels, which addresses multiple issues at the same time and is something that we can export to the rest of the world.

Q Mr Counsell, I would like to quiz you on your first point. Given the premium on SAF, the mandate is going to cost far more than the RCM?

Jonathon Counsell: Yes.

Q The RCM is all about increasing the ability to produce, which will surely bring down the market price. Is not the RCM, in fact, an investment to cut your costs in the long run?

Jonathon Counsell: We support the RCM: it is a critical mechanism and you will not get 2G plants funded in this country without it. We spent the last five years talking to investors who said that the mandate is not enough. The mandate creates demand; it does not create investment. If you have a mandate on its own, all your SAF will be imported. The RCM unlocks the investment to get the plants built—so it is absolutely an investment, but the issue for airlines is that we are paying for the SAF and also paying for our carbon emissions. If we then pay for the derisking of the infrastructure, we are double-paying.

The EU ETS first established that the key principle is that money is recycled to help decarbonisation of those sectors that fund it. It is not taxpayers’ money. Aviation puts £500 million into the UK emissions trading scheme. That money is supposed to come back to support the decarbonisation of aviation. None of it does. All we are saying is, is that not a perfect opportunity to use some of that aviation money to support the costs that are coming back to us through the levy? Then we would not be paying twice. Instead, we would be paying for the levy, but through the UK emissions trading scheme.

Q To your point on the RCM, the money you put into the RCM will bring down your overall costs, because the premium on SAF will go down, will it not?

Jonathon Counsell: Absolutely—we hope that eventually, as you scale up SAF supply, the cost will come down. Will it ever come down to jet fuel levels? I do not think it will, because of the factor cost element. I agree with Paul Greenwood, who said earlier that one of the disadvantages we have in this country is high energy costs. We are doing SAF contracts with SAF suppliers in the US, where their energy costs are one third of those in this country, so we are at a disadvantage.

On 2G SAF, however, I think we have some real advantages: we have some sites, we have expertise and we have feedstock, both waste biomass and municipal solid waste. We put 20 million tonnes of municipal solid waste into landfill; we even ship 5 million tonnes of it to Europe. That is energy. We should be using it to make SAF. Those advantages can overcome the energy disadvantage in the short term. Hopefully we will sort out that energy disadvantage, but as we scale up those plants that SAF price should come down. It is an investment, but we do not want to double-pay for it.

Luke Ervine: Just to add and clarify, I think Luke Taylor asked a question earlier about ways to pay for the SAF mandate. We have always been very clear about paying twice through things such as the ETS scheme. We would love to see those revenues used to reinvest in the decarbonisation of the aviation industry. Given the economic value it returns and the Government’s growth agenda, we believe that creating a SAF industry also creates jobs and a lot of economic prosperity. The Sustainable Aviation report in 2023 estimated that the UK SAF industry would create about 60,000 new jobs by 2050 and about £10 billion gross value added by the same time. There is a benefit here for the UK economy as a whole purely in terms of the SAF industry, and using some of the taxes we currently pay to fund the RCM would be very helpful.

Q Building on the point Mr Ervine made about the potential wider economic contribution of SAF, I am particularly interested in the jobs. We have heard that 70% of existing fuel is imported, and therefore a significant part of your economic supply chain is essentially providing economic benefit overseas. Could you say a little more about—if we get this off the ground, as it were—how far you think that value chain and economic benefit will shift into the UK from imports? In particular, could you talk about the potential regional economic benefits of SAF, as opposed to being concentrated on London and the south-east?

Jonathon Counsell: From our modelling and analysis, we still want to have the flexibility to import SAF, because there is a global market there and we do not want to put ourselves at a competitive disadvantage by saying that all mandated SAF has to be produced in the UK. We still want access to imported SAF, particularly 1G SAF; we do not think the UK has much competitive advantage in producing 1G SAF. We think roughly 50% feels about right, and you have to compare it around that. Our view is that, of the mandated SAF, approximately 50% should be produced here in the UK—but, as I said earlier, not all of that will need the revenue certainty mechanism.

One of the key points that I want to make is that the revenue certainty mechanism is for those plants that cannot get funding: they are early stage, first-of-their-kind technology, and cannot get tracker funding because it is perceived to be too high risk by the investment market, and they cannot get that revenue certainty through any other mechanism, so therefore they rely on this mechanism. We think that roughly half of that 50% will need the revenue certainty mechanism.

A good example is LanzaJet in Teesside, the speedboat project that I mentioned earlier. That does not need the revenue certainty mechanism because we at IAG are providing the company with a long-term committed take-or-pay offer. We are giving the revenue certainty to LanzaJet, so that project does not need it; but other projects do, typically including the municipal solid waste projects that take black bag waste. They are at a very early stage, using less mature technology, and they are massively capital intense projects. They definitely need the revenue certainty mechanism, so we must ensure that it is targeted.

Q Thank you all for joining us. The evidence that you have given so far has been very helpful. There was a question earlier about waste hierarchy and the availability of waste feedstocks as one source of raw fuel or raw material for some of the second-generation SAF. Is enough being done across Government, in a holistic way, to ensure that the goals of the SAF mandate, the RCM and this Bill are achieved? Is enough being done to ensure that the things that are needed—waste feedstocks, the reforms to planning and energy production for eSAFs—are in place? What is going to hold back what we are trying to achieve in this Bill, and what needs to be done elsewhere?

Jonathon Counsell: That is a really strong point. There is a key question about the waste hierarchy, which Gaynor spoke to. Currently, waste going to SAF is treated the same way as incineration or energy from waste, but the analysis is clear that we can get twice as much energy capture from producing SAF than from producing energy from waste. We feel that you are getting a lot more bang for your buck from using waste to produce SAF than from other things, which we think should be reflected in aviation being prioritised in the waste hierarchy.

On renewable energy, last year the Sustainable Aviation road map made it quite clear that 3G SAF—where you basically electrolyse water to get hydrogen and you capture CO₂ from the atmosphere—is going to take a lot of renewable electricity. We are going to need a lot more of that within the UK if we are going to support a domestic power-to-liquid market.

Luke Ervine: In addition to that, we need to think about other areas of SAF, when we talk about SAF having a nominal value associated with its ability to reduce greenhouse gases. We are working alongside the Department for Energy Security and Net Zero and the Department for Business and Trade to understand how carbon can form part of the solution, and decarbonising the SAF that we are producing is also key. We are also working side by side with the Treasury to understand what the revenues from the ETS look like.

Q You alluded to this earlier, but have you done any work with your customers—either passenger or freight—on how much they care about SAF specifically, or sustainability more generally? If you were not working towards the kind of targets that you are, do you think that would impact customer choice? Do you see this as a competitive advantage between yourselves, or globally as well? Also, to pick up on something that Jonathon mentioned earlier, do you think there is enough in this legislation on what needs to happen after, if it is passed, to encourage the necessary investments, particularly in third-generation SAF and beyond that?

Jonathon Counsell: On the customer perspective, we did a lot of surveying of our customers, and it is no surprise that there was a bit of scepticism about offsets and all the history with those. When it comes to SAF, I think there is general recognition and support: people think, “You burn a lot of fuel, so it just makes sense that you are trying to find a lower carbon fuel.” There is a lot more acceptance of that. We have always offered voluntary schemes for our customers to offset their emissions. We provide offsets, carbon removals and SAF. The uptake is very low, but SAF is proving quite popular, so I think there is greater acceptance of SAF as a solution for aviation than some of the others.

What I will say is that corporates have gone gangbusters—if I can use that technical term—on SAF, and we do something called SAF Scope 3. A lot of the big corporates set very ambitious net zero targets by 2030, particularly professional services firms such as consulting firms, banks and law firms. When they do their carbon footprinting, a huge proportion is from their flying activity, so they come to us and say, “I want to address my carbon emissions”, and we can offer them SAF. We can sell the carbon attributes as what they call a Scope 3, and that has literally taken off. Most of the SAF that we bought last year came with a SAF Scope 3 deal from a corporate. That is fantastic, because we can use that revenue to reinvest and buy more SAF. From a corporate market, there is definitely very good acceptance of the power of SAF to reduce our emissions.

May I say that we want full answers, but we have three other Members who want to ask questions? We have 11 minutes left.

Luke Ervine: I agree with Jonathon; the corporate world is where we see most support for SAF, particularly in cargo companies. They are very mature in the way that they think about SAF, largely because they have clients—as freight forwarders, they have clients—that demand CO₂ reductions. That is corporates and cargo.

We recently undertook a survey. I cannot remember, off the top of my head, what the split was, but a large proportion of our passengers really valued the ability to buy SAF—less so carbon credits; they relished the ability to buy SAF. In terms of competitive advantage, we are all working with the same levers, and there are not many of them in the aviation industry. We have invested in those fleet transitions to cleaner, more efficient aircraft. We are 82% transitioned into new NEO—new engine option—fleets at the moment, and we will be 100% by 2028. There are competitive advantages in this space, but we are all dealing with the same basic levers in order to drive our customer base and attract customers in.

Lahiru Ranasinghe: We probably have a slightly different customer base from the two airlines here. A large proportion of our travellers are people who travel once a year, or once every couple of years, on their holidays.

Generally speaking, we have asked customers, and they care about sustainability, and about easyJet and the airline becoming sustainable, but it is not something that those who travel infrequently engage with frequently enough for it to be a consideration. Also the question about SAF, for example, is a complicated one. I completely agree on the corporate side, but on the average customer side, it does not feel like a competitive advantage right now.

I will call Chris Vince, then Euan Stainbank and Luke Taylor—will you go one after the other, please?

Q I will be very quick, Mr Pritchard. Thank you all for coming to give evidence. Graeme has stolen a little of my question, which was to understand what you see as the risks to your industry if the Bill does not go forward or, in fairness, if it does go forward. I want to understand the risks involved.

We have talked about targeting. Would you support any further specific policy interventions to help to stimulate advanced 2G SAF technologies that might otherwise struggle to scale up?

I just have a pushback or challenge on the comments about SAF being popular. An earlier pushback, too, was on the £1.50 per passenger on top of tickets. Does that suggest that this might be easier to sell—easier to promote—to passengers than you might have suggested in the first place? I think the suggestion was that certain demographics and certain airline customer groups will be more or less in favour and able to pay it.

Lahiru Ranasinghe: To add to that, for us, the average leisure traveller would say—to put it in colloquial terms—“It’s your problem to solve. We want you to do it, but we’re not going to pay for it.” With corporates, they have their own corporate targets, so from a B2B—business to business—perspective, they want to hit those.

Jonathon Counsell: I will answer the risk question. Yes, without the policy, we have no 2G SAF, so we would be dependent on the 1G market, which will cap out in the early 2030s. We are not going to achieve our decarbonisation targets without 2G SAF. That is the biggest risk without the Bill.

The biggest risk with the Bill is buy-out. If the incentive does not produce enough SAF—we understand the buy-out is there to manage short-term supply shortages, but if we have long-term buy-out, which we have seen in the ground transport fuels market—that is policy failure. Essentially, that huge cost is £6,000 per tonne of SAF, and if that cost comes straight back to the airline, it will go on air fares, but you do not get any decarbonisation—you get huge cost and no decarbonisation. That is our biggest risk.

Luke Ervine: Some of the risks of the RCM that we need to be cognisant of include covering too much of the mandate with the RCM. We do not want to lock ourselves into high prices forever and a day. Obviously we want that to stimulate the part of the market that needs that support, so we want to leave enough room for competition.

The other thing we need to think about is how suppliers might bear some of the risk that is presented in the RCM—how some of the cost of capitalising the fund, or any cost of compliance failures that they may face, might be passed through to airlines and consumers. That key area of transparency is therefore important. This needs to be well thought through, but we also need to do it quickly because we are reaching a pivotal point in terms of buy-out where we will have to just pay for no decarb.

Euan, do you want to follow up on that?

No.

We have two minutes left. Do the other witnesses have any final comments or do Members have any further questions? No. I thank the witnesses for their evidence. We will move on to the next panel.

Examination of Witnesses

We will now hear oral evidence from Sophia Haywood from LanzaJet and Noaman Al Adhami from Alfanar Projects. We have until 11.25 am for this panel. Good morning to you. Could you introduce yourselves for the record?

Sophia Haywood: Good morning, everyone. My name is Sophia Haywood. I am the director of EU and UK Government affairs, policy and sustainability for LanzaJet. We are a US-headquartered alcohol-to-jet SAF producer, and we are developing our flagship project—Project Speedbird—here in the UK. Thank you for having me.

Noaman Al Adhami: My name is Noaman Al Adhami. I am country head at Alfanar, which is a global renewables and engineering and construction company. We are developing our Lighthouse Green Fuels project in Teesside. It is a second generation SAF from biogenic waste and residues. We are currently considered the most advanced globally in terms of development, and one of the largest globally in terms of capacity.

Q Good morning to both of you. You are both bringing different technologies to SAF production. Ms Haywood, your SAF is more bioethanol based, and Mr Al Adhami, yours is more waste derived. At what point do you think that the incentives—shall we call them that?—in the Bill, if it becomes law, such as the price mechanism, will mean that you can get your respective products to a cost that is similar to regular, fossil fuel-derived jet fuel in today’s prices? How long will it take you to get prices down?

Noaman Al Adhami: Maybe I can answer this question. This comes with scale. The technologies that we are implementing currently have been implemented in other sectors, so they are not necessarily new, but with the scale, in terms of logistics and feedstock availability, it will take time. We think that when we potentially scale up production, we can recycle engineering and we can utilise other services to push the price down further.

However, in our case, because we are using the FT-SPK route, biogenic CO2 is produced in the process. If I capture that CO2 and connect to Net Zero Teesside, I will be able to generate more carbon certificates—actually, it is triple. For example, if I produced 100 carbon certificates without carbon capture, with carbon capture I can produce 300. By this process, we can reduce the cost of SAF to the offtaker or to the consumer, because then I will divide the capex with the overall cost; instead of dividing it by 100, I will divide it by 300. In our case and for our route, it is key to be connected to the carbon cluster in Teesside, because then I will be able to provide a lower cost for these carbon certificates, if we get the RCM potential.

Sophia Haywood: Just to build on that, scalability is absolutely key. We are looking at a global suite of different projects all across the world. With that, each time we are learning and improving, and becoming more efficient. For example, we built a demonstrator project in the US of our ethanol-to-jet process. From that, we have been able to learn and to become more efficient in spaces, so that when we then develop in Teesside with Project Speedbird, we are able to improve consistently on that basis.

Q This question is probably more for you, Ms Haywood, given the ethanol element of your product. Clearly, there has been some concern in the UK that the lower tariffs deal with the United States has quite a significant bioethanol element to it, which has made UK producers nervous, if I can put it that way. Given that what sits underneath a lot of the Bill is domestic fuel security and production here in the UK, how big a concern is it for you, producing SAF that is ethanol derived, that we might not have that UK security, because we will be dependent on imports—in this case, imports of the bioethanol feedstock?

Sophia Haywood: At the moment, we are not allowed to use the bioethanol produced in the UK, because the majority of it is technically first generation, whereby it is produced from crops. The bioethanol here is particularly produced from crops such as wheat. I am not sure about the exact proportion that is grown here and then converted into bioethanol here.

I think that SAF is a great opportunity for the challenge that the bioethanol sector is currently facing. If we were allowed to use in SAF the bioethanol that is currently allowed to be used in the road transportation sector, we would be able to take that and convert that into jet fuel at our facility Speedbird. I did some quick statistics—quick maths—looking at the total capacity that we have for bioethanol production in the UK today. If we took that additional capacity—not counting our current project, which is 2G or second generation—we would be able to build three and a half more Project Speedbirds in the UK, just taking that potential capacity, if that was all theoretically to come to us.

We see SAF as a great opportunity to fix the current issue that the bioethanol sector is facing. Certainly, we see it as complementary also to the scale-up of 2G, because for us it means that we can reduce the overall cost of project development and we could still transition to 2G over time, or indeed have blends of first generation and 2G together to increase roll-out. For our technology, as long as it is sustainable ethanol that is coming in, we are producing sustainable jet on the other side.

Q Thank you both. A lot of the criticism and cynicism over the value of SAF and its environmental benefits are around the fuel source or feedstuff—you have alluded to it. The Bill concentrates on second and third generation SAF. Do you see that as enabling a lot of the potential greenwashing of SAF that may have been behind all that cynicism? Does it address some of those challenges?

As a follow-up question, similar to one that I asked the previous panel, what do you see as some of the challenges across Government that will hold back your ability to produce more SAF? You referred to the ability to use some of the feedstuff to produce second generation SAF mixing, but I think planning and energy will be among the responses as well.

Sophia Haywood: On sustainability and fraud, I have been working on sustainability certification over a number of different fuel types. We have ISCC, which is like an auditing process that we generally have to go through—there are other providers out there—to be able to prove the sustainability of our fuel. This is a very complicated and rigorous process, and I have gone through it many times on different types of fuels.

On the sustainability piece, the guidance that has been put out already in the SAF mandate is very high, and we have to go through a lot of that auditing process. To your point about the risk of fraud and other challenges around greenwashing that potentially could have happened in the past, I think the UK has done a good thing there with how it has approached this, so I support the approach that we are taking. That is not necessarily in this Bill; I would say that that has more already been laid out in the mandate rules.

On what else we would like to see, potentially, through this, as I said before, there is a piece around the SAF allowances—this is a scheme currently in Europe that is funded through ETS revenues. Obviously, you are always taking from somewhere with funding, but you are trying to take at least from a funding source that is coming directly from industry, and using that to then fund the industry back with SAF. I think that has good bones and good structure, and I would love to see that being fleshed out.

Q What effect has anticipation of the RCM and the corresponding timetable, which I imagine your companies are now working to, had on your ability to make a final investment decision? Can you give us as much detail as possible about your current plans, spades in the ground and such?

Noaman Al Adhami: Our project is a £2 billion investment. We need the RCM to be able to reach FID. We already have lenders on board, and that is the requirement they have asked us to secure before reaching FID. Our project was part of the windows of the advanced fuels fund. The original plan was to start construction by 2025—this year. We were planning all our development activities to be ready to start construction this year. Unfortunately, that is now not possible, because the RCM is now pushed to the end of 2026.

Yes, immediately after I sign the contract—the day after—I will start constructing the site and reach FID. I will technically be ready by the end of this year. I am finishing FEED. We have invested more than £70 million in this project so far and we will finish FEED by the end of this year, so technically I am ready to start construction after the end of this year.

If there are delays, we are worried. We are broadly very supportive of the Bill; our issue is timing. If I do not get the RCM by the end of 2026, then the project will be delayed, and then I will not be able to produce SAF as planned starting from the end of 2029, and then provide the market with the SAF quantities by 2030, when it is required, as per the mandate. The second-generation SAF is required in 2030. I will not be able to do that if there are delays.

Sophia Haywood: We are currently in the FEED phase, which is front-end engineering and design—we are really good at acronyms in this space. Basically, what that means is that we are looking at the facility specific to the site and designing everything up with the site. It is a really important stage, before we then go to a final investment decision. We are expected to go to a final investment decision next year. That is what we came out publicly and said. Any policy uncertainty in this space, even if it is for a good thing, creates questions, but at the moment we are still working towards that timeframe.

Q Following on from the shadow Minister’s questions about scalability and production, Ms Haywood, you talked about the globally distributed nature of this technology sector. With international supply chains becoming more contested and the view that traditional production methods will be scaled down and SAF will be increased, where do you see the biggest blockers to growth and scalability, and how do you balance that against energy security?

Sophia Haywood: That is a great question. In terms of the international value chains, as I said before, all eyes are on the UK. For a lot of projects that are developing globally, even if they are being developed in countries significantly further away from here and Europe, we are going to see a lot of opportunity for product to be moved over to the UK, at least until other mandates in other countries are put in place, and then we will start seeing shifts in where this goes.

Instead of a blocker, perhaps, I would phrase it more as an opportunity about things that we could maybe do slightly differently. One example that we have just had is a project in Japan that we have done. We had a large amount of funding. It is quite similar to the advanced fuels fund principle, but a lot larger in terms of the quantity of funding that is available, albeit with a smaller number of participants. That has enabled a much larger-scale project in partnership with one of Japan’s largest oil companies to develop a SAF project. This is a transition, and they are going to move at the same pace as one another.

As much as we can support investments on existing sites with existing infrastructure, such as both of our projects in Teesside in terms of the regeneration, I think more activities like that could be a great opportunity for the UK. The steps that have been taken so far with Project Willow are a good example of how that could be taken to the next level. The project is looking at opportunities on the site of the former refinery at Grangemouth; maybe this could be a similar example, where you could take it to the next level. However, we will see increasing competition globally.

Q That is a very good answer; I am happy with that, and it is obviously coming from a company’s perspective. In terms of Government engagement, how many conversations have been had with the Cabinet Office and the Department for Energy Security and Net Zero around energy security and your production capability?

Sophia Haywood: It is not something that we have had great levels of conversation about, particularly when it comes to energy security. It is a really important part of energy security. Coming back to the point about access to locally produced bioethanol, I see it as another great example of something that would be sustainable, affordable and secure, if we are able to take wheat that is produced locally by British farmers, and convert it in local facilities and then at a SAF facility. With all the additional benefits on things such as CO₂, that is a great opportunity on energy security, but speaking more broadly it has not been a huge part of the interest in SAF.

Noaman Al Adhami: I will focus more on scalability. When it comes to scalability, allowing all the routes to SAF and not focusing on one route will potentially enable SAF production to be scaled up. Green hydrogen will also potentially be there in large quantities with an affordable price, and that will contribute. For example, we could utilise green hydrogen to triple production if it were available, but currently it is not.

We are also designing our plant to utilise multiple types of feedstocks. It is mainly solid waste to SAF. I would start with a less challenging feedstock to prove the line-up and then explore much more difficult feedstocks, such as MSW. Even sewage sludge, chicken manure and grease, for example, could be used to co-fire the gasifier, so we think the supply chain will potentially build once it sees a home for their waste.

We will start with a safe option for the feedstock, but our objective is to explore all other potential feedstock and increase capacity. We have plans for at least phase 2. Our site in Teesside can accommodate phase 2 and we are already planning for that. Hopefully, once we reach FID, we will announce phase 2 of the project.

Q You have talked a little about this already, but I am interested in the conditions you are operating in and the constraints you are facing. You mentioned regulations and planning, but I am also interested in the availability and maturity of standards and the particular different types of biofuel. I am also interested in how you store intermediates and if there are any issues around that, because I have heard from others that there is perhaps a lack of regulation on the safe storage of some of these intermediates. I do not know whether you are using hydrogen for upgrading at all, but I am interested in whether you have a vision for a future UK hydrogen system, and what that might look like.

Noaman Al Adhami: In terms of standards, as I mentioned before, our route is approved as per the ASTM route. The rest of the standards—mainly on feedstock—are already there in the SAF mandate with all the details, and we are complying with that. I think one of the big advantages of SAF, compared with other means of decarbonising aviation, is that it is a drop-in fuel. It is a liquid fuel, very similar to the jet fuel kerosene, so it is easy to store and transport; you can use existing pipelines.

Obligated parties, whom we may potentially supply with SAF, have the capability to blend it. Currently, it can be blended up to 50% drop-in, and they can do so using the infrastructure that is already available. If you compare hydrogen with SAF, SAF is much easier, because you can use the existing infrastructure in airports, storage and logistics. To be frank, we do not see any challenge there in Teesside, which is an industrial area with storage facilities. We do not see any issues. With hydrogen, as I explained, we can use hydrogen not necessarily to power the plane directly, but we can certainly use it to boost production of SAF. That is possible. I have the CO that I mentioned earlier, which I am currently capturing to reduce carbon intensity. I can convert this to CO, mix it with hydrogen, and produce more SAF.

I am afraid you have just two minutes left.

Sophia Haywood: Just quickly on planning, it is more about boots on the ground than a lack of skills or particular challenges within planning. That is something I have heard from many other SAF producers all over the UK, so that would be my point there.

Similarly, in terms of standards, we also have ethanol-to-jet, ASTM approved, at 50%. That is fine for the current mandates, but as we move towards potentially greater blends of SAF in the mix, more work will be needed to increase the blend limit from an ASTM perspective. I am not aware of any issues on the diesel side—we produce 90% SAF and 10% diesel—but of course I can go away and check, and report back. The same applies to the storage of intermediates; ethanol is a well-transported product in many ways, shapes and forms. Again, I am not aware of any particular challenges there, but I can double-check and—[Interruption.]

Order. Photographs must not be taken of the Committee—I am absolutely clear about that. I am sorry to interrupt.

Sophia Haywood: No, thank you. Just on hydrogen, we need a small quantity of hydrogen for our project. The challenge we actually have at the moment is that we are not allowed to use hydrogen supported by the hydrogen business model, which is obviously supporting a lot of the hydrogen production out there. We also have to use green hydrogen in SAF, otherwise it would essentially be counted as fossil-based, and we do not want to produce any fossil jet—that is not what we are trying to do.

There could perhaps be some leeway in the short to medium term to allow us to access projects supported by the hydrogen business model. I think they are being treated slightly in isolation at the moment, but we are all very connected with one another. Whether it is CCS, hydrogen, or everything else, we are all interconnected in one shape or another. I get why we are trying not to double-incentivise, but in a way we are all reliant on each other’s—

Order. I am afraid that brings us to the end of the time allocated for questions from the Committee. I thank our witnesses for their evidence this morning. As it is now 11.25 am, the Committee is adjourned. I look forward to seeing you all this afternoon at 2 pm.