UK SAF plants at risk amid tight legislative schedule: developer
Quantum Commodity Intelligence - Delays in rolling out new biofuels legislation in the UK following the chaotic last few months of government are making investors uneasy about the progress of key sustainable aviation fuel (SAF) laws and investment decisions could be held up causing 2025 targets to be missed.
The UK government has targeted five commercial-scale SAF plants to be under construction by 2025, in order to grow domestic production as a blending mandate starting the same year and rising to 10% by 2030 is rolled out.
A project developer laid bare the reality facing investors to government officials at an industry event this week, saying SAF was now an "investment risk" as confidence waned in the ability of the government to deliver the blending mandate and other support on time.
While the government is on track per its own timetable to get the SAF blending mandate passed into law by 2024, a likely UK general election also that year meant any setbacks could see it delayed by two years or more, leaving investors in limbo, said the developer.
Without reassurances and good progress on the SAF mandate and other legislations, final investment decisions on planned UK SAF plants could be placed on hold, they added.
A second consultation on the SAF mandate is due to be launched in Q1 next year, covering the growth in targets from 2025 to 2030 and onwards, buy-out prices, a cap on SAF made via the HEFA process and a sub-target for power-to-liquid SAF.
Draft options for blending targets presented by officials all maintained the 10% 2030 blend rate, but 2040 targets ranged between 19% and 40% and for 2050 between 35% and 95%.
The legislative process for the SAF mandate is due to take place in 2023 and 2024 according to the timetable, meaning it could brush up against a general election, delaying its passage through parliament and risking a new government wanting to make changes.
The developer's comments came in response to a presentation on progress for regulation supporting recycled carbon fuels (RCFs), which has seen its timetable slip following several changes to the government and responsible ministers in the last six months.
The industry has been vocal in general over pushing for the quick adoption of support for SAF in the UK to reach the 2025 goals, including both a blending target and additional support such as contracts for difference, price floors or fixed strike prices.