UK confirms 10% SAF target for aviation fuels by 2030

The UK government confirmed April 25 its 10% sustainable aviation fuel target by 2030 for fuels used in flights taking off in the UK, in a move that paves the way for a major increase in the country's SAF production capacity.

Under the new mandate, SAF will make up 2% of total UK jet fuel demand in 2025, and then increase to 10% in 2030 and then to 22% in 2040. From 2040, the obligation will remain at 22% until there is greater certainty regarding SAF supply, the transport ministry said in a statement.

In comparison, SAF must make up at least 2% of aviation fuel in the EU by 2025, 6% by 2030, 20% by 2035, 34% by 2040, 42% by 2045 and 70% by 2050, according to the EU's ReFuelEU Aviation rules.

The UK first consulted on the introduction of an SAF mandate in 2022 and subsequently confirmed it would be introduced in 2025.

More ambitious than the EU's 6% SAF target for 2030 and subject to parliamentary approval, the UK's mandate was expected to require some 1.2 million mt of SAF in 2030 to meet the UK's ambition.

The UK's announced SAF capacity is currently around 600,000 mt, so a further 600,000 mt remain to be met by unannounced capacity or imports, according to a recent report by environmental consultants ICF.

To help bridge the gap, the ministry said it had launched a consultation to help boost investment in SAF production plants.

Like other reviewable fuels, SAF is manufactured from organic waste -- such as used cooking oils or biomass -- or by combining renewable hydrogen and captured CO2. In the EU, the ReFuelEU Aviation directive sets a target of 6% of SAF by aviation fuel in 2030, rising to 70% by 2050.

The UK's mandate also includes a cap on the feedstocks used in the hydro-processed esters and fatty acids (HEFA) process. HEFA is currently the main commercially available SAF technology pathway as higher-cost, power-to-liquid, hydrogen-based SAF fuels are developed.

The waste biomass feedstocks that HEFA requires are limited, however, and "cannot deliver our long-term SAF goals alone," the ministry said.

In order to drive innovation and diversification, the government said a separate obligation on power-to-liquid fuels would be introduced from 2028 and would reach 3.5% of total jet fuel demand in 2040.

"By targeting expansion beyond the HEFA pathway, the UK hopes to be a first mover in new technologies," Seb Lewis, associate director of agribusiness consulting at S&P Global Commodity Insights, said. HEFA fuels will need to use waste and residue feedstocks such as UCO, which are in short supply, and there are concerns about non-sustainable feedstocks being passed off as scarce sustainable feedstocks.

In trying to move beyond HEFA, the UK acknowledged risks to how verifiable imports of scarce feedstocks are. "We recognize that there are concerns that increased demand for UCO could lead to increased sustainability and traceability risk," the transport ministry said in its response to the second consultation on the SAF mandate.

Market reaction

The new SAF mandate and consultation were broadly welcomed by the refining, fuels and aviation industries.

Fuels Industry UK, which represents refineries, said the SAF mandate gives "more certainty on the UK's future demand for sustainable aviation fuels, so the industry can now work on ensuring their supply ... Allowing all production methods can attract early UK SAF investment, while also offering clear trajectories for new fuels, which will be developed as demand grows."

The Airport Operators Association said: "Sustainable aviation fuel is a key part of the decarbonization of air travel and a domestic SAF industry will create jobs, wealth and help the UK secure its energy independence. We are pleased that the government has brought forward proposals for a mandate and revenue certainty scheme that will send the message to investors that the UK is serious about developing its own production facilities."

The higher costs of making SAF from waste biomass, or green hydrogen, remain an obstacle to demand growth, even though bottlenecks with regional feedstock values have moderated in recent years. In Northwest Europe, the premium of SAF on a CIF basis in Amsterdam-Rotterdam-Antwerp to jet cargoes on a CIF basis in Northwest Europe was at some $1,800/mt on April 24, with regular jet valued at $835/mt, according to Platts, part of S&P Global Commodity Insights.

Globally, SAF demand could reach 350,000 b/d by 2030, before jumping to more than 2.1 million b/d by 2050, according to forecasts by S&P Global Commodity Insights analysts.