AEF response to Government update on the revenue certainty mechanism for the SAF Mandate
4th August, 2026
The Department of Transport has confirmed further details of the mechanism designed to make alternative aviation fuels (also known as SAF) more competitive with traditional kerosene.
What is the Revenue Certainty Mechanism?
Very early on in the creation of the UK SAF Mandate the higher cost of producing alternative fuels for aviation was identified as a key barrier for the burgeoning industry becoming viable. As a result, the Revenue Certainty Mechanism (RCM) was proposed in order to guarantee a strike price for fuel producers. However, the sustainability of each type of alternative fuel varies greatly, so the latest Government consultation on the design of the RCM sought views on how to incentivise the production of the most sustainable alternative fuel.
What would be the best kind of RCM?
AEF argued in its consultation response that non-HEFA alternative fuels should be prioritised. Specifically, alternative fuels such as e-fuels (also known as e-kerosene, power to liquid, PtL) and fuels that offer high reductions in emissions over their lifecycle. AEF also stressed the importance of not loosening rules around the amount of HEFA allowed into the SAF Mandate. HEFA is largely produced from waste oil and fats and has increased risk of double-counting along its supply chain, alongside other sustainability issues. Similarly, AEF stressed that the rule forbidding crop-based biofuels should not change.
These recommendations reflect not only the sustainability risks posed by these fuel types, but also a concern for market stability: the Government should ensure that investment decisions, once made, are shielded from future policy changes. Without that certainty, investors will be reluctant to commit.
What was the UK Government’s response to this consultation?
The government has confirmed it will launch its first round of negotiations for contracts next year, with the first contracts expected to be awarded at the end of 2028. The allocation round is expected to support up to 230,000 tonnes of advanced fuel production, however there was no specific funding ringfenced for e-fuels projects (also known as e-kerosene, power to liquid, PtL).
Indications of progress?
From the outset, AEF has cautioned the Government against an over-reliance on SAF as a means to decarbonise aviation in the UK. While the UK so far seems to be meeting its SAF mandate requirements, there are concerns that as the mandate ramps up, there may not be enough supply of second generation fuels. Advanced fuel producers have expressed dismay that they will not receive contracts for almost another two and half years, making it unlikely any of these projects will be producing fuel before 2030.
Celeste Hicks, Policy Manager at AEF said:
While the RCM announcement does represent an important milestone, the progress of supporting UK-based SAF production is too slow – investors cannot wait until the end of 2028. At the same time, the government is single-handedly sabotaging this progress and undermining investor confidence in more sustainable fuel pathways by signalling that the SAF mandate’s strict sustainability criteria could be up for debate.”
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