In April 2024, the UK government published a proposal for a Sustainable Aviation Fuel (SAF) mandate, with targets to apply from 2025 and increase to 2040. The central target of a 10% SAF blend by 2030 goes even further than the EU’s ReFuel EU SAF mandate. Achieving these emissions reductions will depend heavily on drop-in fuels that replace fossil fuels, so-called Sustainable Aviation Fuels (SAF).

This report examines the cost impacts of the proposed SAF mandate targets from an industrial development perspective. The scenarios in this study assess the proposed target ambitions in the proposed SAF targets using different assumptions about the technology mix used to deliver these SAFs. Achieving these targets will require an expansion of alternative fuel production capacity. Different technology pathways may have different impacts on costs – both on upfront investments in fuel production facilities and on the price premium for aviation fuel. The report presents five scenarios from 2025 to 2035. Some conclusions of the study are:

• Meeting the SAF targets in the near future will be challenging. The ambitious targets require a combination of rapid development and deployment of domestic production facilities for alternative aviation fuels or import of modern fuels to avoid the transfer fee.
• Fuel costs will increase by approximately £0.10 to £0.12 per litre in 2035 compared to current fossil aviation fuel tariffs. For the first period of the SAF mandate from 2025 to 2035, model results suggest investment needs of £2.6 billion to £3.7 billion (approximately US$3.3 billion to 4.6 billion), depending on the scenario.
• Given the scale of investment required and the pace of capacity expansion, additional financing schemes, including government-supported revenue security mechanisms, are needed to support the domestic SAF industry. Reinvestment schemes that reduce the SAF price gap and provide price certainty can catalyse and stimulate investment in UK fuel production.