Net Zero, Energy and Transport Committee
The UK Government's Sustainable Aviation Fuel Bill had its first reading in the House of Commons on 14 May 2025. On 25 July, the Scottish Government lodged a Legislative Consent Memorandum (LCM) on the Bill. An LCM is laid when a Bill in the UK Parliament makes provision (a) for any purpose within the legislative competence of the Scottish Parliament or (b) that alters the legislative or executive competence of the Scottish Government. The LCM sets out the Scottish Government's position on whether the Scottish Parliament should consent to such provisions.
The LCM laid on 25 July was followed by two supplementary LCMs, the first laid on 27 October, and the second on 17 December (referred to in this report as the LCM, the first supplementary LCM, and the second supplementary LCM).
The Parliamentary Bureau has referred all three LCMs for the Bill to the Net Zero, Energy and Transport Committee as lead committee, meaning it must report on them. The purpose of any committee report on an LCM is to express a view on whether the Scottish Parliament should consent to each of the provisions in the UK Bill which triggered the need for an LCM.
More detail is set out below but in essence the Bill aims, via market intervention funded by an industry levy, to provide greater price certainty for sustainable aviation fuel (SAF), thus encouraging more of it to be domestically produced and used. The Scottish Government supports this overall aim.
LCMs for a number of different UK Bills have been referred to this Committee during this 2021-26 Parliamentary session. The Committee has found that in practice reporting on them has often meant expressing a view on relatively narrow issues, because most of the Bill relates to reserved matters or does not geographically extend to Scotland. The issues under consideration tend to relate to powers in the Bill for UK Ministers to make regulations or orders that could stray into devolved areas, with the main question being around whether the Scottish Government consider they have sufficient say in how these powers are to be used.
The situation with this Bill is different in that while that issue has arisen, the Bill extends into devolved areas in more than a technical or marginal way. It applies geographically across the whole UK and involves using a mix of devolved and reserved powers - something which both the UK and Scottish Governments agree on. Offering an informed view on consent to the Parliament therefore means looking at the Bill in the round, considering:
whether the price certainty approach set out in the Bill, alongside the levy, is likely to work, meaning more SAF will be made here, bought and used;
The wider context around domestic SAF production; alongside measures in the Bill, what else is needed to kickstart this sector?
How effective will SAF actually be as the main driver for decarbonising the aviation sector? What other approaches or technologies might complement it or, in specific cases, be a better long-term bet?
Whilst questions of this type are being asked as the Bill proceeds through Westminster, it is right to reflect on them in a specifically Scottish context, especially given the extent to which it leans on devolved responsibilities, and taking into account in particular the Project Willow proposals for the Grangemouth site.i As well as hearing from the Scottish Government, we also therefore sought expert opinion on the Bill from industry stakeholders, academics and campaigners. In the time available, this could only be a "snapshot" of views on a complex, technical and developing subject but some key themes clearly emerged. We touch on these in the report. Where the discussion touched on Scotland's overall policy for decarbonising aviation, there is some reference to this below, with this being further covered in our report next month on the Scottish Government's current draft Climate Change Plan (CCP), which includes a chapter on transport including aviation.
The Committee took evidence on the Bill over three meetings:
On 30 September, the Committee took evidence from a panel comprising:
Graham Hutchings, Regius Professor of Chemistry, Cardiff University, and Chair of the Royal Society Working Group on net zero aviation fuels: resource requirements and environmental impacts;
Celeste Hicks, Policy Manager, Aviation Environment Federation, an NGO campaigning on aviation’s impacts for people and the environment;
Mark Morrison, Optimat: consultants commissioned by Scottish Enterprise in 2023 to author Synthetic/Sustainable Aviation Fuel Mapping an independent assessment to understand the capability/interest of industry and research organisations in Scotland to support the adoption of SAF;
Professor Mercedes Maroto-Valer, Director UK Industrial Decarbonisation and Innovation Centre and a member of Professor Hutchings’ working group;
Seb Eastham, Associate Professor in Sustainable Aviation, Imperial College London. Author of Sustainable aviation fuel: what does it mean for airport expansion?
On 28 October, the Committee took evidence from industry representatives - Scotland's leading airline for regional and island airports and two energy companies with an interest in expanding into SAF, including in Scotland:
Simon McNamara, Head of Government and Corporate Affairs, Loganair;
Doug McKiernan, Chief Technology Officer and Co-founder, Zero;
Ralph Lavery, Net Zero Applications Engineer, CATAGEN.
On 4 November, we heard from Jim Fairlie MSP, Minister for Agriculture and Connectivity and supporting officials from the Scottish Government and Transport Scotland.
We solicited and received one written submission: from Unite the Union. We are grateful to all of those who volunteered their time and expertise to assist the Committee.
SAF is not one thing. The key characteristic is that all types are normally considered to be drop-in fuels which means they can be mixed with conventional fossil aviation fuel with no need to adapt the engines or for re-fuelling infrastructure. A trial trans-Atlantic flight on a Boeing 787 with 100% SAF took place in 2023. Fuel standards currently allow for a 50% SAF blend in commercial jet engines.
The House of Commons Library Briefing for the UK Bill divides SAF into—
First generation (bio-derived): oil feedstocks (raw materials) from either crops or waste sources are processed to make a type of SAF called hydro-treated esters and fatty acids (HEFA). First generation SAF is already being produced on a commercial scale, including in the UK. A Royal Society report on Net Zero Aviation Fuel also includes hydrogenated vegetable oil alongside HEFA as possible biologically-based jet fuels:
Second generation SAF: can be made using waste feedstocks including municipal solid waste (such as black bin bag waste). It has received UK Government funding for pilot projects (through the Advanced Fuels Fund) and is seen as ready to scale and commercialise in the UK. Grains, sugar crops and some types of waste can also be made into what is also usually classified as second generation SAF under an “alcohol-to-jet process”:
Third generation SAF: also known as e-SAF, synthetic fuels, “power to-liquid (PTL) or, by some witnesses, "power-to-fuel" aviation fuel, is made using electrolysis, powered by renewable electricity, to extract hydrogen from water. The hydrogen is then synthesised with carbon dioxide into liquid fuels. Third generation SAF has also received UK Government funding but is at an earlier stage of development than second generation SAF. E-kerosene and synthetic kerosene are other terms used for fuel generated by combining hydrogen and carbon dioxide.
According to the Royal Aeronautical Society, SAF currently represents a very low percentage of UK jet fuel, accounting in 2022-23 for less than 1% of the jet fuel consumed that year. Globally, SAF represents less than 0.1% of global jet fuel volumes.
The UK's statutory target is to be net zero in territorial emissions by 2050.i In Scotland, it is 2045.ii Aviation is widely agreed to be one of the most difficult sectors to decarbonise.iii Modelling for net zero typically projects unavoidable residual emissions from aviation that must be offset with “negative emissions” (e.g. tree-planting). In the modelling included in the Climate Change Committee’s May 2025 advice on Scottish Carbon Budgets, aviation is responsible for 16% of Scotland's residual emissions in 2045.
The Scottish Government published its Aviation Statement in 2024, which describes planned actions to increase international connectivity while also encouraging decarbonisation. Aviation is considered a largely reserved matter although the Scottish Government does have powers to introduce a Scottish Air Departure Tax as a devolved replacement for the UK-wide Air Passenger Duty. The Scottish Government has set a non-statutory target to decarbonise scheduled flights within Scotland by 2040 and create a zero-emissions aviation region. This commitment was made as part of the CCP update of 2020, and has been retained in the draft CCP currently being considered in the Scottish Parliament.
As we heard in evidence, the International Air Transport Association (IATA)—the trade body representing most of the world’s airlines—has also formally resolved to reach net zero by 2050.iv
The Explanatory Notes for the Bill state that, on average, emissions from SAF are 70% less than fossil jet fuel on a lifecycle basis. Different types of SAF will have different levels of saving. Table 7.3 in the UK Government's Cost Benefit Analysis for its SAF mandate (see below) provides "best", "worst" and "mid" estimates for various SAF feed sources. For waste wood and residual waste sources, the "worst" assumption is that they will be no better than kerosene; for direct air capture, the "best" assumption is of a 100% reduction. The Committee notes that SAF remains a relatively nascent sector, that calculating the whole-life cost of new types of fuel will, like making the fuel itself, be a process of refinement, and that all this appears to be reflected in the confidence margins for different types of SAF as set out in this table.
The UK Government brought into force a SAF mandate in January 2025: a legal requirement to blend a minimum proportion of SAF into aviation fuel. It requires 2% of aviation fuel mix to be SAF in 2025, rising to 10% in 2030 and 22% in 2040. (The Committee notes, however, that the CCC's 2025 Scottish Carbon Budget Advice assumed SAF uptake of 6% by 2030 and 17% by 2040.) The mandate also includes a "power-to-liquid obligation". This will be introduced from 2028, with PTL set at 0.2% of total jet fuel demand, reaching 3.5% in 2040.
The Cost-Benefit Analysis for the mandate does not set out a single specific net zero target in relation to this specific policy intervention. "Critical success factors" include "reduce greenhouse gas emissions associated with aviation [emphasis added]. It describes SAF as "important for reducing the costs of transitioning to net zero across the energy system .... provided UK production is focused on SAF pathways that can be coupled with Carbon Capture and Storage".v
The mandate includes a cap on the feedstocks used in the HEFA process. In April 2024, the previous UK Government justified the need for a HEFA cap on grounds that, while at the time it was the only commercially available SAF in the UK and would have an important role to play in this decade, it is limited by being "dependent on limited feedstocks that cannot deliver our long-term SAF goals alone." (The cap is not a limit on production per se, as the UK Government recognises there is an international market for HEFA.)
A ‘SAF Mandate: essential guide’ from the UK Government provides further guidance on matters such as the minimum contribution SAF must make to emissions reductions to be considered mandate-compliant and qualifying criteria for feedstock materials. Specifically:
Eligible SAF must be made from sustainable, wastes or residues derived from: biomass (e.g. used cooking oil or forestry residues); fossil wastes that cannot otherwise be avoided, reused or recycled (such as unrecyclable plastics); renewable or nuclear power. SAF produced from food, feed or energy crops is not eligible.
Outside of the UK, other jurisdictions are also pursuing interventions to increase SAF use and establish reliable supply chains. This includes the European Union, which mandates a minimum share of 2% SAF by 2025, 6 % by 2030 and 70 % by 2050.
The LCM explains that the Bill—
… enables the Secretary of State (SoS) for Transport to fund financial assistance, by way of a levy imposed on suppliers of aviation fuel, to a designated counterparty (a company limited by shares, with shares held by a Minister of the Crown) so that the counterparty may, at the direction of the SoS, enter into revenue certainty contracts with sustainable aviation fuel producers. This is intended to reduce revenue risk in relation to the production of SAF and support SAF production in the UK, leading to a reduction in aviation emissions.
The LCM adds that the Scottish Government supports the Bill’s overall aims—
…which should help to increase the production and uptake of SAF, thereby reducing aviation emissions, and could help to encourage the establishment of commercial SAF production facilities in Scotland.
It indicates agreement between the UK and Scottish Governments that—
provisions in the Bill specifically creating the levy relate to taxation; a generally reserved matter. Therefore, no consent is required in relation to most/ all provisions about the levy;
most of the remaining provisions in the Bill are about decarbonising the aviation industry and protecting the environment. These are not reserved matters and consent is therefore required.
The LCM recommended that the Scottish Parliament consent to most of the latter provisions but that—
The Scottish Government is still to reach a position on consent in relation to clauses 1, 3, 10, 11 and the schedule as far as it relates to devolved matters. These provisions are subject to ongoing discussion with the UK Government and will be the subject of a supplementary legislative consent motion.
These provisions all give the UK Government the power to give directions or make subordinate regulations in potentially reserved areas. In some cases, the UK Ministers must first consult devolved administrations but need not get their consent to the use of the power. In other cases, no formal requirement to consult devolved Ministers is set out.
Clauses 1 to 3 enable the UK Secretary of State for Transport to direct a counterparty to offer a SAF producer the option to enter into a revenue certainty contract. This creates a guaranteed price for the SAF the producer makes. The Explanatory Notes accompanying the Bill say that the point is to guarantee a stable price for a project’s eligible SAF over a defined period, so as to substantially de-risk SAF production.i Requirements on the giving of directions are set out, and the Secretary of State is also given the power to revoke directions. The Secretary of State is given two regulation-making powers in this area:
To require the counterparty to maintain a register of information about revenue certainty contracts;
To extend the life of the direction-making power by 5 years, otherwise the power expires 10 years after enactment. (The rationale is that the market for SAF should, by then, be more self-sustaining without the need for this intervention.)
The LCM says that the Secretary of State's power to direct the counterparty is to be made by regulations, but this appears to the Committee to be incorrect: the Bill seems to provide that a direction takes effect simply by virtue of the Secretary of State giving notice in the right way. No prior Parliamentary process is needed.
Clauses 4-5 concern the counterparty. The Secretary of State is given the power to designate a company (which must be owned by the UK Government) as the counterparty. The designation may be revoked and transferred to another government-owned company and there are provisions on how this transfer is to be effected. The Explanatory Notes say the company's role will be to issue contracts to producers as directed by the Secretary of State, manage those contracts through construction and delivery phases, facilitate any payments under those contracts, and collect the levy to fund scheme costs.ii
Clause 10 enables the Secretary of State to make regulations requiring the counterparty to pay surplus costs to persons who have paid the levy, and for customers to receive such benefits as specified. Clause 10(1) is subject to a duty on the Secretary of State (clause 10(4)) to consult with the Scottish Ministers when making regulations in respect of devolved matters (but not to seek their consent).
Clause 11(2) to (5) enables the Secretary of State to impose financial penalties on a person if they have breached a requirement imposed by clause 10(1)(b), which requires a person receiving a surplus levy payment to ensure a specified benefit to customers. Schedule 1 makes further provision in relation to these financial penalties. More detailed provision on financial penalties is in the Schedule. To the extent that these make provision for the Scottish court system, the LCM says consent is triggered. Specifically, the LCM states that the Scottish Government is continuing to explore whether penalty sums received in Scotland might instead be paid into the Scottish Consolidated Fund [i.e. rather than pooled in the UK Consolidated Fund]".iii
There are also the following clauses in the as-introduced Bill, elements of which the Scottish Government considered trigger the need for consent but which it was content with and recommended the Parliament consent to:
Clauses 12 and 13 enable the Secretary of State to direct the counterparty in relation to its functions and provide the Secretary of State with information and advice when requested.
Clause 14 relates to financial assistance for the counterparty, enabling the Secretary of State, by way of regulations, to provide financial assistance by way of grants, loan or other specified forms, and subject to conditions the Secretary of State considers appropriate.
Clauses 15- 19 are standard provisions for a public Bill (general regulation-making power, interpretation; commencement; short title).
Finally, there are clauses 6-9 which the Scottish Government accepts do not trigger any requirement for consent. These establish the levy. The aim is to ensure that the revenue certainty mechanism is self-funded by the industry, specifically aviation fuel suppliers. The Explanatory Notes for the Billiv indicate that there are around 20 suppliers on whom costs are likely to fall in practice. It says this approach is in line with the "polluter pays" principle. The Notes add that:
Aviation fuel suppliers will benefit from the additional SAF production that the revenue certainty mechanism is designed to stimulate, since the SAF Mandate obligation to supply a minimum amount of SAF is placed on them
There is a power for the Secretary of State to set out details of the levy and its administration by the counterparty by regulations.
The LCM indicated general support for the aims of the UK Bill but reserved its position on some provisions that impacted devolved matters, indicating that the Scottish Government was exploring how the UK Bill could recognise devolved responsibilities in these areas. The first supplementary LCM then recommended withholding consent to those provisions, including specifically these four regulation-making powers (per the original numbering of the Bill):
Clause 1(6) (power to extend the period during which the Secretary of State can give directions from 10 to up to 15 years after enactment)
Clause 3(1) (power to require the counterparty to maintain and publish a register),
Clause 10(1) (power to require the counterparty to make repayments to levy payers where there is a surplus, and to attach conditions to these) and
Clause 11(4) (power to amend the fine level for breaching requirements of the levy or to amend how turnover is to be calculated for purposes of determining fine level).
The first supplementary LCM makes the general point that there has been engagement between the two governments about these four powers and that:
The Scottish Government has continued to reiterate its concerns and to explore whether amendments can be made to better reflect devolved responsibilities.i
It affirms that the Scottish Government continues to support the general aims of the Bill. But following inter-governmental discussions at both official and Ministerial level that failed to achieve resolution, the Scottish Government has now moved to recommending that the Scottish Parliament withhold consent from the provisions on which it previously was reserving its position, as listed above.ii This is because:
The Scottish Government’s position overall is that Scottish Ministers should have a formal role in any regulation-making powers that relate to devolved matters. This is not only a matter of constitutional principle but of practical alignment, as SAF production is a key component of Scotland’s ambition for aviation decarbonisation.iii
Giving evidence on 4 November, the Minister for Agriculture and Connectivity said:
As things stand, the bill does not provide the Scottish ministers with a statutory role and we continue to press for amendments that would provide appropriate safeguards and accountability. We believe that a statutory consultation or consent mechanism would offer reassurance and transparency, especially given the early stage of development of the UK sustainable aviation fuel industry.iv
He added that the attitude of the UK Government appeared to be that "the Bill is about a technical thing and we do not need to worry you about it". If this were the case, he said the UK Government should have no difficulty with seeking consent from the Scottish Government.v
However, by the time the second supplementary LCM had been laid the Scottish Government was able to recommend that the Parliament signify its consent to all provisions in the Bill requiring legislative consent. This was on the basis of commitments, including amendments, made by the UK Government.
Specifically in relation to all the regulation-making powers referenced in paragraph 37 above, a new clause has been inserted requiring the Secretary of State to consult their counterparts in Scotland, Wales and Northern Ireland before exercising the power.i The second supplementary LCM states that the new clause is the result of constructive dialogue with the UK Government and that it is satisfied with this outcome. In particular the UK Government has committed to a "consult mechanism" that, the second supplementary LCM says, should ensure that the Scottish Ministers are appropriately involved in developing any new regulations at appropriate points. It further states that "the Scottish Government will ensure that the Scottish Parliament is informed of these consultations and its responses going forward".vi
An additional regulation-making power was added to clause 1 by amendment - a power to direct a “relevant company” (another UK Government-owned company, like the counterparty) to provide any assistance that the Secretary of State may require for the purposes of identifying producers who are potential recipients of revenue certainty contracts, and to pay it for this service, as appropriate. There is no requirement in this case to consult the Scottish Ministers. The purpose of this amendment is apparently to pave the ground for an auctions process for future hydrogen production business model allocations. The second LCM indicates that this seems appropriate and that:
The Scottish Government continues to engage with the UK Government on the design and delivery of the hydrogen business models, and will seek to engage in the process of designing any such model for SAF.vii
The second supplementary LCM does not provide any further view on the Secretary of State's power to give directions to the counterparty under section 1, which appears to be exercisable without any requirement to consult or seek the consent of devolved administrations. However, the secondary supplementary LCM is now clearly recommending consent to clause 1 in its entirety so it is to be presumed the Scottish Government accepts this power. This appears to the Committee to be a potentially relevant consideration in the context of views in evidence on what attitude the Scottish Government should take to developing an industrial strategy for SAF, discussed below.
As regards provisions on financial penalties for failure to comply with levy regulations set out in the Schedule, the secondary supplementary LCM notes the UK Government's view that it is rare or unprecedented for provisions of this sort in Bills applying across the UK to require payment into the Scottish Consolidated Fund and says that it accepts "there may be practicalities" in seeking to make provision of this sort. It recommends consent to the Schedule.viii
Finally, the Committee notes that the new clause requiring the Secretary of State to consult devolved administrations before making regulations only applies to regulation-making powers which the administrations agree affect, or may affect, devolved areas. This means they do not apply to the making of regulations setting out the detail of the levy. Again, this is a potentially relevant consideration in the context of the discussion below about ensuring the details of the levy scheme are right.
The role of the Delegated Powers and Law Reform (DLPR) Committee in relation to the consent process for UK Bills is to consider any delegated powers in the Bill that are exercisable within devolved competence. It considers technical and procedural aspects of powers.
In its 9 October report on the LCM, the DPLR Committee commented on the four powers listed in paragraph 37 above. It was content in principle with the clause 3(1) and 11(4) powers. In relation to the clause 1(6) and 10(1) powers, the Committee noted that the powers were exercisable by the Secretary of State within devolved competence, were not subject to any requirement to obtain the consent of the Scottish Ministers before being exercised, and did not fall within the scope of post-Brexit protocols that would give the Scottish Parliament an automatic right to scrutinise any proposed use of the power. It noted that the Scottish Government was in discussion with the UK Government about these powers and asked to be kept updated, especially on how it would facilitate Scottish Parliament scrutiny of any use of these powers in devolved areas.
In a follow-up report of 14 January, the DPLR Committee considered the second supplementary LCM. It said it welcomed that:
the power in section 1(6) is now subject to a consultation requirement; and
the Scottish Government has now set out how it will facilitate the scrutiny of proposals by the Secretary of State to make regulations under section 10(1) containing provision within legislative competence, and the Scottish Ministers’ consultation response in respect of such proposals.
Most witnesses gave the Bill a cautious and qualified welcome. Most strongly agreed that much more SAF (by an order of magnitude) will be needed to help decarbonise aviationi and that having a revenue certainty mechanism at this early stage in the development of a scaled-up SAF supply chain could help.ii However, Professor Eastham described SAF as "an important but only partial answer" as a route to decarbonisation, saying that it had "fundamental limitations" and other approaches were needed. Inasmuch as the Bill was needed, this was grounded in the fact that demand was not abating and airport expansion was still continuing. As long as this continued to be the case, the Bill was "urgent" but not sufficient and other matters such as electrification also needed to be pursued.iii There were also views, outlined further below, on not letting a decarbonisation strategy based heavily on SAF crowd out other interventions or technologies with potential in this area.
A number of witnesses talked of the Bill creating a framework that could work but that the detail of the scheme- little of which is on the face of the Bill - would be crucial.iv Scottish Government officials took a similar view, saying that this made it hard to predict how Scottish producers could benefit from the Bill.v This tied in with fundamental questions about what strategic model (if any) government has in mind for the sector as it develops: for instance, is a decentralised approach favoured, with lots of small and distributed producers, or is it envisaged that the bulk of production will be done by large companies at a handful of sites? What types of SAF will the counterparty be directed to set contracts for? (These issues are developed further below).
Simon McNamara of Loganair expressed doubts about the Bill's approach, especially given the lack of detail currently available on how the system would work. He worried that the Bill could lead to a complicated and costly system, with the aviation industry "perpetually funding producers".vi
Unite in their written submission said that:
SAF is currently hugely expensive in comparison to Jet A1 fuel. This highlights the need for support to encourage change, as the price differential will currently increase the fuel bill by more than 4.3 times. In any airline the cost of fuel is normally higher than their renumeration bill so such an increase will result in substantial increases in the price of a ticket or a kilo of air freight if matters stay the same. There is therefore a need for market stability. The UK's guaranteed strike price (GSP) is a mechanism to provide revenue certainty for SAF producers, to end any impasse, but as yet no specific price has been set.
We sought to bottom out with witnesses what an effective industrial strategy for SAF could look like, in terms of both production and use. This is premised on the assumption that a thriving sector will require a mixture of private investment and innovation and prudent government intervention. The mandate and now the mechanisms set out in the Bill, including the UK Secretary of State's power of direction under clause 1, are the main instances of governmental intervention so far.
The submission from Unite the Union spoke in general terms about the importance of governments being on the front foot with a robust industrial policy on SAF to support workers, find a future for Grangemouth and its worker, and ensure the UK does not fall behind its international competitors. Three further distinct issues arose in evidence.
As noted earlier, the UK Government anticipates HEFA playing only a transitional role, and this is reflected in how the SAF mandate has been set up. It has also said that the first round of revenue certainty mechanism contracts will be offered for UK projects producing second or third generation SAF (that is, non-HEFA derived fuel).i
Most witnesses agreed it would be best to move to mainly producing and using third generation (i.e. PTL) SAF as soon as realistically possible. Witnesses said that not getting the balance of government support right (and investing too heavily at the outset in first or second-generation SAF could risk creating stranded assets as PTL hopefully came into more mainstream use. Witnesses said that upsides include that it delivers more emissions reductions than alternatives and that feedstock supplies are theoretically almost limitless. It is also a new way to store surplus electrical energy that might otherwise be curtailed.ii
By contrast, biofuel feedstock is likely to quickly run out if deployed at scale, and in any case might more usefully be deployed in other areas, at smaller scale.iii The alternative would be to repurpose land currently used for other reasons, such as food production, to grow and harvest HEFA feedstock. Professor Hutchings said such a policy would be "a travesty" and should be considered a "non-starter", as it would require a change of use in a huge proportion of land in order to meet future SAF need.iv
The downside of PTL is that it requires significant investment in infrastructure, in order to source green hydrogen and carbon at scale.v The Committee is well aware, from other scrutiny work in this Parliamentary session that - alongside the challenge of securing investment - developments of this sort can be locally controversial and must negotiate the planning system.vi There must also be commensurate electricity grid expansion- and similar considerations apply there.vii Witnesses also noted that even if and when significant scale-up is achieved, SAF producers will not be the only up-takers for green hydrogen.viii The high cost of electricity in the UK was also mentioned as a hurdle to expansion for PTLix This was also a key theme of the Committee's one-off evidence session on green hydrogen prospects at the Grangemouth site earlier in 2025 - we heard that the cost of electricity would make up around three quarters of the cost of green hydrogen.x Electricity cost concerns could, however, clearly be mitigated if wind power, especially offshore wind power, expands at the rate hoped for by government and if hydrogen can be harvested and used on-site.xi
There was disagreement between witnesses as to whether PTL SAF was likely to become more affordable in the near future. Doug McKiernan of Zero said that he was confident that in due course it could be produced cheaply, whilst his co-panellist Simon McNamara of Loganair was doubtful, expecting it would mean higher running costs passed on to the purchaser. xii
In their evidence, the Scottish Government held back from committing to a clear view on the right balance of SAF types, pending the outcome of a Scottish Enterprise economic impact assessment for SAF. (The Committee notes that this would appear to be the second Scottish Enterprise-supported study on SAF in quite quick succession.) A Scottish Government official noted evidence the Committee had heard to the effect that PTL-type SAF appeared to have the greatest potential but to be furthest away in time than alternatives. He commented that the view the Committee had heard that PTL did not have to be expensive was "interesting" and that this was the first time he had heard that view.xiii Another official added that:
In relation to power to liquid, the opportunity may lie in Scotland’s potential for renewables. That is where we hope that the Scottish Enterprise work looking at the economic impact of the SAF industry will come to bear.xiv
The Minister told us that he had hosted a round-table session with the aviation industry and that there had been "huge uncertainty in the sector about what the right way to go is".xv
Some witnesses referred to the opportunity provided by the SAF sector's relative infancy to develop or enable from the outset a decentralised model of production. This would be as opposed to allowing it to default to what Simon McNamara described as the "centre of gravity" in the south, with a handful of large SAF producers, clustered near the busiest airports, dominating the market and potentially stifling production elsewhere.i
Mark Morrison said there was nothing to stop there being upwards of 50 "modular" producers of PTL SAF wherever sufficient renewable energy is generated;ii far more such plants than there are refineries in the UK currently. This could then be used to fuel local airports.i Professor Hutchings agreed that a model along these lines would be preferable.iii The two energy producer representative we heard from also strongly supported a decentralised approach, and expressed some disappointment and surprise at a lack of clear governmental signalling so far in support of regional, modular investment and growth. Ralph Lavery of CATAGEN said that distributing hydrogen long distances was practically difficult and inefficient and that it made sense to always try to use it as close to its source as possible.iv Doug McKiernan said that the modular approach looked like a good route to building investor confidence in a new sector.v
The Minister said "there is discussion to be had" on whether to actively pursue a decentralised model and that:
...consumers may want the SAF to be produced as close to their point of consumption as they can get it, but producers may want to produce it closer to their centre of production. We need to have negotiations and conversations at a UK-wide level to ensure that Scotland will be a beneficiary of what the new technology can deliver.vi
Some witnesses also pointed to need to take into account the importance of UK and Scottish energy security and wider geopolitical issues; first in determining why we need an indigenous SAF sector of adequate size in the first place, and then in discerning how to ensure it is robust and self-sufficient.i Unite said in their written evidence that "If the UK government doesn’t act fast, we risk being left behind and dependent on imports for this critical fuel supply. This would raise serious energy security issues." Professor Hutchings said it was strategically important for the UK not to become reliant on imports.ii In this connection, he considered PTL SAF as a better pick than alternatives on energy sovereignty grounds, because of the relative abundance of domestically-produced feedstock (or the potential for it). He also raised a specific point on kerosene:
As we move to total electrification of ground transportation in the UK and globally, the refineries that currently produce kerosene, which is a by-product of making gasoline and diesel, will no longer do so. Therefore, we are going to need something that is an e-fuel or a sort of kerosene, because it is a particular cut—about 5 per cent—of the oil barrel. If you do not have refineries making gasoline and diesel, you will not have any jet fuel, and you will probably end up having to import all of it, which will give rise to a security of energy problem for aviation. The direction of travel, therefore, is that we need a way of making SAF locally.iii
Witnesses saw Scotland having significant potential for playing a major role in SAF production in the UK. Reasons given included:
Especially in the case of PTL SAF, the availability of a skilled workforce, built up in the oil and gas industry. Doug McKiernan referred to the very strong synergies between work in fossil fuels and making SAF by a PTL method.i Witnesses saw building up a strong PTL sector as exemplifying the just transition in practice;ii
If the decentralised "modular" approach to sectoral growth outlined above were followed, Scotland looks well-placed to benefit from this, particularly if use were made of electricity from wind energy, where Scotland is a leader.iii It was felt this model could work well in the context of Scotland's distinct geography and settlement patterns with more remote and island communities than in the rest of the UK, for whom short-haul flights are lifeline services. It need not necessarily be only the largest windfarms that produced SAF; smaller community projects potentially could too. There could also be first-mover advantages in getting a number of smaller modular projects off the ground as early as possible, such as developing intellectual property that could be sold around the world;iv
The mothballed Grangemouth refinery was seen as potentially a very important asset for SAF. It was very well-sited for making or distributing SAF.v Professor Maroto-Valer said immediate use could be made of the plant for SAF blending and distribution.vi Professor Hutchings said that Grangemouth presented a "superb opportunity" for SAF manufacture.vii He indicated it would likely cost well over he $20 billion to build anything equivalent from scratch, as opposed to the £2.1 billion estimated for repurposing part of the plant for PTL production. Mention was also made of possible future use of the Flotta oil refinery in Orkney;viii
Witnesses also noted the potential in Scotland to use carbon capture and storage during the period between now and a future point where green hydrogen has become more affordable. This process can create both usable hydrogen and carbon at scale.ix One carbon-rich resource Scotland also has in numbers is distilleries: this would be useful for initial scaling-up but if things went well demand would quite quickly outstrip supply from this source.x Mark Lavery of CATAGEN said the proposed Acorn project for carbon capture and storage and blue hydrogen generation would not only deliver carbon but be a crucial pathfinding exercise, helping develop effective skills and technology to capture and move carbon molecules to where they are needed.xi
However witnesses considered it a significant barrier to progress that not much of the basic infrastructure or planning for a robust SAF sector seemed to be in place yet and that the intentions of either the UK or Scottish Governments were not yet particularly clear.xii Witnesses talked about the need for more dialogue and for all the main stakeholders to be together in the room with government, understanding better what each could contribute, and working out from that a coherent strategy that would maximise opportunities. This could include auditing current and potential SAF infrastructure assets.xiii
In response to a question on what concrete steps the Scottish Government could take, alongside the Bill, to increase SAF production in Scotland, the Minister referred to the Sustainable Aviation Test Environment at Orkney and to Grangemouth and said that:
Regular conversations take place between Scottish Government officials and UK Government officials. However, this is largely a reserved area, so you are right in what you say. There are many things that we cannot control in this country, but we are having on-going discussions to see how we can maximise the opportunities for people in Scotland.xiv
He also committed to look at the suggestion of a government-led audit of SAF infrastructure assets. xv
The Committee understands that of 18 plants to have received Advanced Fuel Funding (AFF) so far to make SAF, only one is in Scotland (at Orkney). The two producer representatives we heard from expressed perplexity as to the lack of regional balance in awards so far, especially given Scotland's geographical advantages in renewable energy generation.xvii Scottish Government officials told the Committee they had requested feedback on whether there had been any bids from Scotland in the most recent AFF bidding process but that "they [Department of Transport officials] were not able to confirm that." However, the launch of Project Willow in March 2025 had really stimulated demand from the market", with over 20 bids relating to SAF.xviii
As for the Acorn Project, it remains at the developmental stage. Scottish Government witnesses appeared uncertain as to how big an impact its not going ahead would have on the development of SAF in Scotland.xix
A Scottish Government official told us that "we do not know exactly what will happen at Grangemouth" as a result of the Bill.xx We also heard that a SAF working group set up by the Scottish Government had been stood down in the light of Project Willow.xxi Project Willow had set out two main proposals on SAF: one for producing PTL-type SAF and the other for first-generation (i.e. HEFA) SAF - but it remains to be seen what the prospects for these being realised are. Professor Maroto-Valer said the target of having HEFA underway at Grangemouth by 2030 and PTL by 2035 looked ambitious. On the latter, Mark Morrison agreed.xxii
Given witnesses' doubts about HEFA's viability for scaled-up production, and that the UK Government apparently intends to exclude it from revenue certainty contacts under the Bill, the Committee asked the Scottish Government whether it proposed to support that Project Willow strand. An official answered that tests of a new crop (camelina) were currently underway, including field trials. They advised that "it will take a couple of growing seasons before we get the answers".xxiii
It is not disputed that a gradual switch to SAF, as required under the UK Government mandate, will mean a rise in costs to airlines that would likely be passed on in part to the consumer. The ratcheting effect of the mandate is likely to mean costs increase over the mandate's lifetime, moderated (it is to be presumed) by any savings obtained through technological advances, scaled-up production or other efficiencies. The UK Government's cost benefit analysis for the SAF mandate estimated that:
‘the mandate could increase the average one-way ticket price by £3.90 (2%) in 2030 and by £9.40 (5.5%) in 2040 (2023 prices).’
‘Our indicative analysis suggests, however, that a lack of available HEFA and 2nd generation SAF leading to significant levels of buy-out in the main obligation under Scenario C could lead to more significant increases in average one way ticket prices - £22.00 (13%) in 2030 and £37.80 (22%) in 2040’
Professor Maroto-Valer referred to modelling she had helped lead showing that a ticket for a long-haul flight powered entirely by SAF would likely be 3 to 12% more expensive than for conventional fuel.i The Committee notes that this is quite a wide confidence margin, reflecting the difficulty in tracing the chain of causation between the "input" of SAF made from one of several possible feedstocks under a relatively novel process and the "output" of ticket prices set by an airline company operating in a competitive business environment. Simon McNamara said that, given the tight profit margins within which Loganair works it seemed almost inevitable that costs from SAF will be at least partly passed on to consumers but there were too many uncertainties and variables at present to attempt to quantify the increase.ii
Turning to the likely effect of the Bill itself on ticket prices this seems, if anything, even less clear. There was passing reference in our scrutiny to remarks made in evidence by UK aviation ministersi to the effect that the effect of the Bill on ticket prices would be no more than around £1.50 or "half a cup of coffee".ii The Committee notes that this appears to have originated as an estimate as to the extent to which the revenue certainty mechanism would, taking into account the roll-out of the mandate, affect ticket price fluctuations. In other words, it is an attempt to model what level of ticket price stability the mechanism will deliver to ticket prices rather than what level of increase to ticket prices switching to SAF will deliver.i The Committee notes that this appears to originate from the revenue certainty mechanism cost benefit analysis, which, as set out in the relevant consultation document, states that "there is likely to be a small impact on passenger ticket prices, on average, between -£1.50 and £1.50 per year. This is less than the average annual variation in ticket prices." The Committee also notes that the details of the mechanism are still to be set out.
There is the further question of what the levy to fund the revenue certainty mechanism will mean for consumers. This is provided for in the Bill, rather than in the SAF mandate. It is a levy on fuel producers not airlines, which (as with the mandate) complicates efforts to trace a clear chain of causation between costs under the levy, whatever these might turn out to be, and ticket prices. Nonetheless, there were views from industry that the levy probably would create some upward pressure on ticket prices.iii Celeste Hicks referred to the need to hit the right balance in setting the levy: high enough to ensure enough funds are available to set prices at the right level but not so high that costs are inevitably passed on to consumers. She referred to the precedent of energy price premiums still being locked into energy price under mechanisms such as the Contract for Difference as a precedent policy-makers needed to carefully reflect on. Alongside the direct impact on households, it had probably also affected public sentiment about the energy transition.iv
In connection with all of the above, the Committee notes the evidence of a UK aviation industry representative giving evidence to the House of Commons standing committee considering the Bill:
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 [revenue certainty mechanism], 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.v
The "number of factors" to which that witness referred includes other relevant government interventions in the aviation industry such as the UK's emission trading scheme (ETS). Put very broadly, the ETS is a scheme for heavy industry, power generation and aviation. A carbon emissions cap is placed on a sector. Companies in the sector effectively then pay for the "right" to emit. Less polluting businesses therefore pay less. (Not all flights are included in the ETS. In particular, most long-haul flights are excluded). In the UK the aviation sector had benefited from free allocation of emissions allowances up until 2025, largely exempting it from the cost of participation. With the sector now exposed to the scheme in full, it is not disputed that the higher running costs imposed on airlines by the ETS will mean higher ticket prices for consumers. It is also a feature of the ETS that it has a ratcheting effect, with costs under it likely to increase over time for airlines.
Interventions to support SAF and the ETS dovetail in that the scheme "charges" less for flights that use SAF. However, witnesses who expressed a view suggested that the policies were not well-aligned and seem to have developed in parallel rather than as complementary measures.i The exclusion of most long-haul flights from the ETS was given as an example of this.ii Simon McNamara of Loganair said it would be a good long-term aim to bring SAF and other low carbon technologies into the mainstream so that the ETS would no longer be needed.iii On the other hand, Celeste Hicks said the cost of carbon under the ETS needed to be far higher if it was to encourage a switch to SAF.iv
We explored with witnesses what other technologies or approaches apart from SAF could also help decarbonisation. As noted above, the balance of evidence was clearly supportive of an ultimately exponential expansion of SAF generation and use. However, there were views that governmental policy risked being skewed towards SAF as a one-size solution when other options, potentially better in specific situations, are available.i We also note views that, unless there is intervention specifically designed to avoid such an outcome, there is a risk of smaller airlines companies falling well behind larger companies in the queue for SAF and having difficulty accessing it.ii
Demand management and curbs on airport expansion were mentioned,iii as was the prospects for an airport departure tax being implemented in Scotland. Officials said that "the issue is under discussion"iv but did not indicate a timeline for reaching a view. iOthers issues included:
fuel efficiency: we heard that any further increases in efficiency of conventional jet propulsion aircraft would likely be only incremental and not contribute significantly to net zero goals;v
battery-powered planes: conversely electric-powered planes potentially promise large efficiency gains and require less complex maintenance. The downside of battery-powered planes is that there is no realistic prospect of them being used for anything other than very short-haul flights in the foreseeable future.vi However, Simon McNamara told us that this created opportunities in Scotland, where a number of short, lifeline routes exist. He said "exciting" developments in battery and hybrid -powered flights meant that Loganair hoped to be providing these by around 2030;vii
Hydrogen: witnesses were more cautious about hydrogen-powered flights, with some doubting whether they were even a longer-term prospect, though others were more hopeful. Various initiatives are being pursued globally but it was not clear whether any were close to commercial lift-off. They have tended to require radically different design blueprints for craft.viii
The Minister mentioned "hydrogen and zero-emission aircraft" as technologies that could be developed in Scotland.ix He said he was ambitious for Scotland "to be at the forefront" in pushing for the development of new aviation technologies for island connectivity. x
On consent issues as set out in the LCM and supplementary LCMs
The Committee recognises the ambition behind the Bill and key associated measures such as the UK Government’s recent introduction of a sustainable aviation fuel (SAF) mandate. There is a need for a massive increase in the production and use of SAF if aviation is to make a significant contribution to reaching net zero. The revenue certainty mechanism created by the Bill can play a positive part in that.
Whilst overall aviation policy is substantially reserved, the Bill crosses over into devolved responsibilities in a material way and effective intergovernmental cooperation will be required to make it work. The Committee notes and welcomes that the Scottish Government have reached agreement on consent issues raised by the Scottish Government in relation to the UK Bill as the Bill has progressed through the UK Parliament and that the Scottish Government is now in a position to recommend agreement to all the provisions in the Bill that trigger the need for legislative consent. Specifically, the Bill now underwrites a requirement for UK Government Ministers to consult devolved counterparts before making regulations that may go into devolved areas.
This is a framework Bill and both the Scottish Government and expert witnesses have noted the crucial importance in getting the detail of the revenue certainty mechanism (such as who is eligible to it) and the levy to pay for it right. In relation to the UK Secretary of State’s power in section 1 to give directions to a government-owned counterparty to enter into revenue certainty contracts with SAF producers, the Committee notes that this power has potentially significant implications in terms of giving UK Ministers power to help shape a future SAF sector. The Committee seeks clarification on what dialogue the Scottish Government has had with the UK Government on whether it will also have a consultative role in helping determine a balanced overall policy on the use of that power, so as to ensure benefits from developing the sector are shared across the UK and that the distinct contributions Scotland can make are taken account of. These include the existence of a skilled workforce with transferable skills, the potential repurposing of Grangemouth and other oil and gas sites being decommissioned or working at reduced capacity, and Scotland’s enormous wind power and green hydrogen potential.
The Committee makes a similar request in relation to the UK Secretary of State’s power to make regulations on the detail of the levy- will the Scottish Government have a consultative role in helping shape these? We ask for a response on these points to be provided by the time the motion on consent is taken in the Chamber.
The Committee recommends that the Parliament consent to all the clauses in the Bill in relation to which the need for consent has been highlighted.
On wider issues concerning an effective industrial strategy for SAF in Scotland
The balance of evidence strongly suggests that so-called first and second generation SAF has only a limited and transitional role to play in decarbonising aviation and the Committee urges the Scottish Government to exercise caution in encouraging or supporting significant long-term investment in this area. The Committee notes and agrees with the majority of expert views that power-to-liquid (PTL) SAF is a far better medium to long-term bet, in terms of energy security, potential abundance of feedstock, the just transition, and synergy with Scottish Government ambitions on wind energy and green hydrogen. There should be a focus on working with industry and universities, as well as with the UK Government, to investigate whether practical routes to making PTL can be made more affordable and deliverable and on signalling to the private sector that Scotland is supportive of PTL investment.
The Committee heard evidence about the potential role of the Grangemouth industrial site in the development of a SAF industry. The site was seen as having a potential role in the prospective industry in terms of production but also in terms of handling and processing, due to the existing expertise in handling fuels, its existing infrastructure, as well as its location and interconnectedness. The Committee asks the Scottish Government to respond to evidence that there could be one “quick win” for the development of an indigenous SAF sector by making use of the Grangemouth site as a base for mixing SAF and conventional fuel. Have there been discussions with the UK Government, site owners and other stakeholders about this potential use?
The Committee also recommends that the Scottish Government refresh and re-convene the SAF working group with a widely-drawn membership and a mandate to think creatively about growing the sector and making best use of Grangemouth and other key assets around the country. Identifying and auditing all such potential SAF assets should be a critical early task for the group and the Scottish Government.
The Committee notes expert views that, while developing a strong SAF sector is critical, it would be a missed opportunity for policy-making to become exclusively SAF-focused, crowding out critical thinking and investment in other areas, particularly developing electricity-powered flights. In this regard, Scotland’s distinctive geography is an advantage: it is an opportunity to be in the vanguard in the development of low or no carbon short-haul flights by smaller craft, and to investigate the opportunities to develop and scale up technology arising from it, and create domestic supply chains. The Committee asks the Scottish Government for more information on how it is working with industry and academia to promote advances in this area.