The Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024 (the Order) came into force on 1 January. Based on the premise that sustainable aviation fuel (SAF) has the potential to materially reduce the greenhouse gas impacts of aviation, the Order creates a mandate for sustainable aviation fuel in the UK and is anticipated to deliver a reduction in greenhouse gas emissions of between 11 and 54 MtCO2e between 2025 and 20401.
In this article we consider the impacts of the Order, the new obligations for aviation fuel suppliers, the penalties suppliers may now be subject to and how it is anticipated SAF requirements may evolve.
What is "sustainable aviation fuel"?
The Order creates a statutory definition of SAF, referring to aviation gasoline, aviation turbine fuel2 or hydrogen. The associated guidance identifies four categories of SAF based on feedstock3:
Renewable sources
A. Wastes and feedstocks of biological origin (from a production process or derived directly from agriculture, aquaculture, fisheries or forestry).
B. Renewable hydrogen, or Power to Liquid (PtL) fuels produced from sources other than biomass.
Low carbon feedstocks
C. Non-renewable fossil wastes that comply with the requirements for recycled carbon fuel (RCF) as designated by the Secretary of State.
D. PtL or low-carbon hydrogen produced using nuclear energy.
The guidance clarifies: SAF made from feedstocks that falls under category "A" is considered biofuel; fuel made from feedstocks falling within "B" and "D" with a final fuel type of avtur is PtL; and SAF cannot be produced from food, feed or energy crops4.
What is the SAF obligation?
The SAF obligation is broadly equivalent
to the renewable transport fuel obligation that was brought in
under the Energy Act 2004 (the 2004 Act) Note: the mandate does not apply to the first 15.9 terajoules of
fuel if the amount they supply in the relevant year is less than
344 terajoules7. The Renewable Transport Fuel Obligations Order 2007 (RTFO),
which requires suppliers of transport fuel (including petrol,
diesel, gas, oil and renewable fuels) to ensure that low carbon and
renewable fuels make up a certain percentage of the fuel they
supply, no longer applies to aviation fuel. Obligated suppliers will also be under an obligation to fulfil a
certain % of the total energy content they supply by
utilising PtL. Suppliers' PtL obligation starts in
2028 at 0.215%, increasing year-by-year to 4.487% in 2040 as
below. Obligated suppliers must apply to the Department for Transport
(DfT) within 28 days of becoming an obligated supplier for an
account which will record the balance
of SAF certificates held. SAF certificates are issued by
the DfT to suppliers in respect of each unit
of applicable SAF11. Obligated suppliers will be required to provide
the DfT with information such as: how much
relevant aviation fuel and/or SAF they have
supplied during a calendar year; the amount of each they have
received from other suppliers and details as to the mass supplied,
energy content, portion attributable to each feedstock type; and
the amount that meets the sustainability criteria. Note: SAF is no longer eligible for
certificates under the RTFO. SAF certificates can be transferred between
any persons who are account holders, provided that: Any SAF certificates may count towards
the discharge of no more than 25% of a supplier's main
obligation in the next calendar year12 / no more
than 25% of a supplier's PtL obligation
in the next calendar year13. The Order also provides for obligated suppliers to pay a
"buy-out amount" for any calendar year where they do not
meet the SAF obligation
/ PtL obligation14. The Order
identifies an amount of £0.145 per megajoule for any
shortfall against the PtL obligation, and
£0.137 per megajoule for any shortfall against
the SAF obligation. The order provides for civil penalties of up to: Suppliers are liable for civil penalties if they
contravene16: Concerns have been expressed that there will be a limited supply
of SAF in the early period following the
Order's introduction 17. The Order seeks to
mitigate such concerns through methods such as the buy-out
mechanism discussed above, which allows obligated suppliers to pay
a buy-out amount to the Government if they are not able to meet
their SAF obligations under the Order. The Advanced Fuels Fund (AFF) was launched in July 2022 by
the DfT for the purposes of allocating
£135 million of investment into the UK's advanced fuels
sector. The AFF is seeking to support the
progression of a range of routes to advanced fuels
(including SAF), boost innovate technologies for
fuel production and strengthen the UK's project pipeline. A full official review of the regulatory provisions contained
within the Order must be carried out at least once every five
years, meaning a review is due to take place before 1 January
203018. The Government has also indicated its intention to introduce a
Revenue Certainty Mechanism in 2026, which would aim to reduce the
risks for producers of SAF, thereby encouraging
investment into SAF production in the
UK19. The Government has shortlisted the following
mechanism options: (i) mandated floor prices; (ii) mandated auto
rachet; (iii) buyer of last resort; and (iv) guaranteed strike
price. The mandated floor price mechanism introduces a universal
minimum price for SAF certificates, while
the mandated auto rachet automatically adjusts the price
of SAF when there is an oversupply in the
market to bring this near to the buy-out price. Both mechanisms
would maintain a high price for SAF, which would
almost certainly be passed on to passengers via higher
airfares. Where a buyer of last report mechanism is utilised, if the price
of SAF certificates on the open market falls
below an agreed amount, the Government
purchases SAF certificates. This maintains
the price of the SAF certificates so that
this does not fall below this pre-agreed figure, reducing the risk
to SAF producers by ensuring their operating
costs are covered by the return on the sale of
the SAF. Under a guaranteed strike price
scheme, SAF producers are guaranteed a price
for SAF on a per litre basis (known as the
strike price), as the Government covers the difference where the
market price falls below the strike price. However, this also works
to require the SAF producer to pay back the
difference if the strike price is lower than the market price. The Government has not yet established which of these mechanisms
would be most effective for the SAF market
but has stated that it intends for the industry to cover the costs
of any revenue uncertainty mechanism that is
required20. As part of the consultation for the Order, consideration was
given to whether any mitigation measures should be included within
the Order to avoid airline operators tankering (where enough fuel
is taken on in markets where lower-cost fuels are available ahead
of inbound trips to the UK to cover the outbound trip) to minimise
the impact of the Order on their operations21. The
Government considered introduction of a minimum uplift when
departing UK airports, which the European Union (EU) has introduced
to reduce tankering and minimise avoidance of sustainable fuel
obligations. At present it has been decided that no such mitigation
measures are to be introduced in the UK, but the Government intends
to conduct further research and assess the potential for
introducing mitigation mechanisms, meaning such measures may be
imposed in the future22. Footnotes 1
Explanatory Memorandum to The Renewable Transport Fuel Obligations
(Sustainable Aviation Fuel) Order 2024 (2024 No.
1187), paragraph 5.4. 2 The Order includes definitions of aviation gasoline
referring to ASTM International standard D910, Ministry of Defence
standard 91–90 (or other equivalent standard) and Aviation
turbine fuel as heavy oil (as defined in the Hydrocarbon Oil Duties
Act 1979), of which more than 50% by volume distils at 240°C,
which meets ASTM International standard D1655, the Ministry of
Defence standard 91-91, or another equivalent standard. 3
RTFO and SAF Mandate technical guidance 2025. 4
RTFO and SAF Mandate technical guidance 2025pages 11,
13-20. 5 Energy Act 2004, section 124. 6 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 3. 7 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024 article 3. (6)(b) and
The Renewable Transport Fuel Obligations (Sustainable Aviation
Fuel) Order 2024 page 7. 10 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 22. 11 Units of applicable SAF are determined by dividing the
notional amount of that fuel by the lower heating value of aviation
turbine fuel. 12 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 23(1). 13 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 23(2). 14 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 21(9). 15 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 24(7), which references breaches of
articles 6(2), (7), 7(3), 11(6), 12(5), 16(5), 20(14) or 21(8) of
the Order. 16 The
Renewable Transport Fuel Obligations (Sustainable Aviation Fuel)
Order 2024, article 24. 17
Flight Global | Emirates' Clark warns that SAF mandates have
gone too far 18 19
Department for Transport | Supporting the transition to Jet Zero:
Creating the UK SAF Mandate. 21
Department for Transport | Pathway to net zero aviation: Developing
the UK sustainable aviation fuel mandate, page 14. 22
Department for Transport | Supporting the transition to Jet Zero:
Creating the UK SAF Mandate, page 129. Read the original article on
GowlingWLG.com The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Obligation period
% of energy supplied required to be SAF
1st January 2025 to 31st December 2025
2.041%
1st January 2026 to 31st December 2026
3.734%
1st January 2027 to 31st December 2027
5.485%
1st January 2028 to 31st December 2028
7.082%
1st January 2029 to 31st December 2029
8.952%
1st January 2030 to 31st December 2030
10.556%
1st January 2031 to 31st December 2031
11.485%
1st January 2032 to 31st December 2032
12.465%
1st January 2033 to 31st December 2033
13.467%
1st January 2034 to 31st December 2034
14.493%
1st January 2035 to 31st December 2035
15.882%
1st January 2036 to 31st December 2036
17.344%
1st January 2037 to 31st December 2037
18.856%
1st January 2038 to 31st December 2038
20.421%
1st January 2039 to 31st December 2039
22.040%
1st January 2040 to 31st December 2040 and subsequent
obligation periods
23.718%
The amount of SAF that can be derived from
hydro-processed esters and fatty acids (HEFA) for the purposes of
meeting the main obligation will be capped from 1 January 2027 as
below10.
Obligation period
% of SAF that can be derived
from HEFA for the purposes of
producing SAF certificates
1st January 2025 to 31st December 2025
100.00%
1st January 2026 to 31st December 2026
100.00%
1st January 2027 to 31st December 2027
92.31%
1st January 2028 to 31st December 2028
87.88%
1st January 2029 to 31st December 2029
80.49%
1st January 2030 to 31st December 2030
74.74%
1st January 2031 to 31st December 2031
73.17%
1st January 2032 to 31st December 2032
69.09%
1st January 2033 to 31st December 2033
65.53%
1st January 2034 to 31st December 2034
61.60%
1st January 2035 to 31st December 2035
57.78%
1st January 2036 to 31st December 2036
53.79%
1st January 2037 to 31st December 2037
50.32%
1st January 2038 to 31st December 2038
47.27%
1st January 2039 to 31st December 2039
44.57%
1st January 2040 to 31st December 2040 and subsequent
obligation periods
42.16%
Obligation period
Percentage of amount
of PtL required to be used
1st January 2025 to 31st December 2025
0.000%
1st January 2026 to 31st December 2026
0.000%
1st January 2027 to 31st December 2027
0.000%
1st January 2028 to 31st December 2028
0.215%
1st January 2029 to 31st December 2029
0.218%
1st January 2030 to 31st December 2030
0.556%
1st January 2031 to 31st December 2031
0.560%
1st January 2032 to 31st December 2032
0.850%
1st January 2033 to 31st December 2033
1.146%
1st January 2034 to 31st December 2034
1.449%
1st January 2035 to 31st December 2035
1.765%
1st January 2036 to 31st December 2036
2.273%
1st January 2037 to 31st December 2037
2.798%
1st January 2038 to 31st December 2038
3.342%
1st January 2039 to 31st December 2039
3.904%
1st January 2040 to 31st December 2040 and subsequent
obligation periods
4.487%
What steps do obligated suppliers need to take?
Payments
What are the consequences of non-compliance?
What are the anticipated impacts on airline operators?
How has the Government supported the market?
How are the current obligations likely to evolve?
Revenue certainty
Mitigation of 'tankering'
What are the key dates under the Order?
Key dates (in each year)
Event
01 January
Each specified period begins.
01 January
Each obligation period for the buy-out amount begins.
12 May
Deadline for suppliers to make an application for a SAF
certificate for the previous obligation period, per article
16.
16 July
Each revocation date for the previous obligation period, for
the purposes of article 20 (Revocation of a SAF certificate).
23 July
Each applicable date for the previous obligation period, for
the purposes of article 20 (Revocation of a SAF certificate).
6 August
Each notification date for the previous obligation period for
the purposes of article 20 (Revocation of a SAF certificate).
15 August
Each reconsideration date for the previous obligation period
for the purposes of article 20 (Revocation of a SAF
certificate).
16 August
The applicable date for the previous obligation period for the
purposes of article 24 (Civil Penalties).
15 September
The specified date, being the date by which a supplier must
provide the Administrator with the information required under
article 11, for the previous specified period.
26 October
Each obligation period for the buy-out amount ends.
31 December
Each specified period ends.