Is SAF ready to Take-Off? The Latest Government Announcements on SAF and What They Mean

Last week saw the publication of the UK government's strategy for the allocation of contracts under the sustainable aviation fuel (SAF) revenue certainty mechanism (RCM). However,this was preceded in  June) with the announcement of 4 key SAF related updates or initiatives  

In case you missed them, we have summarised each of those updates below, and our thoughts on the allocation round strategy will follow shortly.   

1. The Low Carbon Fuel Fund (LCFF)

On 16 June 2026, the government showed further support for the sustainable aviation sector by announcing a new £219 million low carbon fuels fund (LCFF) to support UK companies in developing and scaling up SAF production. 

The new LCFF builds upon the £198 million already invested through the advanced fuels fund (AFF) since 2022 and recognises the government’s continued commitment to financially supporting the sustainable aviation sector. 

The press release confirmed that applications will open in mid-July for companies to bid for their share of an initial £93 million over the next two years to develop low carbon fuel, with the fund focussing its support on the projects closest to the actual production stage rather than those in the early development and commercialisation stages

2. Call for Evidence – SAF Mandate: SAF supply and industry certainty in an evolving market

Alongside the announcement of this new fund to help boost the industry, the government also announced a call for evidence on the UK SAF Mandate aimed at identifying how it can further support industry in meeting its obligations under the mandate. 

Under the SAF Mandate there is:

1. a legal obligation for fuel suppliers to ensure that an increasing proportion of the jet fuel they supply is SAF, rising from 2% in 2025, to 10% by 2030, and eventually 22% by 2040.
2. from 2028, a separate obligation to ensure that a minimum amount of total SAF that must be derived from power-to liquid fuels, at 0.2% in 2028 and 3% by 2040; and
3. from 2027, there is a declining cap on the amount of SAF that can be produced using hydroprocessed esters and fatty acids (HEFA), reducing from 71% in 2030 to 35% by 2040.

However, stakeholder feedback to date has indicated that there are concerns that non-HEFA SAF is currently not being produced in significant quantities and that the SAF Mandate’s future supply targets are not achievable. 

The Call for Evidence (which is open until 11:59pm on 28 July 2026) presents an opportunity for key stakeholders to influence the non-HEFA cap and the PtL obligation and poses questions to industry on three (3) key topics relating to the availability of non-HEFA SAF supply:

1. The availability of advanced non-HEFA and power to liquids (PtL) SAF 

Whether global and domestic non‑HEFA SAF supply (PtL or non-PtL) can meet the SAF Mandate targets, the consequences of no policy change, and whether altering HEFA caps or PtL obligations would affect investment and supply, in particular for non‑HEFA production.

2. Potential changes to the SAF Mandate 

The current structure of the SAF Mandate, including the impact of keeping the current HEFA cap and PtL obligation at the current levels,  whether the use of the buy-out mechanism remains an appropriate fallback for compliance or whether other flexibility options should be allowed (e.g. rewarding certain fuels (for example, advanced types of SAF) with additional certificates). 

3. Wider considerations: tankering and alternative approaches

The impacts of the SAF Mandate on tankering (the practice by which airlines exploit cheaper fuel prices at the airport of origin by carrying enough fuel for both legs of a given flight on the outbound leg, increasing fuel burn and emissions through greater aircraft weight), as well as suggestions for any alternative options not covered in the consultation that could help to deliver carbon savings. 

3. October 2025: Levy Design Consultation Response

On 22 June 2026, the government published its response to the October 2025 consultation on the SAF Revenue Certainty Mechanism (RCM).

The response sets out the government’s preferred position on several features of the Aviation Fuel Supplier Levy, designed to fund the RCM, including:

1. Calculating individual levy contributions and frequency of collection

   The response confirmed government intention to determine each supplier’s contributions by reference to its relative share of fossil fuel aviation turbine fuel supplied in the UK over a defined period. It considers that continuing to use the existing SAF Mandate reporting system (ROS) to calculate individual levy contributions is the most effective approach. 

   The government confirmed that it plans for the levy to only apply to suppliers meeting the minimum threshold of 15.9 terajoules (TJ) or more of aviation fuel per year. The government plans to align the minimum threshold for the levy obligation with the SAF mandate threshold and confirmed that this will be the only exemption for the levy. 

   The response additionally confirmed that assessment and collection periods should be aligned: the government will collect the levy on a monthly basis to align with existing data reporting and business payment cycles. This is intended to support cashflow and mitigate risk of supplier default. 

2. Sequencing of assessment, collection, and billing periods 

   The government response recognises that reconciliation, which is used in existing, similar schemes, is a cause of uncertainty. As such, it has opened the further consultation (see below) which seeks views on minimising the impact of reconciliation creating material additional payments and the flow of payments to and from suppliers.

3. Forecasting

   The consultation proposed that forecast periods set by the counterparty should be 12 months. To determine how levy rates are calculated and will evolve over time, the government will require the counterparty to publish forecast and actual data within specified notice timeframes. 

   Final decisions on forecast frequency are intended to align with the design of the forecast levy rate and will form part of the second consultation (see below). 

4. Managing uncertainty 

   As the levy will be calculated based on forecasts and then reconciled when actual data becomes available, the government sought views on mitigating the risk of under-collection and the return of over-collected sums. 

   The government recognises that further consultation is required on the mechanisms to mitigate under- and over-collected sums.

5. Managing supplier default

   The government decision is that suppliers will be required to provide credit cover on a quarterly basis, via cash, standby letters of credit or a mix of both. This is as proposed in the consultation. The government proposes that excess credit cover (and any interest) will be returned to suppliers either on request or through credit cover assessments. This will be covered under the Levy Regulations.

   The government also intends to confer powers on the SAF counterparty to conduct mutualisation exercises as a backstop once credit cover and reserves have been exhausted.

6. Compliance and enforcement

   The government intends to proceed with the proposed compliance and enforcement actions, including to confer powers on the counterparty to issue formal notices of non-compliance.

   The counterparty will publish publicly available reports on compliance to provide information on non-compliance and the actions taken in response.

7. Further Levy Design Consultation 

At the same time as the response, the government published a further consultation on the RCM to gather industry views on the elements of the RCM levy design on which where respondents have requested further clarity, including: 

• Individual levy contributions: Whether fossil aviation turbine fuel or total aviation fuel volumes should be used to calculate a suppliers’ contributions;
• Sequencing: Whether a ‘lagged approach’, where the levy will be collected based on the most recent reported volumes of aviation turbine fuel to ROS, or an ‘aligned approach’, where the levy is collected based on forecast volumes, is preferable;
• Collection: Although the levy will be collected on a monthly basis, further views are requested on how frequently the forecast levy rate will be set and how the reserve should be collected; and
• Over-collection and surpluses: How surpluses should be returned to suppliers and whether returns should be made through future levy rate adjustments, direct repayments, or other mechanisms.

Alongside these, the consultation is seeking views on elements of the levy that have not been previously consulted on. Whilst the first consultation raised the concept of a reserve fund for the counterparty to ensure its solvency, the second seeks views on building this before any RCM payments are made. 

Lastly, and perhaps most importantly, the consultation proposes updating the definition of a ‘support scheme’ in the SAF Mandate legislation to ensure that SAF produced under the RCM is eligible for SAF Mandate Certificates. 

A full list of the consultation questions can be found here. The consultation period runs until 11:59pm on 2 August 2026. 

So what do these announcements indicate?

The launch of the call for evidence may be seen as an indication that the government recognise that the SAF Mandate alone may not be sufficient to incentivise investment in technologies to deliver the diverse SAF supply pathways required for SAF Mandate targets to be achieved. This is perhaps more an indication that potential non-HEFA SAF investors and producers still need greater certainty over the availability of the Revenue Certainty Mechanism to fund a viable business model which allows for full scale development and production. 

The levy design consultation response and further consultation outline the government's intention to design a levy which works in practice for industry and air passengers and adequately ensures that SAF policy unlocks the decarbonisation benefits it is aimed to support.

The announcement of a further fund and additional opportunities to formally submit evidence to the government will no doubt be welcomed across the industry and demonstrates the government’s continuing commitment to ensure the UK is at the forefront of the SAF journey. 

The government has further strengthened their position with respect to decarbonisation of aviation fuel with a recent amendment to the Climate Change Act 2008 which brings international aviation emissions within the scope of the sixth carbon budget (from 2033 to 2037) and all subsequent carbon budgets. 

If you would like any further information, or advice related to any of the information in this article, please contact Nick Churchward, Greg Fearn, Chloe Challinor or Patrick Bettle or your usual Burges Salmon contact. 

This article was written by Nick Churchward, Greg Fearn, Sasha Anisman and Charlotte Sinclair.

The announcement of a further fund and additional opportunities to formally submit evidence to the government will no doubt be welcomed across the industry and demonstrates the government’s continuing commitment to ensure the UK is at the forefront of the SAF journey.