Heidi Alexander

There is more detailed design work to do on all that, and we will work alongside industry to ensure that we have a workable proposition. The mechanism boosts SAF production and gives investors confidence in the UK by addressing one of the biggest barriers to investment: the lack of a clear, predictable market price for SAF. That starts with a guaranteed strike price agreed between a Government-owned counterparty and the SAF producer. If SAF is sold for under that price, the counterparty will pay the difference to the producer. If SAF is sold for above that price, the producer will pay the difference to the counterparty. The revenue certainty mechanism will be funded by industry, specifically through a levy on aviation fuel suppliers. That makes sense for two reasons. First, it is the industry that will benefit from more and cheaper SAF production, so it is only right that industry, and not the taxpayer, should fund it. Secondly, placing the levy higher up the supply chain spreads costs across the sector and is the least burdensome option. It is important to note that the revenue certainty mechanism will not be indefinite. It will be targeted and time-limited, helping to get first-of-a-kind UK projects off the ground. The Bill’s sunset clause means that we can offer contracts only for 10 years, unless it is extended via the affirmative procedure. We will have a firm grip on costs throughout. We will decide the number and duration of contracts, limit support to a predetermined volume of SAF and negotiate acceptable strike prices. There is no obligation on the Government to enter into a defined number of contracts or to agree contracts at any cost. I know that some hon. Members may be concerned about the impact on passengers, so let me reassure them: none of this will limit people’s ability to fly. We expect minimal changes to fares, with an average ticket increasing or decreasing by up to £1.50 a year. I am pleased to say that this is a product of many months of consultation with the industry. Airlines are calling for it, airports are calling for it, SAF producers are calling for it, environmental organisations are calling for it, and the Government are therefore getting on with delivering it.