Lord Harper (Con)

My Lords, my noble friend Lord Moylan set out the challenge—the thing you have to justify—to put the revenue certainty mechanism in place. It was certainly one of the things that I grappled with, and challenged the industry on, when I was the Secretary of State for Transport and we were developing the beginnings of this policy. As my noble friend said, the SAF mandate sets out some guaranteed demand for the industry producing sustainable aviation fuel. The challenge I always put to those thinking about investing in producing the technology was exactly the challenge that the noble Lord, Lord Moylan, set out: if you have guaranteed demand, what is the barrier to producing that product? We discussed this in Committee. The logic is that, for some of these products, it is new technology that requires significant upfront capital investment, and the judgment is that, if you compare it to other similar sorts of investments that these investors are making, the risk is higher than with those other investments. Therefore, if you do not do something to close that gap, you will not see the investment in the technology, particularly here in the United Kingdom, where we want to see the production take place, at least in part, if for no other reason than resilience. What you are really dealing with is closing the gap between the risks involved in producing SAF and the alternative products that those investors could invest in. I do not think, therefore, that you need an open-ended contract. You need to put some limits around it. I am sure that the Minister will have some responses on what those limits should be, but a very obvious one would be to have a time limit, so that investors have some certainty: they have guaranteed demand and a period when they will get a guaranteed price. That should enable the risk premium to be reduced and enable the investment and production to take place. If we start from the assumption that it certainly does not need to be an infinite period and should therefore be fixed, the debate is therefore just about what the length of that period should be. Now, the Minister may want to come back and say that the 10 years proposed by my noble friend is the wrong number or limitation period, in which case I would be happy to listen to the arguments that he makes about an alternative period, but I do not think that the right answer is that it can be any length at all, with no cap on it. I would be much more comfortable if we put a cap on it. Again, if, at some point in the future, there was a clear justification for changing it, there would be nothing to stop this or a future Government coming back to Parliament to change the position. But I do not want to see open-ended contracts in place, particularly since we have legislated for there to be guaranteed demand. So I strongly support my noble friend’s amendment, unless I hear a very good counter case from the Minister.