Contribution
I am grateful to the noble Lord for explaining that. I am glad we are broadly ad idem, but he helps me to my third point.
The assumption by the noble Lord, Lord Ravensdale, appears to be that the procurement of all future SAF, including non-HEFA SAF and potentially at some stage power to liquid, will have to depend upon or be supported by a revenue certainty mechanism, or at least some form of subsidy or support from the state. That appears to be the assumption. I wholly deprecate that assumption. It is appalling that we should embark upon this project with a view to a regime of perpetual subsidies. If SAF is not rapidly producible on a commercial basis in this country then, as I shall come to in other amendments, the whole project should be reconsidered at this stage.
However, I am comforted in thinking that the Government do not envisage perpetual subsidy by my reading of Clause 1(7) and (8). These are the subsections that I referred to before, so I will not read them out again, but why would the Government put in place what is, in effect, a sunset clause if they envisaged a need for perpetual subsidy? The Minister may want to confirm this, but subsections (7) and (8) taken together are a sunset clause. At the end of 10 or possibly 15 years, no more contracts can be awarded without further primary legislation. There is a degree of confusion, which I may have participated in, concerning what we are discussing. We are giving the Minister the opportunity to bring a blast of fresh air to clear the fog and explain it all to us, so that we know what we are talking about, because up to now I am not entirely sure that we all do.
My Amendment 2 has been explained very well by the noble Baroness, Lady Pidgeon. I do not need to elaborate on what it says, but I have not yet given any rationale for why it should commend itself to the Committee. Amendment 2 seeks to limit the length of contracts. The reason is very simple. This Bill is a large slice of corporate welfare. Having given to the industry, through the SAF mandate which we approved last year, a guarantee of uptake of SAF so that you know that your product is going to have to be bought, this is not enough for them, and we are now going to give them, in addition, a guaranteed price. That is what they are demanding.
I do not blame them for demanding that. Let us have guaranteed demand and a guaranteed price—that is a very pretty place to be in. Let us transfer all the risk somewhere else. Who is going to pay that guaranteed price? Not the Government, because it is not a subsidy. They have discovered from the electricity market the contract for difference, which the noble Lord, Lord Ravensdale, has referred to as a model—a structure which has given us the highest electricity prices in the civilised world. This points to the cost of SAF falling on the airlines and, potentially and ultimately, on the passenger. We will come to this later, but the Government have assessed what that might mean in pounds per ticket. That is the subject of a later amendment which I will not trouble your Lordships with now.
Recognising the large element of corporate welfare in the Bill and the need to get away from that and to incentivise competition, I suggest that there should be some basis for limiting the contract, and therefore the benefits that accrue to the producers of SAF. I am grateful to my noble friend Lord Harper for supporting this. I have suggested 10 years, which is of course an arbitrary number—it might be six years, it might be seven years, or it might be eight years. I have also suggested including a break clause, which I put at five years, so that if the Government saw that this was all going well and that the thing was becoming commercial, they could walk away—which must be their ambition. I put that break clause at five years, which is an equally arbitrary number. If the Minister agreed on the principle, I am sure that he and I could sit down and rapidly agree a maximum length of contract and an appropriate term for the break clause.
It is in that direction that we should be looking if we are not to burden young people. There are not so many young people in the Committee this evening. Many of us are getting to the point where our best flying days are behind us, but when you look to young people who perhaps work in other parts of the House and say, “You are going to be paying for this for the next 20 years. You and your wives and children, and even potentially your grandchildren, are going to be paying for this slice of corporate welfare, so if we don’t get it right the burden falls on you”, and one thinks about that, then of course one is moved very strongly, and is surely moved in the direction of supporting my Amendment 2.