The Sustainable Aviation Fuel Act 2026 is now law (Royal Assent on 5 March 2026), creating a price‑stability backstop for UK‑produced SAF. Ministers can direct a state‑owned ‘designated counterparty’ to offer revenue certainty contracts that guarantee a strike price for eligible fuel, a model the government has trailed as similar to contracts for difference used in power. Section 1, which enables these contracts, takes effect on 5 May 2026. (lordslibrary.parliament.uk)

What changes for producers is bankability. When market prices sit below an agreed strike price, the counterparty tops up the difference; if prices run above it, the producer pays back the spread. Payments are calculated against a contractually defined market reference price, and fuels qualify as “UK‑produced” if any part of the feedstock‑to‑fuel conversion happens in the United Kingdom. It is a familiar formula with new purpose: to pull first‑of‑a‑kind plants over the investment line by stabilising future revenues.

Who pays for the cushion is set out in the Act and accompanying policy. An industry levy on aviation fuel suppliers will fund top‑ups, administration and reserves, with scope to vary contributions by market share and require financial collateral to protect the scheme. The legislation also provides a route to return surpluses to levy payers and, in serious cases of non‑compliance, allows fines up to the lesser of £100,000 or 10% of a firm’s turnover. Transparency provisions enable a public register of contracts, with redactions permitted for commercially sensitive material subject to ministerial rules. (gov.uk)

The move plugs into a wider policy arc. The UK’s SAF Mandate started at 2% of total jet fuel in 2025, rises to 10% in 2030 and 22% in 2040, and-crucially-awards more tradable certificates to fuels that deliver deeper lifecycle carbon cuts. The Department for Transport estimates the mandate can save up to 6.3 MtCO2e a year by 2040, provided supply scales. Today’s Act is designed to accelerate that supply onshore. (gov.uk)

Mandate design steers the market towards genuinely low‑carbon pathways. Government guidance caps the share of HEFA fuels-those made from waste oils and fats-at 100% of SAF demand in 2025–26, falling to 71% in 2030 and 35% by 2040, while a separate power‑to‑liquid sub‑target begins in 2028 and rises to 3.5% by 2040. This mix is intended to avoid over‑reliance on scarce lipids and nudge investment into advanced and synthetic options with greater long‑term abatement. (gov.uk)

Climate impact is not only about CO2. New peer‑reviewed evidence from the ECLIF3 campaign shows 100% HEFA fuel reduced ice crystal numbers in contrails by 56% and soot particle emissions by 35% versus conventional Jet A‑1 in side‑by‑side flight conditions-an important signal given contrails’ warming effect. Design choices on fuel chemistry matter, and they strengthen the case for prioritising the cleanest blends on routes with high contrail persistence. (acp.copernicus.org)

Still, feedstocks are the pinch point. Transport & Environment reports that Europe already imports around 80% of its used cooking oil, raising traceability and fraud concerns as demand from aviation grows. Robust chain‑of‑custody rules and independent verification-baked into UK compliance guidance-will be vital to ensure that “waste‑based” SAF is truly waste‑based and not a backdoor for virgin oils. (transportenvironment.org)

Scaling synthetic e‑fuels will demand serious power. The Royal Society warns that replacing today’s UK jet fuel with green hydrogen‑based options would require 2.4 to 3.4 times the country’s 2020 renewable electricity generation, underscoring why energy system planning and siting for PtL projects must run in step with grid upgrades and new renewables. The Act’s price guarantees help with investor confidence; plentiful clean electricity will decide volumes. (royalsociety.org)

Funding design aims to keep costs with the sector rather than general taxpayers. The government’s consultation response confirms an industry‑funded levy on aviation fuel suppliers, justified by the polluter‑pays principle, with controls to limit total liabilities by capping supported volumes and negotiating acceptable strike prices. Officials also flag National Audit Office oversight for any government‑backed counterparty and promise transparency on levy flows. (gov.uk)

For airlines and airports, this is a planning window. With a predictable demand signal from the SAF Mandate and a revenue floor for UK projects, long‑term offtakes, on‑airport blending and storage upgrades, and scheduling SAF to contrail‑sensitive corridors can all cut climate impact while managing cost. For producers and investors, the scheme opens a route to final investment decisions in advanced ethanol‑to‑jet, gasification‑FT and PtL plants-provided feedstock integrity and power sourcing are watertight. (gov.uk)

Next up are the mechanics. The Secretary of State must designate the counterparty company, consult devolved administrations on key regulations, finalise levy design and publish contract templates that define how strike and reference prices are set. Government has signalled it wants the full revenue certainty framework-including secondary legislation-in place by end‑2026. Investors will watch closely for contract length, indexation rules and how any export of supported fuel is handled. (gov.uk)

Taken together, the Act, the SAF Mandate and non‑CO2 evidence point to a pragmatic path: prioritise the cleanest molecules, guard against weak feedstocks, and use targeted price certainty to build UK capacity. It is optimistic realism, with safeguards. If delivery matches the design, the UK can cut aviation’s warming footprint while building a domestic SAF industry that lasts. (gov.uk)