Westminster has moved from consultation to commitment. The Sustainable Aviation Fuel Act 2026 received Royal Assent on 5 March 2026, unlocking private‑law “revenue certainty” contracts for UK‑produced SAF. These contracts mirror the logic of power sector Contracts for Difference: a guaranteed strike price stabilises revenue for first‑of‑a‑kind plants, with paybacks due if market prices rise above that level. It’s a pragmatic fix to the green premium that has frustrated investors for years. (gov.uk)

Section 1, which enables ministers to direct a designated counterparty to offer a contract to a named producer, starts on 5 May 2026-two months after Royal Assent. Each direction must set the terms, the compliance window, and how long the offer stays open. There’s a 10‑year window to issue directions, extendable by up to five years at a time, giving developers clarity on sequencing their UK project pipelines.

A government‑owned company will act as the counterparty. The Secretary of State designates it, must keep a counterparty in place at all times, and publishes any designation or revocation. If a replacement is needed, a statutory transfer scheme can move contracts, people and liabilities-TUPE‑style-so counterparties change without derailing projects. That continuity is central to bankability.

The Act also leans into transparency. Ministers can require the counterparty to keep a public register of revenue certainty contracts and publish them (with focused redactions for commercially sensitive detail). This should give communities and investors sight of which projects get support and on what basis-an overdue step for trust in transition spending.

Funding is ring‑fenced via a levy on aviation fuel suppliers that fall under the Renewable Transport Fuel Obligation. Regulations can scale payments by market share, build a reserve, allow exemptions, and charge interest on late payment. Importantly, if a surplus builds up, ministers can require rebates to levy payers and insist that benefits flow through to customers-guardrails that matter for households and small businesses facing travel cost pressures.

Policy finally joins up demand with supply. The UK’s SAF Mandate-now in force-requires 2% of jet fuel in 2025, rising year‑on‑year to 10% by 2030 and 22% by 2040. Caps on cheaper HEFA‑based fuels are designed to create headroom for advanced pathways, while a power‑to‑liquid sub‑target begins in 2028 to accelerate e‑fuels. This Act provides the price floor to build the plants that the mandate will need. (gov.uk)

Done well, the mechanism can cut emissions meaningfully. The Department for Transport estimates the mandate could deliver up to 6.3 million tonnes of CO2 savings a year by 2040-provided supply scales. Pairing a predictable strike price with a predictable offtake obligation gives that scale a fighting chance. (gov.uk)

Realism still matters. The Climate Change Committee’s latest pathways show aviation demand growth must be managed while SAF and engineered removals scale, with residual emissions in 2050 needing permanent removal. The Royal Society likewise warns that bio‑SAF feedstocks are finite and e‑fuels will demand large volumes of additional renewable power. Policy signals are strong; delivery must respect these system constraints. (theccc.org.uk)

Consumer protections are baked in. Beyond surplus recycling, the Act enables penalties for non‑compliance with levy rules-capped at the lesser of £100,000 or 10% of turnover-alongside clear rights of appeal. Ministers can also direct the counterparty and demand information to keep the scheme on track. That blend of carrot and stick is what makes industrial policy credible.

For producers, the to‑do list is immediate. Map feedstock provenance and lifecycle emissions to UK standards, stress‑test plant economics under plausible strike prices, and prepare data rooms for transparency rules. Projects using non‑HEFA pathways-including ethanol‑to‑jet, gasification‑FT, and, in time, e‑fuels-are well‑positioned, given government steers on prioritising advanced technologies for early contract rounds. (gov.uk)

Airlines and airports can turn policy into tonnes of CO2 saved by aligning offtake agreements with the new contracts’ term sheets, expanding book‑and‑claim programmes for corporate travellers, and investing in on‑airport blending and storage where it reduces logistics costs. Early, multi‑year offtakes tied to the revenue certainty mechanism can bring down financing costs and, over time, ticket price impacts.

Communities stand to benefit when plants are sited in industrial clusters with waste‑processing capacity and grid access. Transparent contracts and a public register can help local leaders scrutinise employment, air‑quality and waste‑handling commitments-ensuring climate gains come with community gains, not externalities shifted elsewhere.

What happens next will decide how fast steel goes in the ground. Government has already consulted on the funding approach, set out how the strike‑price model will work, and published indicative heads of terms and allocation thinking for 2026. Secondary legislation to operationalise the levy and contracts is slated to be in place by the end of 2026. Watch for the formal designation of the counterparty and the first allocation round timeline. (gov.uk)

Internationally, the UK is moving in parallel with Europe’s ReFuelEU rules, which ramp SAF to 70% by 2050. The UK’s distinct HEFA cap and earlier e‑fuel sub‑target aim to pull investment into next‑generation fuels rather than just chase the cheapest litres. Competitiveness will hinge on how quickly UK projects reach final investment decision under this Act. (apnews.com)

The summary: the Act turns a decade of ambition into investable policy. Price certainty plus a clear levy, transparency, and consumer pass‑through create a workable bridge from pilot projects to commercial scale. For an industry short on easy wins, this is a practical step that rewards real emissions cuts and keeps the public in view.