Assessing SAF In The UK

What to Know (AI Generated)

• UK SAF mandate enters full operation, requiring 2 percent blend in 2025, rising to 10 percent by 2030.
• Certificate trading and buyout mechanisms shape SAF pricing, compliance and market liquidity.
• Investment risk, feedstock limits and new technologies drive UK SAF growth and future supply.

The UK sustainable aviation fuels mandate came into force on January 1 2025, making the UK one of the first countries in the world to legislate for mandatory SAF requirements. The mandate applies to fuel suppliers, principally the major fuel companies and distributors who deliver fuel to airports and who supply at least 468,000 litres of aviation turbine fuel in the UK per year. The mandate imposes a volume-based blending obligation, requiring a minimum proportion of SAF within the total aviation fuel supplied: 2 percent in 2025, rising to 10 percent by 2030 and 23.7 percent from 2040.

To qualify as SAF, the fuel must achieve a minimum greenhouse gas emissions reduction of 40 percent relative to a fossil fuel comparator, as verified to the administrator within the Department for Transport. Compliance operates through a certificate-based system: suppliers that demonstrate eligible SAF supply receive certificates issued in proportion to the level of GHG emission reductions achieved, and the obligation can then be met through physical supply, SAF certificate trading, or payment of a buyout price.

Within the overall obligation, a cap on the use of HEFA-derived SAF will be set at 92.31 percent in 2027 falling to 35 percent in 2040. It is anticipated that this will preserve headroom for more advanced and sustainable fuel technologies to develop including power-to-liquid SAF, which are synthetically produced liquid hydrocarbons. A separate sub-target for PtL also applies, reflecting the nascent state of that technology: starting at 0.2 percent in 2028 and rising to 4.48 percentby 2040.

Market Structure

The UK SAF market brings together a range of participants at different points in the supply chain, each with distinct commercial objectives and regulatory exposure.

Producers of SAF range from established energy supermajors, with integrated refining capacity to early-stage developers advancing nascent technologies such as PtL. The capital intensity and long development timelines associated with SAF production, particularly for non-HEFA pathways, mean that producers face significant financing and offtake risk, making long-term commercial arrangements a commercial necessity.

Airlines are the end users of SAF and, while they are not directly obligated under the mandate, are significant market participants. Recently, longer-term offtake agreements are being agreed between major airlines to lock in multi-year deals to secure supply to ensure compliance with rising mandate targets. Airlines also increasingly use SAF procurement as a tool for managing their own emissions reporting and sustainability commitments.

Commodity traders act as intermediaries across the supply chain, providing aggregation, logistics, financing, and risk management services. The trading houses are playing a major role in connecting producers with end-user markets and enabling commercial structures that can underpin new production investment.

For the purposes of the SAF mandate, obligated fuel suppliers are the parties with direct statutory responsibility under the mandate. This principally means fuel suppliers, however the certification scheme has introduced participants who trade SAF certificates in order to manage their compliance positions, which has created a secondary market in compliance instruments alongside the physical SAF market.

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