As airlines and governments grapple with the challenge of reducing carbon emissions from flights — a sector responsible for a significant share of transport emissions — sustainable aviation fuel (SAF) is emerging as a critical climate and industrial strategy. At the heart of this transition is the question of how to make SAF production commercially bankable, particularly in the UK, where policymakers are attempting to engineer a supportive investment environment.
In their recent legal analysis, Nick Churchward and Greg Fearn of Burges Salmon explore how the UK government’s evolving approach to SAF Revenue Certainty Mechanisms (RCM) — part of broader SAF legislation — seeks to reduce commercial risk and spur investment in SAF projects by stabilising future revenues.
Why Revenue Certainty Matters
Historically, SAF projects have struggled to attract large-scale capital because revenue streams are uncertain. Unlike electricity or some renewable fuels, SAF production currently does not have a consistently traded market price. Investors, therefore, face potential volatility in how much they can sell SAF for — and how often it will be offtaken by airlines — making project economics hard to forecast.
To shift that dynamic, the UK government is consulting on a Revenue Certainty Mechanism (RCM) as part of its sustainable aviation fuel policy. In practical terms, the RCM is designed to guarantee a price for SAF producers over a contract term, helping them secure debt and investment on commercial terms.
This concept is not unprecedented. Similar models have been used in other low-carbon markets, such as renewable electricity’s Contracts for Difference and hydrogen support schemes, where price certainty makes nascent industries more attractive to lenders and shareholders.
Inside the Government’s Proposed SAF Allocation Framework
The UK Department for Transport’s “minded to” position for the first SAF allocation round — known as SAF AR1 — proposes a tender and bilateral negotiation process for revenue certainty contracts. This means that SAF producers will bid into a competitive process where they agree with the government on revenue terms, rather than simply being allocated fixed support automatically.
The proposed framework includes the following stages:
- Application Window — Proposals submitted by eligible producers during an open period (details still to be confirmed).
- Eligibility Checks — Assessments to confirm that SAF producers meet the criteria to participate in the scheme, including technical capability and feedstock commitments.
- Tender and Negotiation — Competitive bids are assessed and revenue certainty contracts are negotiated bilaterally for successful bidders.
- Contract Award and Implementation — Winners enter into revenue guarantee contracts for a defined term, creating a known revenue stream for financing and production planning.
By making SAF revenue predictable, the government hopes this mechanism will unlock commercial investment into first-of-a-kind and early-stage SAF facilities, which currently struggle to compete with fossil kerosene on cost.
A Growing Policy Framework for SAF
This work builds on previous policy steps in the UK, including the SAF Mandate that came into force on 1 January 2025. Under this mandate, aviation fuel suppliers are required to blend increasing proportions of SAF into the jet fuel they supply — starting at 2 % in 2025 and rising to 10 % by 2030 and 22 % by 2040 — creating an assured future market for SAF volumes.
The Revenue Certainty Mechanism now being consulted on is intended to go further by reducing market risk for producers, rather than merely creating demand through a blending mandate. It is widely seen as a crucial policy tool to scale domestic SAF production — a goal that the government and industry consider vital for both climate targets and energy security.
The Stakes: Investment, Decarbonisation and Market Scale
SAF can cut lifecycle greenhouse gas emissions by around 70 % compared with traditional jet fuel, and does so without requiring aircraft modifications or new fuelling infrastructure, making it one of the most practical decarbonisation options for aviation.
But production costs remain high, particularly for advanced SAF types made from sustainable feedstocks such as waste biomass or Power-to-Liquid (PtL) routes. Without mechanisms like revenue certainty, capital markets are reluctant to finance commercial-scale plants, meaning domestic SAF supply could lag behind demand and mandate requirements.
The government’s proposals, discussed in Part 2 of the Burges Salmon analysis, signal a policy shift toward a more active role in reducing investment risk and creating a predictable revenue environment — a key step toward building a viable SAF sector in the UK.
What’s Next
The consultation on the SAF Revenue Certainty Mechanism closes on 3 April 2026, after which the Department for Transport will review responses and refine its approach ahead of a formal publication of SAF AR1 guidance and rules.
Meanwhile, the Sustainable Aviation Fuel Bill — legislation providing statutory backing for the mechanism and levy funding — is progressing through Parliament and is expected to become law later in 2026, completing the legislative framework that could unlock the first commercial SAF plants in the UK.
Toward an Investable SAF Industry
What emerges from this evolving policy landscape is a clear message: legislators recognise that demand alone isn’t enough to build a commercial SAF industry. Revenue certainty — backed by stable contracts and market frameworks — could be the missing piece that turns climate ambition into bankable reality.
In the race to decarbonise air transport, making SAF investable is as crucial as making it producible — and the UK’s newest policy tools aim to do just that.