On 16 June 2026, the Department for Transport announced a £219 million Low Carbon Fuels Fund due to open later in the summer, with £93 million available over the next two years from mid-July. According to the department, the first allocation is aimed at UK companies whose projects are closest to production, pointing support towards schemes that can move beyond development and into supply. The design of the programme matters as much as the total allocation. By concentrating early funding on projects nearing operation, ministers are signalling that this is not a broad research initiative but a targeted attempt to bring domestic low carbon fuel capacity into the market at pace.
The package builds on £198 million already committed through the Advanced Fuels Fund since 2022. In the Department for Transport’s assessment, domestic low carbon fuel production could support 15,000 jobs and add up to £5 billion to the economy by 2050, while helping position the UK as a production centre for sustainable aviation fuel. For policy observers, that places the new fund within a continuing industrial intervention rather than a stand-alone announcement. The government is extending a grant-based support model already used in aviation decarbonisation, but with a sharper emphasis on scale-up and commercial readiness.
Sustainable aviation fuel, or SAF, is being presented by ministers as a route to lower aviation emissions while allowing the sector to maintain capacity growth. The Department for Transport says SAF reduces greenhouse gas emissions by an average of 70 per cent on a lifecycle basis compared with fossil jet fuel, making it a key part of the government’s net zero aviation approach. That framing is central to the wider policy case. The government is arguing that aviation growth and climate compliance do not need to be treated as competing objectives if enough SAF supply can be brought forward through a mix of public support and regulatory direction.
Alongside the funding announcement, the government has opened a Call for Evidence on the SAF Mandate. Under that scheme, an increasing share of jet fuel supplied in the UK must be sustainable, starting at 2 per cent in 2025, rising to 10 per cent by 2030 and 22 per cent by 2040. According to the Department for Transport, the evidence exercise will examine what current global supply projections for different SAF types mean for delivery of those targets in the coming years and how all parts of the industry can be supported in meeting them. Ministers have stated that the overall targets are not under consideration for reduction, with the exercise instead focused on keeping the scheme responsive to an evolving market and strengthening it for future delivery.
Taken together, the announcement addresses two separate policy questions. The fund is aimed at easing capital constraints for producers, while the Call for Evidence is aimed at market certainty for fuel suppliers, airlines and investors that need a clearer view of how compliance requirements will operate as mandated volumes increase. In practical terms, the government is trying to support both sides of market formation: supply development through grants and demand assurance through a binding mandate. For project developers, those elements are closely linked, because capital support on its own may not be enough to secure full-scale investment if the long-term market signal is uncertain.
Aviation, Maritime and Decarbonisation Minister Keir Mather presented the package as the next phase of the government’s green aviation programme, linking it to economic growth, skilled employment and cleaner flying. That language is consistent with the Department for Transport’s broader presentation of aviation decarbonisation as climate policy and industrial policy at the same time. The government’s own argument rests heavily on domestic production. Rather than depending only on imported supply, ministers are seeking to show that SAF policy can also support UK construction, engineering, manufacturing and plant operation as projects move towards delivery.
Industry responses included in the government release indicate the type of schemes likely to compete for support. British Sugar said its British BioJet project at Wissington, which previously received backing through the Advanced Fuels Fund, is exploring a demonstration plant using existing waste feedstocks and ethanol-to-jet technology to produce 1,500 tonnes of SAF. LanzaTech said its planned Humberside facility could supply around 1 per cent of UK jet fuel demand and argued that certainty beyond 2030 is important if private investment is to accelerate. Those examples illustrate the present policy challenge: there are identifiable projects in development, but delivery depends on a combination of grant funding, credible mandate rules and investor confidence.
What happens next will carry more weight than the announcement itself. Applications for the first £93 million are due to open in mid-July, and the wider Low Carbon Fuels Fund is scheduled to launch later in the summer. The Call for Evidence will run in parallel, giving the Department for Transport a route to test whether the current mandate design matches expected feedstock availability and production growth. For airlines, fuel suppliers and plant developers, the immediate message is that ministers are maintaining the upward path of SAF obligations while examining how the market can meet them. The main policy test will be whether public funding and regulatory certainty together can convert a pipeline of projects into dependable domestic supply before the next major increase in mandate requirements.