Parliament has enacted the Sustainable Aviation Fuel Act 2026, creating a statutory framework to support domestic production of sustainable aviation fuel through contract-based revenue support and an industry-funded levy. Royal Assent was signalled on Thursday 5 March 2026; the Act is listed as c. 9 on the UK Parliament bills service. (hansard.parliament.uk)
The central instrument is a revenue certainty contract issued via a government-owned counterparty. Payments flow either from the counterparty to the producer or vice versa, calculated by the difference between a contract “strike price” and a market reference price for SAF sold in a defined period. This mirrors the familiar difference-payment logic used in electricity Contracts for Difference. (bills.parliament.uk)
The Secretary of State may direct the counterparty to offer a contract to a named producer and must set out the terms, the period for compliance, and how long the offer remains open. This power runs for 10 years from Royal Assent and can be extended by up to five years at a time by regulations subject to parliamentary approval. (bills.parliament.uk)
The legislation ties support to UK production. “UK‑produced” SAF is defined such that fuel qualifies where any part of the process for converting feedstock into fuel occurs in the United Kingdom, a drafting choice intended to incentivise siting of conversion steps domestically. (bills.parliament.uk)
A designated counterparty must be a company limited by shares with every share held by a Minister of the Crown. The Secretary of State designates the company by notice, may revoke that designation, and must ensure a designation is always in force. If consent is withdrawn, a replacement must be appointed. (bills.parliament.uk)
If the counterparty is replaced, the Secretary of State may transfer property, rights and liabilities-explicitly including employment contracts-with scope to make provisions equivalent to the TUPE Regulations 2006 and to compensate parties adversely affected. (bills.parliament.uk)
Transparency is baked in. Regulations may require the counterparty to maintain a public register of contract information and to publish contracts or details of them, with redactions permitted either under contract terms or following a Secretary of State decision made in accordance with the regulations. (bills.parliament.uk)
Funding comes from a statutory levy on “relevant suppliers of aviation fuel”, defined by reference to who is obligated under the Renewable Transport Fuel Obligation when supplying aviation fuel in the period specified. Levy regulations can vary contributions by relative market share, allow reserves to be held, provide exemptions, require payments on account and set interest for late payment. Government has already signalled this supplier‑funded approach in its SAF revenue certainty mechanism policy response. (bills.parliament.uk)
Levy regulations may also require providers to post financial collateral, confer administrative and enforcement functions on the counterparty, oblige data provision to the counterparty or Secretary of State, and provide for dispute resolution including arbitration and appeals. They may specify how calculations are to be performed and by whom. (bills.parliament.uk)
If the counterparty runs a surplus, secondary legislation may require repayments to levy payers and require recipients to pass specified benefits on to their own customers, with conditions enabling clawback if pass‑through duties are not met. (bills.parliament.uk)
Non‑compliance attracts civil penalties. The Secretary of State may fine a person (other than the counterparty) for breaching specified levy or information requirements, up to the lesser of £100,000 or 10% of turnover, with power to uprate the fixed cap for inflation. Schedule provisions require a notice of intent, at least 28 days for representations, a final notice, rights of appeal to the High Court (or Court of Session), and enforcement of unpaid sums as court debts; receipts are paid into the Consolidated Fund. (bills.parliament.uk)
Most of the Act commenced on Royal Assent. Section 1-covering directions to offer revenue certainty contracts-starts two months after Royal Assent, on Monday 5 May 2026. Regulations under key provisions, including the levy, are subject to the affirmative procedure; others are subject to the negative procedure. (bills.parliament.uk)
The framework complements the UK SAF Mandate, which began in 2025 and increases blending targets over time. Ministers have made clear that contract support will operate alongside the mandate and is intended to de‑risk UK projects by improving revenue visibility while an industry levy spreads costs across the fuel supply chain. (gov.uk)
For UK producers, the immediate task is readiness for allocation: ensure project structures meet the Act’s UK‑production test, assemble evidence for strike price setting and reference price methodology, and prepare for contract publication requirements once regulations are made. For aviation fuel suppliers and finance teams, early planning should assume levy payments from the date specified in secondary legislation, potential cash‑collateral calls, enhanced data submissions, and pass‑through obligations if surpluses are returned. Devolved administrations will be statutory consultees on core regulations, and the regime applies UK‑wide. (bills.parliament.uk)