UK government releases pricing mechanism strategy and timelines to support SAF production
In the UK, Green Air News reported that the UK’s Department for Transport has published details of its proposed strategy for allocating contracts under the Revenue Certainty Mechanism (RCM), which is intended to give advanced sustainable aviation fuel producers and investors the confidence they need to build and scale first-of-a-kind SAF production plants in the UK.
Contracts will be allocated in rounds, with the first, SAF Allocation Round 1 (SAF AR1), open for applications from Q1 2027, shortlisted projects announced from Q4 2027 and contracts awarded from Q4 2028, according to the report.
The proposed size of SAF AR1 will have the aim of supporting up to 230,000 tons of annual SAF production capacity. A larger and more technology diverse second round is likely to take place a year after SAF AR1 contracts have been awarded, the report added.
Based on a guaranteed strike price model and funded by a levy on aviation fuel suppliers, the RCM should enable UK SAF projects to secure a lower cost of capital, lower the cost of UK SAF production and help projects reach final investment decision (FID), says the DfT in its latest publication on the design of the RCM.
Category: Policy
