UK injects £63m into SAF as Heathrow set for expansion

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London’s Heathrow Airport is one of the busiest in the world. It handled nearly 84m passengers in 2024 – that’s more than the population of the UK or Germany. And that number is increasing every year.

The UK government wants to build a third runway to accommodate this growing traffic. But another runway means more flights and more emissions. However, the UK Government is pinning its hopes on sustainable aviation fuel (SAF) to offset those emissions while investing in growing the aviation sector.

“Restricting UK airport capacity won’t reduce aviation demand – it will simply shift it elsewhere, taking jobs, investment and emissions with it. Instead, the UK should lead by example, ensuring that aviation expansion goes hand-in-hand with decarbonisation. That means scaling up SAF production now, even if it starts small, to lay the groundwork for a lower-emission future,” Andrew Symes, CEO, Oxccu Tech tells SAF Investor.

This week, while announcing plans for a third runway at the Heathrow Airport, the UK’s chancellor of the Exchequer Rachel Reeves announced additional support for SAF. Under the plan, the government will invest £63m ($78m) in the Advanced Fuels Fund (AFF) to support SAF producers during the ongoing fiscal year. So far, the AFF has awarded £135m to SAF projects including Symes’ Oxccu Tech.

“If the UK can demonstrate aviation growth alongside emissions reductions, we will also have an opportunity to export SAF technologies and expertise worldwide  turning sustainability into a driver of both economic and environmental progress,” Symes adds.

With the funding support from AFF, Oxccu launched its first official demonstration plant at Oxford Airport in last August. The plant uses CO2 and hydrogen (H2) directly to convert them into long-chain hydrocarbons for use as SAF.

Nova Pangaea, another awardee of the AFF, is developing the technology to transform woody waste into second generation ethanol. The company is one of the suppliers to the LanzaJet’s planned alcohol-to-jet facility, Project Speedbird, in Teesside which will produce 90m litres of SAF and renewable diesel a year (up to a 90/10 max split). The project is expected to become operational from 2027/2028 onwards.

“With SAF mandates becoming law, as we saw on 1st of January 2025, aviation decarbonisation has to happen. If airports are expanding, there will further demand for SAF to deliver on the laws and mandates, as this is the most viable route to airline emission reduction,” said Sarah Ellerby, CEO at Nova Pangaea Technologies.

“Therefore, SAF has huge role to play and it can only be delivered through various technology solutions.”

But this wasn’t the only SAF announcement from the UK Government. The Department for Transport also published the response to consultation on the Revenue Certainty Mechanism (RCM).

It has decided to go ahead with the guaranteed strike price mechanism. However, only non-HEFA SAF projects will be eligible for the first tranche of the contracts. “Once implemented, [the RCM] will encourage investment into the nascent UK SAF industry. Next steps on the RCM will be set out imminently,” said Chancellor Reeves in her statement.

Complementing the government’s support, Heathrow also extended its SAF incentive earlier this year. The airport, for a fourth year in a row, will incentivise SAF usage by making £86m ($106.8m) available to airlines using the fuel. This will ensure a 3% SAF offtake on the flights from the airport in 2025 – 100bps above the UK government’s SAF mandate that came into effect on January 1st, 2025.

The UK’s dual approach to aviation – expanding capacity while heavily investing in SAF – can serve as a template for other countries. 

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