UK Sets Timeline for Its SAF Price-Guarantee Mechanism

The UK Department for Transport (DfT) has published its proposed strategy for allocating contracts under the Revenue Certainty Mechanism (RCM), the pricing support scheme intended to help advanced SAF producers reach final investment decision. The first allocation round, SAF AR1, opens for applications in Q1 2027, with shortlisted projects announced Q4 2027 and contracts awarded from Q4 2028. The round is sized to support up to 230,000 tonnes of annual SAF production capacity.

How the Mechanism Actually Works

The RCM is a contract-for-difference structure: government and producer agree a fixed strike price for eligible SAF over a set period, typically up to 15 years. If the market reference price exceeds the strike price, the producer pays the difference back to a government-owned counterparty; if the reference price falls below it, the counterparty pays the producer. The scheme is funded through a levy on aviation fuel suppliers, and the DfT has modelled levy costs to industry of up to £3 billion (roughly USD 4 billion) under a low-SAF-price scenario, falling to around £1 billion under a high-price scenario, since a strong market price reduces the gap the mechanism needs to cover.

Who It's Actually For

SAF AR1's stated objective is narrow by design: non-HEFA projects representing first commercial deployment of their technology, capable of delivering UK mandate volumes cost-effectively and on schedule. The DfT is explicit that RCM support goes to "a small number of highly deliverable and mature projects," with less mature projects directed instead to grant funding through the existing Low Carbon Fuels Fund. Bids face staged due diligence, including conditions precedent and milestone checkpoints that let government withdraw support if a project stalls, a structure designed to filter out speculative bids rather than fund a broad pipeline.

A Deliberately Temporary Intervention

The DfT frames the RCM explicitly as a transitional tool for a nascent market, not a permanent subsidy, and says it expects the mechanism to keep running into the 2030s while a genuine market price for non-HEFA SAF develops. It is already signalling that later allocation rounds could shift toward pure price-based mechanisms such as sealed-bid auctions, and that power-to-liquid projects, which raised concerns about the current design, may get dedicated ringfenced support considered specifically for the second round.

Why This Matters Beyond the UK

Contract-for-difference-style mechanisms are one of the more closely watched policy tools globally for de-risking first-of-a-kind SAF plants, since feedstock-flexible and e-SAF pathways in particular have struggled to reach FID without price certainty. How SAF AR1 performs, and whether UK-based non-HEFA projects reach FID on the strength of it, will be a reference point for other jurisdictions, including across Asia, weighing similar mechanisms for their own advanced SAF pipelines.

Source: GreenAir News, 13 July 2026