The EU’s ReFuelEU Aviation and the UK’s SAF Mandate place requirements on fuel suppliers to bring alternative aviation fuels to market. In parallel, financial support for alternative fuels comes from the EU’s reimbursement scheme, which subsidises some fraction of the cost difference paid by airlines, and the UK’s guaranteed strike price (GSP), which shields SAF producers from variability in market prices.

This report examines the policy frameworks in the two regions and reviews their strengths and weaknesses. It finds that the structure and targeting of their complementary support mechanisms will deliver diverging outcomes. The EU’s reimbursement scheme will benefit airlines and reduce the costs to flyers, but will do little to motivate next-generation fuel producers. In contrast, the UK’s GSP delivers clear reassurance to fuel producers and is more likely to stimulate investment in the industry by facilitating finance availability and reducing the cost of capital.

The report presents illustrative model scenarios and concludes by distilling major challenges and recommendations for the two policy frameworks.

• The EU’s mandate trajectory and its slightly obscure system of non-compliance penalties could be reviewed, and a joined-up approach adopted for targeting resources towards supporting investment in more sustainable alternative fuels.
• For the UK, there are some important details to iron out about how price-setting works in the GSP; and a potentially vacillating balance of alternative fuel supply and demand from the EU may pose challenges for compliance and costs.