Source · Select Committees · Environmental Audit Committee
Recommendation 24
24
Accepted
Paragraph: 159
Free ETS allocations for aviation ending, SAF pricing needs to reflect carbon impact.
Conclusion
We welcome the decision of the UK Government and devolved administrations to end the issuing of free ETS allocations to aviation with effect from the 2026–2030 allocation period. We note that the use of SAF in aviation is currently zero-rated for ETS, even though the emissions from burning SAF in flight are currently equivalent to those from burning aviation kerosene: as the SAF market matures, consideration must be given to pricing SAF in the ETS at a level which genuinely reflects its carbon impact.
Government Response Summary
The government agrees, confirming the phase-out of free ETS allocations by 2026 and stating they will develop and consult on proposals for how the UK ETS should treat SAF in the future, exploring alternative options for its pricing.
Paragraph Reference:
159
Government Response
Accepted
HM Government
Accepted
The Government agrees with this recommendation. We are committed to enhancing the effectiveness of the UK ETS for aviation; and we will take forward the commitments in the Developing the UK ETS government response, which was published on 3 July 2023. The decision to phase-out aviation free allocation by 2026 is implemented by not extending existing free allocation arrangements for the aviation sector into the UK ETS’s 2026–2030 allocation period. Furthermore, during the current phase-out period there is a cap on the maximum amount of free allocation aircraft operators are eligible to receive per year. Regarding SAF, we will continue to develop proposals on how the UK ETS should treat the use of SAF by aircraft operators and will consult on these in due course. While SAF will continue to be zero rated under the UK ETS in the short-term, the UK ETS Authority will continue to explore alternative options to SAF being zero rated in the future. Proposals will take into account other SAF policy and incentives, as well Government’s wider objectives to support the development and use of SAF in the UK as set out in the Jet Zero Strategy.