The Oxford Institute for Energy Studies has published a paper designing a revenue certainty mechanism for sustainable aviation fuel (SAF, jet fuel produced from wastes, residues or synthetic sources) in the United Kingdom. The proposal targets the single obstacle that has slowed British SAF plant construction more than any other: the absence of guaranteed long-term revenues for producers.

The paper's core argument is straightforward. Fuel producers will not commit capital to new SAF plants without confidence that offtake revenues will cover costs over the life of the asset. Airlines, in turn, face exposure to the price gap between SAF and conventional Jet A-1. A revenue certainty mechanism bridges that gap by stabilizing the price received by producers and the price paid by carriers.

What does the mechanism change for UK aviation?

For airlines, the design addresses compliance exposure under the UK's SAF mandate, which obliges carriers to blend rising shares of SAF into their fuel uplift. For refiners and project developers, it addresses financing. Lenders require contracted cash flows before advancing debt for plants that cost hundreds of millions of pounds and take years to build.

The Oxford Institute for Energy Studies frames the mechanism as the policy instrument that converts a legal blending obligation into bankable projects. Without it, the mandate risks forcing airlines to import SAF produced elsewhere, exporting the industrial investment the policy was designed to create.

The paper examines design choices that determine whether such a scheme works in practice. Among the questions it weighs:

• How the mechanism sets the strike price between SAF production costs and conventional jet fuel prices
• Who carries the difference when production costs exceed fossil parity, and who benefits when they fall below it
• How the scheme interacts with existing carbon pricing and the UK SAF mandate's tradable certificates
• Which entity administers the contracts and backs the counterparty risk

Each choice carries distributional consequences. A mechanism weighted toward producers lowers financing costs and accelerates capacity. One weighted toward the exchequer limits public exposure but raises the cost of capital and delays plants.

Certification and delivery remain separate questions

A revenue mechanism finances supply. It does not by itself resolve the technical and regulatory pathway that determines which pathways qualify. SAF produced under different approved processes carries different compliance value under the mandate, and investors price that regulatory risk into project economics. The paper's contribution is to isolate the revenue leg of that risk stack and propose a contract structure for it.

The timing matters for UK airline planning. Carriers operating from British airports must meet mandated SAF blend percentages that rise on a published schedule toward 2030. Every year without final investment decisions on domestic plants tightens the later compliance years and increases reliance on imports or on certificate purchases from other suppliers.

What does this change for network and cost planning? For now, nothing operational: no plant has broken ground on the back of this design. The paper is a policy proposal, not legislation, and a revenue certainty mechanism would require government adoption, a delivery body and contract terms before any producer could finance against it.

The Oxford Institute for Energy Studies' design will now feed into the UK debate over how to translate the SAF mandate into domestic refining capacity. Whether ministers adopt a revenue certainty scheme, and on what terms, will determine whether the next wave of British SAF plants reaches final investment decision or remains at the feasibility stage.