Paul Kohler MP: speeches

Speeches

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (Second sitting) · Hansard source

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  Q I do not know whether you have seen it, but Valero makes the point in its written submission that if the way that you calculate the levy is too complex, and if you base it on historical market data rather than current data, then with just a standard levy, that will produce problems, whereby new entrants will not be subject to the levy. We have to be sensible about how we calculate the levy. That is all I am suggesting. Do you recognise that as an issue? Mike Kane: The first thing I would say in response to your question, Paul, is that this is a very technical, short Bill, but there are huge challenges ahead. I want to compliment my officials, who have worked extraordinarily hard to get to this point, and also industry who have worked with us to get to this point. As we go to the strike price and the levy, we will continue to work with industry to make sure we get that right. Somebody described it earlier—I think it was Mark again—as being like a seesaw. It will go up, it will go down; but by letting the contracts or drawing them in, we can keep that balance in equilibrium, as far as humanly possible. That is the quality of this. While that is not the answer you might want to hear about the end piece, there will be scrutiny of the Secretary of State and of this, and of the legislation, and that will be covered by the Competition and Markets Authority. There will be many levels of scrutiny of how well Government are delivering this.

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (Second sitting) · Hansard source

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  Q Using carbon dioxide to produce SAF is a wonderfully seductive and brilliant solution. You are addressing the regulatory obstacles, but what are the technical obstacles? Doug McKiernan: To be perfectly transparent with everybody, with carbon dioxide at the moment I think the direct air capture, compared with where we are, is a bit of an Achilles heel. It is probably around two to four years behind in its scale-up, in terms of being able to keep pace with our scale-up, but actually there is plenty of biogenic carbon dioxide around for large-scale commercial plants here in the UK, which could be a stepping stone to the direct air capture. A lot of the work with direct air capture at the moment talks about the cost of it; you can sequestrate the carbon dioxide in the ground. That is not what we want to do as a petroleum company; we want to put that carbon dioxide into a liquid fuel, and then it is net zero. You have carbon dioxide and water coming out of the exhaust—whether that is a turbine or internal combustion engine. If you capture the carbon dioxide again with the direct air capture, you are then net zero. When you integrate that direct air capture with our process, the cost of direct air capture is probably reduced by 80%, because we have an exothermic reaction going on, and the majority of the cost in direct air capture is in the de-absorption of carbon dioxide. Once you have absorbed it from the air, you have to heat up the catalyst again—or the material that has absorbed it—to get the carbon dioxide out again, and we have an exothermic reaction. We would not have those costs associated with our process. Integration of our direct air capture with our power-to-liquid solution in three to four years’ time would be quite a mature technology, and definitely scalable within the UK.

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (First sitting) · Hansard source

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  Q And issues such as tankering? Rob Griggs: We think it is probably too early to say. We need to keep an eye on that and whether there are unintended consequences of the way that this is set up. It is one to monitor.

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (First sitting) · Hansard source

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  Q Mr Counsell, I would like to quiz you on your first point. Given the premium on SAF, the mandate is going to cost far more than the RCM? Jonathon Counsell: Yes.

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (First sitting) · Hansard source

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  Q Mr Greenwood has made a compelling critique of the basics—“We have a mandate; why do we need the RCM? There might be unintended consequences.” I know you disagree with him, but I would like to hear why you disagree with him. Gaynor Hartnell: These projects are first of a kind, pretty much. This waste-based stuff is not being produced at scale anywhere in the world yet. It is very challenging to build one of these projects. There are numerous risks. You have Philip New coming later to give evidence; he has written a report on that, so you could ask him what those risks are. This addresses the showstopper risk if you like, which is the revenue certainty that a SAF producer can rely on when going to a bank and asking to borrow the millions or billions of pounds that it costs to build one of these projects. In the UK, we now have many precedents of other large-scale projects that are driven by environmental requirements, from renewable electricity generation to carbon capture and storage. Those various different projects are all supported by some sort of equivalent to the contracts that will be let under this revenue certainty mechanism, whether it is a contract for difference for electricity or whatever. It is par for the course. We are not asking for this just because everyone else gets it so we should get it too. There is a competition for capital, among other things. If there are supported projects in terms of revenue stability, it will be easier for the capital to flow to those projects. This is a new mechanism. We are seeking new types of SAF production pathways. It is incredibly complex, and it is necessary. Underlying all of this, the SAF mandate creates a market for greenhouse gas certificates, and the price of those certificates will be variable. It is very much built on a preceding policy—the renewable transport fuel obligation for road transport. That was just a demand mechanism without any accompanying equivalent to this revenue certainty mechanism. We import 85% of our road fuels, and we are not doing a very good job, I must say, given the opportunity, at preserving those early movers of projects that were built in the early days. Getting project funding is challenging, and it is not made easier by the fact that we have some early movers that are not managing to keep their renewable fuel projects going. I am talking about the bioethanol producers. Rob Griggs: I agree with what Gaynor says. Ultimately, UK SAF projects are competing for investment against other renewable projects across the UK economy that have similar types of support—CFDs for energy and hydrogen and other types of things. In some way it is levelling the playing field a little for SAF compared with other forms. I am here representing airlines; I am not representing producers. We want and we need SAF, and we want it as cost effectively as possible. We have seen all the evidence, given the nature of our mandate, its design, the global market and the work of Phil New that Gaynor referenced, which specifically asked that question: you have a mandate; why do you need an RCM? Everything suggests that given all those dynamics, without some form of revenue certainty you will not get that investment in the first-of-a-kind plants that we need to prove out the technology and get that initial set of volumes on a really aggressive timeline for 2030. As airlines, on balance, we want the system to be competitive. We expect there to be imports as well as domestic production, but we think that without that UK 2G supply kick-started by the RCM, we will struggle and then we risk the buy-out. That is why we support it. On top of that, if it goes right, you get a UK industry better for your security, and jobs domiciled in the UK. It is a win-win, notwithstanding that as airlines, that is not necessarily our primary goal, but it is a huge benefit, so why not support it?

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (First sitting) · Hansard source

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  Q To your point on the RCM, the money you put into the RCM will bring down your overall costs, because the premium on SAF will go down, will it not? Jonathon Counsell: Absolutely—we hope that eventually, as you scale up SAF supply, the cost will come down. Will it ever come down to jet fuel levels? I do not think it will, because of the factor cost element. I agree with Paul Greenwood, who said earlier that one of the disadvantages we have in this country is high energy costs. We are doing SAF contracts with SAF suppliers in the US, where their energy costs are one third of those in this country, so we are at a disadvantage. On 2G SAF, however, I think we have some real advantages: we have some sites, we have expertise and we have feedstock, both waste biomass and municipal solid waste. We put 20 million tonnes of municipal solid waste into landfill; we even ship 5 million tonnes of it to Europe. That is energy. We should be using it to make SAF. Those advantages can overcome the energy disadvantage in the short term. Hopefully we will sort out that energy disadvantage, but as we scale up those plants that SAF price should come down. It is an investment, but we do not want to double-pay for it. Luke Ervine: Just to add and clarify, I think Luke Taylor asked a question earlier about ways to pay for the SAF mandate. We have always been very clear about paying twice through things such as the ETS scheme. We would love to see those revenues used to reinvest in the decarbonisation of the aviation industry. Given the economic value it returns and the Government’s growth agenda, we believe that creating a SAF industry also creates jobs and a lot of economic prosperity. The Sustainable Aviation report in 2023 estimated that the UK SAF industry would create about 60,000 new jobs by 2050 and about £10 billion gross value added by the same time. There is a benefit here for the UK economy as a whole purely in terms of the SAF industry, and using some of the taxes we currently pay to fund the RCM would be very helpful. Lahiru Ranasinghe: I do not have much to add to what has already been said, but the cost of SAF means that the cost of fuel will go up in the long run, even with the RCM. In our minds, the RCM is something that unlocks production, as opposed to something that brings the cost down. The primary role we see for it is in getting production up so that supply can meet demand in the short run. Ultimately, though, we will have higher costs because of SAF, especially as eSAF and power-to-liquid comes in, and those costs will have to be passed through. We are doing a huge amount to try to be as efficient as we possibly can; that is where the investments in aircraft and how we operate come in. As they say, the best energy is the energy you do not use, and in that way we are trying to manage our costs in the same way we have for the past 30 years, but I completely agree that we have to be wary of adding on to the costs we are already paying in the name of sustainability, both right now and in terms of meeting the mandates.

• 15 Jul 2025 · Sustainable Aviation Fuel Bill (First sitting) · Hansard source

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  Q The RCM is all about increasing the ability to produce, which will surely bring down the market price. Is not the RCM, in fact, an investment to cut your costs in the long run? Jonathon Counsell: We support the RCM: it is a critical mechanism and you will not get 2G plants funded in this country without it. We spent the last five years talking to investors who said that the mandate is not enough. The mandate creates demand; it does not create investment. If you have a mandate on its own, all your SAF will be imported. The RCM unlocks the investment to get the plants built—so it is absolutely an investment, but the issue for airlines is that we are paying for the SAF and also paying for our carbon emissions. If we then pay for the derisking of the infrastructure, we are double-paying. The EU ETS first established that the key principle is that money is recycled to help decarbonisation of those sectors that fund it. It is not taxpayers’ money. Aviation puts £500 million into the UK emissions trading scheme. That money is supposed to come back to support the decarbonisation of aviation. None of it does. All we are saying is, is that not a perfect opportunity to use some of that aviation money to support the costs that are coming back to us through the levy? Then we would not be paying twice. Instead, we would be paying for the levy, but through the UK emissions trading scheme.

• 9 Jul 2025 · Trial by Jury: Proposed Restrictions · Hansard source

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  I sympathise with the Minister’s frustration at the Tories’ brass neck. There is clearly a crisis in the criminal justice system, and it is clearly of their making. However, rather than undermining the jury system, we need to invest in our courts. Does the Minister agree that this is all about priorities? Is she going to use her limited budget to build more prisons and simply produce more prisoners, or use that limited money to invest in the criminal justice system and restorative justice?

• 9 Jul 2025 · Draft Transport Act 2000 (Air Traffic Services) (Prescribed Terms) Regulations 2025 · Hansard source

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  rose—

• 9 Jul 2025 · Draft Transport Act 2000 (Air Traffic Services) (Prescribed Terms) Regulations 2025 · Hansard source

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  It is a pleasure to serve under your chairship, Sir Jeremy. We welcome steps to better co-ordinate the fractured and complex system of managing airspace. It is important to bring it into the 21st century by delivering flight paths that cut emissions and ensure that journeys can be quicker, quieter and cleaner. The creation of a single guiding mind to co-ordinate and sponsor future airspace changes is a positive step and something that my party warmly welcomes. We recognise that without modernisation, not only will there be unnecessary capacity constraints, but outdated flight paths will constrict innovation and stand in the way of future advances, including essential low and zero-carbon developments in the sector. It is vital, however, that the new organisation works closely with the communities affected by noise and air pollution—as has been said, there will be losers as well as winners—and that local communities feel that their voice is being heard when changes take place. We understand that London will be the first area that the UKADS considers. Can the Minister clarify the timeline for the creation of the new service and when we can expect the work on the modernisation of London’s airspace to commence? Can he give any indication of how long the Department envisages it will take for the UKADS to publish and consult on its draft proposals? Finally, will the Minister set out what steps the Government are taking to ensure that UKADS works closely with the public, so that the communities affected by the changes are and feel properly consulted?