The scheme, along with the introduction of a SAF mandate in 2025, will provide fuel security, grow the economy and help create more than 10,000 jobs by 2030, rising to 60,000 by 2050.
To do this, the DfT will launch a consultation on the design and delivery of the scheme to bolster the development of SAF and drive further investment.
Aviation and maritime minister Baroness Vere said not only will SAF bring "countless" economic opportunities, this certainty will allow the industry to "harness its full potential", bringing the country closer to net-zero flying.
"This commitment is an important step to create cleaner and greener aviation in the UK and will cement our position as a global leader in innovation, creating a new, talented workforce that champions decarbonisation and paves the way for future air travel," she continued.
A delivery plan for how this mechanism can be delivered by the end of 2026 has also been published, building on the work by the Jet Zero Council to consider the best way to support the aviation industry to decarbonise.
Sustainable Aviation welcomed the proposal and described the move as a "significant milestone" towards meeting the government’s Jet Zero Strategy commitment.
"Affordable SAF, available at scale, is critical to delivering net zero aviation by 2050," it added. "We look forward to working in partnership with government on the rapid design and implementation of a revenue certainty scheme, that will help unlock billions of pounds of private investment in the UK."
Tim Alderslade, chief executive of Airlines UK, said aviation connectivity is "critical" to the success of the UK and SAF is an important technology in the country’s net-zero arsenal.
"It is a proven way of driving aviation emissions down – particularly for long-haul – and will make the biggest contribution to aviation decarbonisation to 2050. Industry has long been calling for a policy that directly incentivises investment in the initial UK SAF plants."
