NBAA Welcomes Senate Bill’s Provision Promoting Sustainable Aviation Fuel Development
The National Business Aviation Association (NBAA) welcomes the inclusion of an NBAA-championed blenders tax credit for producers of sustainable aviation fuel (SAF), as part of the Inflation Reduction Act of 2022.
Passed Aug. 7 by the U.S. Senate, the budget reconciliation legislation includes a $1.25-per-gallon credit available for each gallon of SAF sold as part of a qualified fuel mixture, if the SAF has a demonstrated lifecycle greenhouse gas (GHG) reduction of at least 50% compared to conventional jet fuel. The stand-alone SAF tax credit — which increases by one cent for each percentage point by which the lifecycle GHG emissions reduction of such fuel exceeds 50%, up to $1.75 per gallon — would be effective for two years, beginning Jan. 1, 2023.
After Jan. 1, 2025, the new Clean Fuel Production Credit (CFPC) would apply to all transportation fuels, with an enhanced baseline credit for SAF. The CFPC is based on the level of GHG reduction performance of a fuel versus a baseline emissions factor. Under this system, SAF is eligible for a credit of up to $1.75 per gallon for fuels with a 100% GHG reduction, with lower credits for fuels demonstrating lower levels of GHG reduction. The CFPC would expire on Dec. 31, 2027, unless extended by Congress.
“Through the Business Aviation Commitment on Climate Change, our industry has pledged to achieve net-zero CO2 emissions by 2050, and increasing the availability of SAF at general-aviation airports is crucial to achieving our goal,” says NBAA president and CEO, Ed Bolen. “Establishing a robust federal tax credit for SAF is the single most important thing policymakers can do to increase production and availability, and NBAA applauds the members of Congress and staff who tirelessly worked to advance this legislation.”
The stand-alone SAF blenders tax credit was initially introduced as part of the Sustainable Skies Act. NBAA worked with a broad coalition to build support for this legislation, and the association thanks U.S. Sens. Sherrod Brown (D-OH), Reverend Raphael Warnock (D-GA), Maria Cantwell (D-WA) and Patty Murray (D-WA), and Reps. Brad Schneider (D-10-IL), Dan Kildee (D-5-MI) and Julia Brownley (D-26-CA) for their steadfast support of our nation’s aviation industry.
The Inflation Reduction Act will now move to the U.S. House for debate and a final vote reconciliation. If passed, the legislation will go to the President to be signed into law.