A bill that recently passed the U.S. House as part of its Build Back Better legislation contains a clause backing a tax credit for sustainable aviation fuel (SAF). This tax credit has been strongly advocated for by the National Business Aviation Association (NBAA).
NBAA’s president and CEO Ed Bolen expressed his support for the passage. “The House passage of this blenders tax credit recognizes SAF’s potential to greatly reduce the aviation industry’s near-term GHG emissions, and validates NBAA’s repeated calls to incentivize the production of this drop-in fuel to attract more producers and make SAF more accessible to business aviation users.”
Tax Credit on SAF
Under the $1.6 trillion bill, some users of SAF will be able to receive a $1.25 per gallon credit. To receive the credit, the operator must use a fuel that’s part of a qualified fuel mixture. If the SAF has a demonstrated lifecycle greenhouse gas (GHG) reduction of at least 50 percent compared to conventional jet-A, the tax credit can take effect.
If the GHG reduction equates to more than 50 percent, each additional percent will add 1 cent to the tax credit, up to $1.75 per gallon.
This provision shall apply for fuel sold or used after December 31, 2022.
“We applaud the leadership shown by Reps. Brad Schneider (D-10-IL), Dan Kildee (D-5-MI) and Julia Brownley (D-26-CA) in continuing to develop support for the blender’s tax credit and as the Build Back Better Act moves to Senate consideration NBAA will continue to advocate for this provision and targeted improvements to the Clean Fuel Production Credit,” Bolen said in a statement Friday.
Other SAF Funding
As part of the bill, the Department of Transportation will be granted $300 million to establish a program to support investments for projects that develop, demonstrate, or apply low-emission aviation technologies or produce, transport, blend, or store sustainable aviation fuels.
The bill allows domestic producers of SAF to qualify for a new Clean Fuel Production Credit starting in 2027.
NASA will also receive funding—$225 million for aeronautics research and development on sustainable aviation.