Aviation Industry Cheers New SAF Tax Credit Plan

 - May 21, 2021, 10:38 AM
The announcement of legislation involving a blender's tax for sustainable aviation fuel (SAF) producer/blenders is welcome news for companies such as World Energy which operates a refinery in Paramount, California, as it will move SAF's price closer to that of conventional jet-A, hopefully spurring adoption and demand. (Photo World Energy)

A broad-based consortium of aviation companies and organizations yesterday applauded the introduction of the Sustainable Skies Act in the U.S. House of Representatives. Among those lauding the legislation were airlines, fuel manufacturers and providers, airframers, engine makers, and aviation alphabet organizations such as NBAA, GAMA, NATA, AOPA, and A4A.

Sponsored by Reps. Brad Schneider (D-Illinois), Dan Kildee (D-Michigan), and Julia Brownley (D-California), the Sustainable Skies Act would establish a $1.50 per gallon “blender’s tax credit” for sustainable aviation fuel (SAF) that achieves at least a 50 percent reduction in lifecycle greenhouse gas emissions compared with conventional fossil-based jet fuel. In addition, the fuels would receive another one-cent-per-gallon credit for each percentage point in reduction above 50 percent. A 100 percent reduction would therefore receive a $2-per-gallon credit. Under the measure, the tax credits would be in effect until 2030.

“The Sustainable Skies Act will help spur the private-sector investments needed to boost the production, distribution, and uptake of SAF,” explained GAMA president and CEO Pete Bunce. “A blender’s tax credit will also assist in making SAF a cost-competitive alternative to conventional jet fuel.”

NATA president and CEO Tim Obitts told AIN that the maximum $2-per-gallon credit, combined with the approximately $1.50-per-gallon credit for SAF provided under the California Low Carbon Fuel Standard (LCFS), could bring the price of the renewable aviation fuel near or on par with the cost of traditional jet-A in some areas of the state.

In February, Brownley reintroduced legislation known as the Sustainable Aviation Fuel Act, but she has since pivoted to place her support behind this measure instead.

“Sustainable aviation fuel is the aviation industry’s best opportunity to cut its carbon emissions for the foreseeable future,” she said. “I am pleased to join Rep. Schneider and Rep. Kildee in introducing the Sustainable Skies Act because federal investment in this nascent industry is critically important if the aviation sector is going to reach its goal of net-zero emissions by 2050. The broad coalition of environmentalists, airlines, sustainable fuel producers, and labor in support of this bill demonstrates how SAF can be both a win for the environment and a win for our economy.”