Orgs Urge Refundability for SAF Blender's Tax Credit

 - August 30, 2021, 12:25 PM

A coalition of nearly 70 aviation organizations and companies sent a joint letter to Congress on Friday urging that any blender's tax credit for purchasing sustainable aviation fuel (SAF) be refundable. They asked Congress to “include a meaningful, long-term refundable tax credit that would better incentivize the production and use of SAF as it considers climate-related proposals for the budget reconciliation bill.”

Many of the signatories wrote to Congress supporting the Sustainable Skies Act (H.R.3440/S.2263), which would establish a $1.50 to $2 per gallon blender’s tax credit for SAF that achieves at least a 50 percent reduction in lifecycle greenhouse gas emissions compared to jet-A.

“We firmly believe a SAF blender’s tax credit is an effective mechanism to send a long-term investment signal and create a vibrant domestic SAF market,” they wrote. “Refundability is a critical element of the incentive because many SAF producers are startups or small companies with limited or no near-term income tax liability, especially in light of the large capital expenditures required to build SAF production facilities.”

Without refundability, they said, producers or blenders without income tax liability would have to carry forward the tax credit for many years, significantly diminishing the present value and thus eroding their willingness to invest in SAF.