House Clears Way for SAF Blender's Tax Credit

 - August 15, 2022, 1:08 PM

The House passage of the Inflation Reduction Act (H.R.5376) on Friday cleared the way for a blender’s tax credit for sustainable aviation fuel (SAF) over the next five years, providing a key incentive to spool up production, according to business aviation advocates. The act, which passed in the House by a 220 to 207 vote, followed Senate approval on August 7.

While the bill includes a range of environmental priorities, aviation leaders were pleased with the inclusion of SAF in the incentives, as well as opportunities provided for hydrogen, saying the moves align with their priorities of reducing carbon emissions.

The bill provides a $1.25 per-gallon credit for each gallon of SAF sold as part of a qualified fuel mixture, including that it has a demonstrated lifecycle greenhouse gas (GHG) reduction of at least 50 percent compared to conventional jet fuel. The credit, available for two years beginning January 1, increases up to $1.75 per gallon on a sliding scale based on the percentage of lifecycle GHG emissions reduced beyond 50 percent. Beginning in 2025, SAF would be eligible for credits up to $1.75 per gallon under a new Clean Fuel Production Credit (CFPC). That credit is set to expire at the end of 2027.

Noting the business aviation industry strengthened its commitment with a goal of net-zero carbon emissions by 2050, General Aviation Manufacturers Association president and CEO Pete Bunce said, “These provisions will accelerate the production, distribution, and use of SAF and spur aviation innovation.”

“Establishing a robust federal tax credit for SAF is the single most important thing policymakers can do to increase production and availability,” NBAA president and CEO Ed Bolen had said following the bill's passage in the Senate.

National Air Transportation Association president and CEO Timothy Obitts further said passage of the bill is “a crucial first step” in meeting the industry’s goals.

Additionally, Bunce praised another tax credit measure that he said would "assist in facilitating the production and development of hydrogen technologies for aviation.”