Aviation Industry Groups, NATA and NBAA, Welcome SAF Tax Credit

The Senate approved the Inflation Reduction Act of 2022 on Monday, which allocates a $1.25 per gallon tax credit for each gallon of SAF sold. SAF producers must demonstrate that the fuel can cut greenhouse gas (GHG) emissions by 50 percent as part of a qualified mix compared to regular jet fuel.

The bill is expected to pass the House and be signed into law by President Biden.

In its statement, NATA said the five-year tax provision was a good incentive for producing renewable jet fuel and accelerating the industry’s progress to net-zero carbon emissions.

“The SAF tax credits…are a crucial first step toward meeting the Biden administration’s SAF Grand Challenge goal of 3 billion gallons of domestically produced SAF by 2030,” said NATA president and CEO Timothy Obitts. 

Currently, global SAF production is a miniscule 26.4 million gallons a year—about 0.1 percent of all aviation fuel. 

Globally, civil aviation produces about 2.1 percent of all human-induced CO2 emissions, according to the Air Transport Action Group. That number is expected to rise significantly by 2050.
NATA also noted that it was important for the government to reduce the “regulatory roadblock” that it said was slowing production and progress of the SAF market, particularly by ensuring that it is included in the Environmental Protection Agency’s Renewable Fuel Standard program.

NBAA president Ed Bolen also welcomed the Senate vote and said increasing the availability of SAF at general aviation airports was crucial in helping the industry attain its goal of reaching net-zero carbon emissions by 2050.

“Establishing a robust federal tax credit for SAF is the single most important thing policymakers can do to increase production and availability,” Bolen said.

With passage of the bill into law, the credit would take effect on January 1, 2023, and last for two years, after which the Clean Fuel Production Credit (CFPC) will take over, providing a baseline credit for SAF until 2027. The Clean Fuels Production Credit will offer fuel producers up to $1.75 per gallon for fuels with a 100 percent GHG reduction or less, based on emission volumes. Unless the CFPC is extended by Congress, it will expire on the last day of 2027.

NATA and NBAA have previously advocated for tax credits, initially as part of the Sustainable Skies Act in 2021, to encourage more investments in the rapidly developing sustainable fuel market. 

“The business aviation industry has already demonstrated a consistent demand for SAF; now we call on government leaders to adopt sound legislative and regulatory policies to foster consistent production,” Obitts said.