Dec. 7, 2022
NBAA recently joined with a coalition of dozens of aviation stakeholders in submitting comments to the IRS on implementation of the upcoming sustainable aviation fuel blenders tax credit (SAF BTC) and clean fuel production credit (CFPC).
Effective Jan. 1, 2023, the SAF BTC makes SAF producers eligible for a $1.25 per gallon credit for each gallon of SAF sold as part of a qualified fuel mixture with a demonstrated lifecycle greenhouse gas (GHG) reduction of at least 50% compared to conventional jet fuel.
On Jan. 1, 2025, the CFPC will apply to all transportation fuels, including SAF, based on the level of GHG reduction performance against a baseline emissions factor. SAF producers will be eligible for enhanced credits under the CFPC up to $1.75 per gallon when demonstrating a 100% GHG reduction.
The credits are intended to incentivize development of facilities to produce significantly higher quantities of SAF, spurring consumer demand and lowering prices to end users. In a recent letter to U.S. Treasury Secretary Janet Yellin, the coalition emphasized a smooth transition between the two programs is vital to achieving these goals.
“With project timelines spanning three to five years for construction of a SAF facility and the [SAF BTC] credit currently set to expire at the end of 2027, it is critical that guidance for [the CFPC] be provided well ahead of the 2025 statutory deadline, ideally by early next year,” the coalition stated.
The letter further urged the IRS to adopt GHG reduction measurement guidelines under the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), or the U.S. Department of Energy Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model. The latter is currently used to determine GHG reductions from clean hydrogen fuels.
The groups also encouraged the department and IRS to establish book-and-claim provisions for SAF feedstocks and production processes, and to define a process by which fuels with a demonstrated negative GHG contribution be eligible for tax credits greater than $1.75/gallon.
Smooth implementation of the SAF BTC and CFPC, the coalition concluded, “Will send a robust investment signal and enable achievement of our shared decarbonization goals. We request the opportunity to meet with treasury personnel to discuss these comments and look forward to working with treasury to implement these foundational SAF policies.”
In addition to NBAA, the 62 member-strong SAF BTC coalition includes other industry trade associations, aircraft OEMs, commercial airlines and major fuel producers.