Increasing the availability and affordability of sustainable aviation fuel (SAF) is critical to achieving the aviation industry’s goal of carbon-neutral growth from 2020 and a 50% net reduction in CO2 emissions in 2050.
To advance that effort, NBAA is an active member of a broad coalition of industry stakeholders seeking a dedicated federal tax credit to scale up the supply of SAF and make the fuel more cost-competitive.
As a “drop-in” fuel, biomass-based SAF can be safely used in any turbine-powered business aircraft. Studies indicate that SAF has the potential to reduce life-cycle greenhouse gas emissions by 80%. However, to achieve this potential, the fuel must be widely available at a competitive cost.
“NBAA is an active member of a broad coalition of industry stakeholders seeking a dedicated federal tax credit to scale up the supply of SAF and make the fuel more cost-competitive.”
NBAA and the coalition members believe that a $2 per gallon SAF blender’s tax credit over 10 years would spur increased production. This credit would encourage fuel producers to invest in additional capacity, increasing the supply of SAF and driving down costs for operators.
The existing $1 per gallon biodiesel tax credit does apply to some SAF pathways, but that credit is scheduled to expire in 2022. While the biodiesel credit is helpful, its limitations and limited duration don’t provide the long-term incentives needed to boost SAF production. Should the $2 credit become law, SAF would no longer qualify for the biodiesel credit.
Along with the other SAF coalition members, NBAA’s government affairs team has been educating policymakers on Capitol Hill about the benefits of SAF and the need for the dedicated blender’s credit. The association’s focus has been on working with members of the Senate Finance and House Ways & Means Committees, who have jurisdiction over tax credits.
Also, NBAA has focused on members of Congress from states with significant general aviation activity, such as Kansas. Another focus has been on rural states, such as Nebraska, where agricultural production could support SAF.
There is a long history of federal tax credits being used to incentivize the production of next-generation fuels.
For example, ethanol and other alcohol-based fuels had a tax credit dating back to 1980, while the tax credit for biodiesel/renewable diesel become law in 2004. However, unlike these fuels, SAF has never had a dedicated tax credit and represents less than 0.01% of all jet fuel uplifted in the U.S.
To date, the Capitol Hill meetings have been positive, and the coalition is working toward identifying a lead Democrat and Republican sponsor for a stand-alone SAF tax credit legislation. Introducing a bill is an essential step in recruiting additional co-sponsors and building grassroots support from the aviation industry.
The goal for 2021 and beyond is to build enough political momentum that the SAF tax credit is included in a larger piece of legislation that moves through Congress and becomes law.
Increasing the availability and affordability of sustainable aviation fuel is critical to achieving the aviation industry’s goal of carbon-neutral growth.
NBAA is working with other industry stakeholders to obtain federal tax credits to scale up the supply of SAF in order to make the fuel more cost-competitive.