NBAA president and CEO Ed Bolen and NATA vice president of government affairs Karen Huggard have welcomed President Biden's signing into law of the Inflation Reduction Act of 2022, which includes a blenders tax credit (BTC) for producers of sustainable aviation fuel for which both associations have long advocated.
Effective 1 January, 2023, the Act includes two years of such tax credits, valued at $1.25-$1.75 per gallon, depending on percentage of lifecycle greenhouse gas emissions compared to fossil-based jet fuel. Beginning in 2025, the legislation creates three years of a Clean Fuel Production Credit with an enhanced value for SAF of up to $1.75 per gallon.
“NBAA has long advocated for this blenders tax credit as a vital step in fulfilling our industry's pledge to achieve net-zero CO2 emissions by 2050 under the Business Aviation Commitment on Climate Change,” says Bolen. “Implementation of this credit marks genuine progress toward increasing SAF production, promoting greater availability at general aviation airports and reducing costs to end users.”
“The sustainability measures included in the Inflation Reduction Act of 2022 represent a critical breakthrough in the business aviation industry’s goal to achieve net-zero carbon emissions by the year 2050," says Huggard. "The SAF Blender’s Tax Credit and Clean Fuel Production Credit that President Biden has signed into law represent a five-year down payment on the policies necessary to scale up SAF production in line with industry demand. The National Air Transportation Association thanks the United States Congress and the Biden Administration for taking these important first steps toward a vibrant domestic SAF industry that will stimulate economic growth while increasing our nation’s energy security and environmental sustainability. We encourage government leaders to continue to enact sound legislative and regulatory policy to foster the industry’s long-term development.”
The BTC will be in effect through to 31 December, 2024. On 1 January, 2025 the Clean Fuel Production Credit (CFPC) will apply to all transportation fuels, based on the level of GHG reduction performance of a fuel versus a baseline emissions factor.
Under this system, SAF will be eligible for a credit of up to $1.75 per gallon for fuels with a 100 per cent GHG reduction, with lower credits for fuels demonstrating lower levels of GHG reduction. The CFPC would expire on 31 December, 2027 unless extended by Congress.
The SAF BTC was first introduced in the US House of Representatives in May 2021 as part of the Sustainable Skies Act and similar legislation was championed in the US Senate.
“In addition to the Biden/Harris administration, NBAA extends our thanks to all the lawmakers who have promoted this credit and who understood its significance and its necessity,” Bolen adds. “This legislation puts us on the path toward a truly net-zero CO2 aviation sector.”