On Tuesday, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced new guidance for the Sustainable Aviation Fuel (SAF) Credit.
Part of the Inflation Reduction Act, the new guidance comes after months of work with the U.S. Departments of Transportation (DOT), Agriculture, (USDA) and Energy (DOE) and the U.S. Environmental Protection Agency (EPA). The guidance outlines changes to the current Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model for the SAF tax credit.
“Innovation in the aviation sector has brought our country and our world together and now, it’s fueling the solution to meet our ambitious net-zero carbon emission goals,” U.S. Secretary of Transportation Pete Buttigieg said. “Today’s announcement will strengthen America’s position as a leader in the production of sustainable aviation fuels, help cut carbon emissions, and create a better future for all Americans.”
The guidance provides clarity for SAF credit eligibility, officials said, including SAF production credit incentives for fuel that achieves a lifecycle greenhouse gas emissions reduction of at least 50 percent when compared to petroleum-based jet fuel. SAF producers that achieve 50 percent GHG emission reductions are eligible for a minimum $1.25 credit per gallon, while those that achieve a GHG emission of greater than 50 percent are eligible for an additional penny per gallon for each percentage point over 50 percent, up to a total of $1.75 per gallon.
The guidance also updates the current GREET model to the 40B SAF-GREET 2024 model and provides methodology for SAF producers to determine the lifecycle GHG emissions rates.
“The guidance released today reflects the latest data and science needed to help create new economic opportunities for America’s agricultural sector,” U.S. Secretary of Energy Jennifer M. Granholm said. “This interagency effort will help our climate goals take flight with cheaper, cleaner sustainable aviation fuel — ensuring America maintains an innovative edge on the global clean technology stage.”