The concept of a blender's tax credit to boost the availability of sustainable aviation fuel (SAF) is gaining momentum with the U.S. House Ways and Means Committee agreeing last week to include such a measure in the House budget reconciliation proposal. The aviation industry has strongly supported adopting blender’s tax credits as a key tool to incentivize production of SAF to help make it more affordable and accessible to general aviation.
Ways and Means approval as part of its package for the Build Back Better Act follows the endorsement by the White House of the measure as part of an overarching multi-faceted approach to encouraging widespread adoption of SAF use. In addition, stand-alone bills have been introduced earlier this year calling for such tax credits.
The Ways and Means provision would have a blender’s tax measure take effect Jan. 1, 2023, providing a $1.25 per gallon credit for each gallon of SAF with a lifecycle greenhouse gas reduction of at least 50 percent compared with conventional fuel. The credit increases by one cent up to $1.75 per gallon for each percentage point that the emissions reduction exceeds 50 percent. Encouraging to industry is the tax credit would continue through the end of 2031, which NBAA said was important to attracting additional investment in SAF production.
“A long-term, refundable blenders tax credit as advanced by the Ways and Means Committee is a critical development to expand the production and availability of SAF, which will significantly reduce the aviation sector’s environmental footprint,” said NBAA president and CEO Ed Bolen.
Noting that many steps still need to take place before the measure is adopted, Bolen added the aviation community will continue its outreach as the budget reconciliation package moves through the legislative process. “The journey is not over,” he said. Some in the House are pushing for a vote on the whole package this month as a condition of approval of the infrastructure package that has already passed the Senate. The pathway in the Senate is a little less clear but both the House and Senate are in discussions about a path forward.