NBAA has joined with a group of industry stakeholders in a letter seeking clarification from the IRS about the implementation of upcoming incentivization programs aimed at increasing the production of sustainable aviation fuel (SAF).
Starting on Jan. 1, 2023, the SAF Blenders Tax Credit (SAF BTS) will give SAF producers a $1.25 per gallon tax credit for SAF sold as part of a qualified fuel mixture with a lifecycle greenhouse gas (GHG) emissions reduction of at least 50 percent compared to standard jet-A, while the Clean Fuel Production Credit, slated to take effect on Jan. 1, 2025, will apply to all transportation fuels compared to a baseline emissions factor. Fuels such as SAF would be eligible for additional credits of up to $1.75 a gallon for 100 percent GHG reduction.
The letter from the 62-member SAF BTS coalition to Treasury Secretary Janet Yellin highlighted the need for a streamlined transition between the two programs to provide assurance to the fuel producers.
“With project timelines spanning three to five years for construction of a SAF facility and the [SAF BTS] 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 letter stated.
The group also urged the IRS to adopt GHG reduction measurement guidelines as formulated under either ICAO's CORSIA program or the U.S Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model, as well as establish book-and-claim provisions for SAF feedstocks and production processes, and a pathway whereby fuels with negative lifecycle GHG emissions could be eligible for even higher tax credits.
Such assurances will spur investment in the industry, the letter stated, "and enable achievement of our shared decarbonization goals."