Aviation Industry Supports New SAF Incentives

Curt Epstein
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A broad-based coalition of aviation industry organizations and companies along with sustainable fuel providers has appealed to the Biden administration to include financial incentives aimed at spurring the production of sustainable aviation fuel (SAF) as part of the recently unveiled American Jobs Plan legislation.

This group includes alphabet organizations such as NBAA, GAMA, NATA, AIA, and AOPA; major U.S. airlines American, Delta, Southwest, and United; airframers Airbus, Boeing, and Gulfstream; fleet operators FedEx and NetJets; airport associations; pilot associations; the Regional Airline Association; SAF producers and distributors; and aircraft engine makers.

In its letter last week to Transportation Secretary Pete Buttigieg, National Climate Advisor Gina McCarthy, and National Economic Director Brian Deese, the group called for the establishment of a $1.50 per-gallon so-called “blender’s tax" credit specifically for the production of SAF, provided that the fuel has a demonstrated lifecycle greenhouse gas (GHG) emission reduction of at least 50 percent compared with conventional jet-A. The proposal further calls for an additional 10-cent per gallon credit for each additional 10 percent reduction with a cap of $2 per gallon of SAF at 100 percent GHG reduction.

The aviation industry has long considered SAF as one of the cornerstones of its stated goals in reducing carbon emissions, and SAF-blended fuels—at least for the neat SAF portion—can represent up to an 80 percent lifecycle reduction in those emissions versus conventional jet-A.

Yet, the SAF industry has barely passed its infancy stage and production amounts remain a mere trickle compared with the current demand. This is despite an existing $1 per-gallon tax credit for producers and blenders of biomass-derived sustainable fuels in the federal tax code.

“Nothing in our view would incentivize SAF production and deployment more than a technology- and feedstock-neutral blenders tax credit that is specific to SAF,” the letter stated. "This mechanism would encourage producers to develop SAF with the greatest emissions reduction potential.”

This Phillips 66 refinery in the San Francisco area is undergoing conversion to process fuels from biomass-derived feedstocks instead of crude oil. Once the process is completed, it could benefit f...
 

This Phillips 66 refinery in the San Francisco area is undergoing conversion to process fuels from biomass-derived feedstocks instead of crude oil. Once the process is completed, it could benefit from any proposed SAF-specific blender's tax credits.