Key SAF Announcement Details
The update to the GREET model in March will play a pivotal role in determining the eligibility of fuels for the sustainable aviation fuel (SAF) credit. Click here to see guidance on the types of fuels allowed to receive tax credits and how the size of the credits will be calculated. Keys:
- Corn-based ethanol and other renewable fuels likely will qualify for the SAF credit in relation to SAF produced and used in calendar years 2023 and 2024.
- Treasury said the guidance means “numerous fuels will qualify for the credit, including valid biomass-based diesel, advanced biofuels, cellulosic biofuel, or cellulosic diesel that have been approved by EPA under the Renewable Fuel Standard (RFS).”
- Following the GREET model update, the focus will shift toward the Clean Fuels Credit, scheduled to take effect on Jan. 1, 2025, replacing the SAF and other credits. The structure of this credit will have significant implications for the future growth of the biofuels industry, encompassing a wide range of feedstocks.
- The SAF credit currently incentivizes the production of SAF that achieves a lifecycle GHG emissions reduction of at least 50% compared with petroleum-based jet fuel.
- Producers of SAF are eligible for a tax credit of $1.25 per gallon to $1.75 per gallon. Under the rules, SAF that decreases GHG emissions by 50% is eligible for the $1.25 credit, and SAF that decreases GHG emissions by more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.
- Fuels that have a 50% or greater GHG emissions reduction via the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) standard will continue to qualify.
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