Six Reasons to Support a Blender’s Tax Credit for Sustainable Aviation Fuel
Aviation is responsible for a growing portion of transportation emissions. As air travel begins to bounce back post-COVID, we need to ensure the industry comes back stronger and cleaner than it was before. According to the International Civil Aviation Organization, one of the most impactful things we can do to reduce aviation emissions is get more sustainable aviation fuel —"drop-in” fuels that can be used in today’s aircraft and which have lower emissions than fossil jet fuel on a lifecycle basis—into the jet fuel supply. But SAF is currently limited in availability and can’t currently compete with the price of fossil jet fuel. We cannot meet our emissions goals and keep U.S. airlines competitive unless we enact policies to scale up SAF and make it cost-competitive with fossil jet fuel.
Recently, Representatives Brad Schneider, Dan Kildee, and Julia Brownley introduced the Sustainable Skies Act which would establish a blender’s tax credit (BTC) for SAF, providing entities that sell or use SAF blended with kerosene jet fuel with a tax credit starting at $1.50 per gallon. The Biden Administration has also endorsed a BTC as part of its Made in America Tax Plan. Along with additional RD&D funding to develop new feedstocks for SAF, this tax credit will help reduce the price of the cleanest aviation fuels and begin bending the curve on aviation emissions.
A BTC is the right approach to get more SAF into the jet fuel supply quickly and should be included in any upcoming legislation on infrastructure, jobs, or climate. Congress should support a BTC for six reasons:
1. It will help decarbonize aviation quickly
In the short term, SAF is one of the most viable options for reducing air travel’s climate impacts. We will ultimately need a variety of technologies to decarbonize aviation, including zero-emission technologies like hydrogen fuel cells and electrification, but those technologies are several years away from being commercially scalable and would require replacing the technology in the aircraft and the refueling infrastructure on the ground. SAF represents the fastest, easiest way to begin reducing aviation emissions now.
The BTC will help SAF achieve price parity with fossil jet fuel and provide fuel producers with certainty to invest in producing these cleaner fuels, leading to faster adoption of SAF. We have reason to believe this policy will be successful: the biodiesel tax credit was instrumental in quickly ramping up production of biodiesel and enabling the industry to support 64,000 jobs across the country, and we can replicate its success with a BTC for SAF.
2. It incentivizes the very cleanest fuels
We should only use taxpayer dollars to help develop and deploy the very cleanest fuels. The Sustainable Skies Act requires any fuel receiving the credit to achieve at least a 50% reduction in lifecycle emissions compared to fossil jet fuel—a threshold internationally recognized as necessary to get us on a path to decarbonizing aviation. Importantly, this includes the emissions associated with direct and induced land-use changes (taking into account, for example, how the production of SAF displaces other crops). This is necessary to ensure the production of these fuels is truly sustainable. The BTC would also be a performance-based credit, rewarding the very cleanest fuels by providing a higher credit for fuels that achieve greater emissions reduction compared to fossil jet fuel.
3. It’s technology- and feedstock-neutral
There are currently seven federally-approved pathways for creating SAF and many more going through the testing and certification process. We will need to draw from a variety of feedstocks to scale-up SAF to the extent needed to reduce aviation emissions substantially. Under the Sustainable Skies Act, SAF made from any feedstock would be eligible for the credit as long as it meets the required emissions reduction targets. This could include non-food agricultural feedstocks, forest residues, waste oils, algae, power-to-liquid fuels using direct air capture, and others.
4. It will help boost rural economies
Feedstocks for SAF will come from a variety of places, including sustainable biomass. This biomass will come from every region of the country, from cool season crops in the Southeast to perennial grasses in the Midwest. Scaling up SAF means new economic opportunities in the rural economy, providing our nation’s farmers with new customers for their agricultural products.
5. It will help improve air quality for airport communities
In addition to being better for climate efforts, SAF is also better for air quality, emitting significantly less sulfur oxide and ultrafine particle pollution. than fossil jet fuel. Scaling up SAF will help reduce instances of heart and lung conditions such as asthma and blocked arteries, which is a critical public health issue for the communities living near airports that are disproportionately exposed to these emissions.
6. It has broad support from industry, labor, and environmental groups
An expansive coalition of stakeholders—including airlines, labor, environmental NGOs and fuel producers–all support the establishment of a BTC for SAF. The policy is a win-win-win by providing clean fuels producers with certainty to invest in SAF production; by enabling airlines to purchase cost-competitive fuels that cut emissions without requiring increased costs to customers; and by helping the country achieve its climate goals. Congress should include this proposal in any upcoming infrastructure, jobs, or climate package so we can begin scaling up SAF quickly and ensure air travel comes back stronger and cleaner than it was before the pandemic.