Fuel
U.S. Treasury’s SAF Production Tax Rules Face Doubt
Detractors say longer span on tax incentives is needed
rendering of sustainable fuel production facility
Commercial-scale sustainable aviation fuel (SAF) production facilities require immense amounts of capital to construct. With the short duration of the U.S. Treasury’s Clean Fuels Production Credit (Section 45Z), which took effect this year, some in the industry fear that the measure—set to lapse in 2027—isn’t of long enough duration to attract the investment needed to spur SAF growth. © Pathway Energy

The U.S. Treasury Department has issued its long-awaited guidance on the Clean Fuels Production Credit. Section 45Z took effect this year and provides a per-gallon tax credit for the production of sustainable aviation fuel (SAF) as well as other transportation fuels with greenhouse gas emissions below certain thresholds.

For SAF transportation fuel, the life cycle greenhouse gas emissions are determined in accordance with the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which has been adopted by the International Civil Aviation Organization, or any similar methodology that satisfies the criteria under the Clean Air Act.

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