Lawmakers Hear Proposals on Incentives for Michigan Sustainable Aviation Fuel Market

by Kyle Davidson (Michigan Advance) Members of the Michigan House and Senate on Tuesday took up a set of mirrored proposals to establish incentives to produce more “sustainable aviation fuel” which blend traditional jet fuel with propellants sourced from biomass like corn, soybeans, cover crops, forestry residue and hydrogen.

Rep. Jerry Neyer (R-Shepherd), who sponsored House Bills 4424 and 4425, told members of the House Transportation and Infrastructure Committee that his legislation is aimed at bringing Michigan into the sustainable aviation fuel supply chain.

If passed, Neyer said the bills would grant farmers access to another revenue stream and encourage the expansion of ethanol production facilities and the construction of fuel blending facilities.

Sen. Joe Bellino (R-Monroe), who sponsored the Senate’s package alongside Sen. Sam Singh (D-East Lansing), explained to members of the Natural Resources and Agriculture Committee that the bills would simply allow aviation companies who choose to use the fuels to claim a tax credit.

“It’s not a mandate. It’s an open thing that if Delta [Airlines] wants to do it, Delta can get a tax break on how much fuel they buy and how much they decrease their CO2,” Bellino said.

The proposals offer a $1.50 rebate on the purchase of fuel blends that cut carbon dioxide emissions by 50% compared to regular jet fuel, with an additional two cents per gallon for every additional 1% in emissions reduced, with the rebate capping out at $2 a gallon. After 2030, any fuel used to claim the credit must use in-state sources for the organic materials used to produce the fuel.

“Either our airline industry can either buy this product from out of state and have it blended out of state, or we can provide the opportunity here with this tax incentive there to allow our our farmers and our producers here in the state to participate in this market and get a leg up on the industry,” Neyer said.

Additionally, with the Federal Aviation Administration working to reach net-zero emissions by 2050, these fuels are plug and play with existing fuel systems, Neyer said.

If approved, the program carries a 10-year expiration date, with Neyer telling the committee he hoped the credit would no longer be needed by that time.

While testifying on the bill to the House committee, Sarah Gonzales, the director of state and local government affairs for Delta Airlines, assured members that the fuels are already in use, with California utilizing sustainable aviation fuels for a number of years and Delta flights out of Detroit utilizing the fuels for the first time this year.

However, there is not enough of the fuel to meet demand for even a week, Gonzales said, noting that the current cost is two to 10 times that of traditional fuels.

With Minnesota, Indiana, Illinois, Nebraska, Washington, Iowa and California all passing tax credits for sustainable aviation fuels, Michigan is in danger of being left out of the economic benefits, Gonzales said.

As the House and Senate sit in deadlock, and Legislative leaders spar over the state budget ahead of the July 1 deadline, the packages showcase a sense of bipartisan, cross-chamber collaboration uncharacteristic of the current dynamic between the Democratic-led Senate and the Republican-led House.

While the House and Senate Committees have yet to hold a vote on Neyer’s bills, he told the Michigan Advance that the package would not likely come to a vote on the House floor until after the budget is done. However, it stands a good chance given the interest in the Senate, he said. READ MORE