Quick Summary of Sustainable Aviation Fuels (SAF) Provisions in Inflation Reduction Act

by Joanne Ivancic* (Advanced Biofuels USA) In the recently signed Inflation Reduction Act, you can find a number of items that involve sustainable aviation fuels (SFA), particularly the tax credit and transition to a carbon credit. Thanks to notes about these provisions by Chris Tindal, Assistant Director of the Commercial Aviation Alternative Fuels Initiative (CAAFI), shared with his permission. Here's a summery of some key items.

Duration of Credits: The SAF BTC would be in place for 2023-2024 only (vs 2023-2026 previously). The Clean Fuel Production Credit, applicable to all transportation fuel and providing an enhanced value for SAF relative to ground transportation, would apply from 2025-2027 (previously beginning in 2027 and extending indefinitely, with a phase down when transportation emissions were 25% of 2021 emissions). Thus, there would be 2 years of the SAF BTC at $1.25-$1.75/gallon and 3 years of the Cellulosic Fuels Producer Credit at up to $1.75 (see revised table with CFPC values below)

Lifecycle GHG Methodology: Recall that there has long been an “ICAO prong” and a “US/future prong” for the lifecycle analysis to demonstrate a 50% reduction under the SAF BTC and to calculate credit amount under the CFPC. Although the GREET model is still not explicitly mentioned for SAF under either provision, the language reverts to the House language from last fall and allows for both the ICAO methodology and a “similar” methodology that meets the requirements of Clean Air Act Section 211(o) (the methodology used under the RFS program). This is a definite improvement, and GREET arguably meets these criteria

Minimum Reduction Threshold under CFPC: SAF and other transportation fuels now qualify under the CFPC so long as their emissions are less than 50 kg CO2e/mmbtu. Recall that all prior versions of the CFPC required SAF to meet a more stringent requirement of 35kCO2e/mmbtu. This was one of our asks in the December 2020 talking points (coupled with changing the calculation to make the credit more valuable).

Coprocessing: In addition to continuing to explicitly include Fischer Tropsch co-processing under the definition of SAF, both SAF provisions now also explicitly exclude lipids coprocessing. This was already excluded under the prior language

Direct Pay: Direct pay provisions removed from the CFPC, which is consistent with intel we have heard about direct pay over the last several months. The refundability provisions of the SAF BTC remain.

Traceability/Information Transmission Requirements: These provisions have been changed slightly from prior versions. Like the LCA language, this provision now also requires that fuels qualifying under the future prong have “similar” requirement for traceability and information transmission

Definition of SAF--ASTM References: No major changes, but references to the “-21” versions of the ASTM standards included in the December version have been eliminated. This is consistent with the goal of the SAF BTC to accommodate updated versions of the listed standards.

Revised Table Sample Credit Values Under Revised Clean Fuel Production Credit (from 2025):

Calculation= Emissions factor * Applicable Amount ($1.75 for SAF vs. $1 for other transportation fuels)

For more information about sustainable aviation fuel, visit the CAAFI website: https://www.caafi.org/

CI (i.e. emissions rate)	Apprx GHG Redux (assume fossil jet fuel value of 94 kg CO2e/mmbtu )	Other fuels 2025-2027 (threshold 50 kg CO23/mmbtu	SAF 2025-2027 (threshold 50 kg CO2e/mmbtu)
50kg/mmbtu	47%	0	0
40	57%	$0.20	$0.35 (formerly 0)
35	63%	$0.30	$0.53
25	73%	$0.50	$0.88
0	100%	$1	$1.75

Quick Summary of Sustainable Aviation Fuels (SAF) Provisions in Inflation Reduction Act

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