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SAF credits go into effect with the signing of the Inflation Reduction Act

President Joe Biden signed the Inflation Reduction Act into law on Aug. 16, one week after the bill passed the U.S. Senate and four days after it passed the House. "This bill also makes the largest investment ever in combatting the existential crisis of climate change," Biden said last week, when the Senate passed the measure. "It addresses the climate crisis and strengthens our energy security, creating jobs manufacturing solar panels, wind turbines, and electric vehicles in America with American workers."General Aviation Manufacturers Association (GAMA) President and CEO Pete Bunce commended Congress for the inclusion of aviation-related environmental sustainability priorities in the bill. "The general and business aviation industry is fully committed to addressing climate change," Bunce said. "For years we have been prioritizing various initiatives to reduce aviation's CO2 emissions, and most recently, through comprehensive technical coordination, we strengthened our commitments with an aggressive goal of net-zero carbon emissions by 2050 and continued technology improvements."What does the bill include? Effective Jan. 1, 2023, a $1.25 per gallon credit will be available for each gallon of SAF sold as part of a qualified fuel mixture with a demonstrated lifecycle greenhouse gas (GHG) reduction of at least 50% compared to conventional jet fuel. The stand-alone SAF tax credit increases by one cent for each percentage point by which the lifecycle GHG emissions reduction of such fuel exceeds 50 percent, up to $1.75 per gallon. "We commend Congress for the inclusion of SAF tax incentives as well as an alternative fuel and low-emission aviation technology program in the bill as these provisions will accelerate the production, distribution and use of SAF and spur aviation innovation," Bunce said. "We also applaud the inclusion of provisions which will assist in facilitating the production and development of hydrogen technologies for aviation. We look forward to working together with Congress and the Administration to further address aviation emissions and strengthen energy security."NBAA reaction Following the signing of the bill into law, National Business Aviation Association (NBAA) President and CEO Ed Bolen said, "NBAA has long advocated for this blenders tax credit as a vital step in fulfilling our industry's pledge to achieve net-zero CO2 emissions by 2050 under the Business Aviation Commitment on Climate Change. Implementation of this credit marks genuine progress toward increasing SAF production, promoting greater availability at general aviation airports and reducing costs to end users." The BTC will be in effect through Dec. 31, 2024. On Jan. 1, 2025, the Clean Fuel Production Credit (CFPC) will apply to all transportation fuels, based on the level of GHG reduction performance of a fuel versus a baseline emissions factor. Under this system, SAF will be eligible for a credit of up to $1.75 per gallon for fuels with a 100% GHG reduction, with lower credits for fuels demonstrating lower levels of GHG reduction. The CFPC would expire on Dec. 31, 2027, unless extended by Congress. "In addition to the Biden/Harris administration, NBAA extends our thanks to all the lawmakers who have promoted this credit and who understood its significance and its necessity," Bolen said. "This legislation puts us on the path toward a truly net-zero CO2 aviation sector."
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