![]()
The U.S. Treasury Department recently issued new guidance on what fuel products are eligible for the Sustainable Aviation Fuel Blender's Tax Credit. The NBAA welcomed the news in a statement.Notice 2024-06 from the Internal Revenue Service has provided guidance on the Dec. 19, 2022 Notice 2023-6, 2023-2 I.R.B. 328 regarding SAF credits. When President Joe Biden signed the Inflation Reduction Act into law on Aug. 16, 2022 it addressed the climate crisis and included the SAF tax credits, which the NBAA has advocated for. A SAF credit applies to a qualified fuel mixture containing sustainable fuel for certain sales or uses in 2023 and 2024. The IRA provided two methods to determine the emissions reduction percentage that can be used to qualify for and calculate the credit. This includes the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) method. The IRS release on Dec. 15 indicates that the new notice provides additional safe harbors for using the EPA's Renewable Fuel Standard program and related guidance. The RFS program is similar to CORSIA and meets the requirements of the Clean Air Act.RELATED STORIES:Aviation groups, airlines, fuel suppliers seek more guidance from IRS on SAF tax creditsSAF credits go into effect with the signing of the Inflation Reduction Act
The safe harbors in the notice can be used to calculate an emissions reduction percentage and for the corresponding certification of the SAF credit. The notice states that the current Greenhouse gases, Regulated Emissions and Energy use in Transportation (GREET) model of the Argonne National Library and GREET-based models do not meet the applicable requirements for credit. With the notice came the announcement that the Department of Energy would collaborate with other federal agencies to develop a new version of the GREET model to satisfy the SAF credit requirements and the release is expected for early 2024. The previous notice includes explanations for the requirements to be eligible for a SAF credit and included safe harbors for the CORSIA method and explains which parties must be registered for the same activities in the process.
The NBAA shared news about the updated guidance on Friday. The organization was part of a large aviation coalition calling on the IRS to expand its guidance on the implementation of SAF credits. The groups sent a letter in December 2022, which included the ALPA, AOPA, IATA, NATA and NBAA. While the groups applauded the tax credits, which were slated to begin on Jan. 1 this year, but encouraged the government to set a path to help the industry scale to a capacity to provide three billion gallons of SAF by 2030. With the recent update to the guidance, the industry may now have more clarity on the credits.
"We are optimistic about the guidance from the Treasury Department today," NBAA President and CEO Ed Bolen said. "It's an important step toward the increased production and distribution of SAF, which is key to business aviation meeting its mission to net-zero carbon emissions by 2050. We are eager for the release of an updated GREET model in the spring."RELATED STORY:SAF production doubled this year, projections for 2024 fall short of rising demands
The use of SAF is a crucial component in business aviation's commitment to achieving net-zero carbon emissions by 2050. SAF has similar properties to jet fuel but comes with a significantly smaller carbon footprint. The alternative fuel is made from renewable products like waste-based feedstocks and atmospheric carbon. Fuels like these can be used in existing turbine aircraft and reduce lifecycle emissions by as much as 80 percent. Current SAF use is approved for blended use, but research and testing are showing the success of 100 percent SAF use.
Business aviation is a major advocate of the use of SAF and expanding its production, Traditional fuels still power the majority of flights nationwide, but SAF is becoming more widely available. The demand for SAF is rapidly increasing and the amount of available sustainable fuel is insufficient to meet that demand. According to a report from IATA, the volume of SAF doubled from 2022 to 2023, and it is expected to triple in 2024. The report also noted that while the demand is sky-high, the projected increase in production will only meet half of the industry's needs.
With the new guidance, the industry now has more clarity on SAF tax credits as the use of sustainable fuels continues to increase nationwide.