New Guidance Boosts Sustainable Aviation Fuel Credits

By Andi Anderson

The U.S. Department of the Treasury and the Internal Revenue Service have issued additional guidance and safe harbors for the new sustainable aviation fuel (SAF) credits under sections 40B and 6426(k), created by the “Inflation Reduction Act of 2022” (IRA). This guidance incorporates an updated version of the GREET (Greenhouse gases, Regulated Emissions, Energy use in Technologies) model to measure the lifecycle emissions from SAF.

Let’s break down the key points:

SAF Credit Details:

• The SAF credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024.
• The credit amount is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture.
• To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions.
• There’s also a supplemental credit of one cent for each percent that the reduction exceeds 50%.

GREET Model Inclusion:

• The updated GREET model serves as a qualifying method to calculate the emissions reduction percentage for SAF credits.
• It also provides a basis for unrelated party certification to qualify for SAF credits.
• Pending further guidance from the Treasury Department, the GREET model will help SAF producers determine the lifecycle GHG emissions rates of their production for the purposes of qualifying for the SAF Credit during 2023 and 2024.

Secretary of Agriculture Mike Naig emphasizes that while the GREET model inclusion is a step forward, the details matter. He advocates for flexibility, allowing farmers to adopt practices that suit their unique operations. Naig believes that SAF can unlock immense potential for Iowa’s agriculture sector.

As the aviation industry seeks cleaner alternatives, the GREET model becomes a critical yardstick. While challenges remain, the path toward sustainable aviation fuel is clearer than ever. Iowa’s farmers and biofuel producers stand ready to harness the full potential of SAF, bridging the gap between innovation and environmental stewardship.

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