New Treasury guidance for awarding sustainable aviation fuel tax credits highlights need for more fuel-carrier options to decarbonize aviation
WASHINGTON – This week, the U.S. Department of the Treasury issued guidance explaining the criteria that sustainable aviation fuels (SAFs) must meet to qualify for the section 40B tax credit created by the Inflation Reduction Act of 2022 (IRA). This guidance marks another important milestone as Treasury continues to implement various provisions that are essential to achieving the climate goals set out in the landmark legislation.
“While 40B is an important component of IRA tax credits, its focus on SAF from biofuels is only part of the puzzle that we need to get right,” said Jonathan Lewis, Director of Transportation Decarbonization at Clean Air Task Force (CATF). “Treasury’s guidance, which is narrowly focused on the lifecycle greenhouse gas emissions associated with SAF made from biofuels, reveals multiple limitations of an aviation decarbonization strategy that is overly focused on biofuels. One of those limitations is the unrelenting complexity and controversy that surrounds efforts to determine the carbon intensity of biofuels. Another limitation is that the projected total global supply of biofuels is too small to meet the aviation sector’s projected energy demand in 2030 and beyond. The aviation sector needs additional types of energy carriers to achieve its decarbonization goals, possibly including synthetic SAF made from climate-friendly sources of hydrogen and carbon.”
A new report from CATF details the significant opportunities and challenges that will shape the development and deployment of synthetic sustainable aviation fuels. CATF looks forward to working with federal agencies and others to tackle those issues, including during the development of federal guidance for the more broadly applicable, technology-neutral section 45Z “clean fuel” production tax credit that is set to replace the 40B SAF credit in 2025.
Find more information on key issues related to Inflation Reduction Act tax credit implementation here.
Press Contact
Steve Reyes, Communications Manager, CATF, [email protected], +1 562-916-6463
About Clean Air Task Force
Clean Air Task Force (CATF) is a global nonprofit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of low-carbon energy and other climate-protecting technologies. With more than 25 years of internationally recognized expertise on climate policy and a fierce commitment to exploring all potential solutions, CATF is a pragmatic, non-ideological advocacy group with the bold ideas needed to address climate change. CATF has offices in Boston, Washington D.C., and Brussels, with staff working virtually around the world. Visit catf.us and follow @cleanaircatf.
