On December 15, 2023, Treasury released guidance on the IRC section 40B Sustainable Aviation Fuel (SAF) tax credit established by section 13203 of the IRA. Working with DOE, EPA, USDA, and DOT, Treasury’s guidance clarifies SAF credit eligibility. The guidance incentivizes fuels that achieve 50% or greater reductions in lifecycle GHG reductions as compared to petroleum-based jet fuel. Credits range from $1.25 to $1.75 per gallon and include a $0.01 per gallon additional credit per percentage point reduction exceeding 50%, totaling up to a $0.50 additional credit per gallon.
Qualifying fuels include valid biomass-based diesel, advanced biofuels, cellulosic biofuel, or cellulosic diesel that have been approved by EPA under the Renewable Fuel Standard (RFS) and fuels that achieve a 50% or greater reduction in lifecycle greenhouse gas emissions under the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) standard.
EPA, DOT, USDA, and DOE also announced their commitment to release an updated version of DOE’s GREET model by March 1, 2024, pending further guidance from Treasury. The updated GREET model will provide another methodology for SAF producers to determine the lifecycle GHG emissions rates of their production for the purposes of qualifying for the SAF credit for calendar years 2023 and 2024.
The updated Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model will include new modeling of key feedstocks and processes, crop production, livestock activity, an best available science and modeling of land use change emissions, CCS, renewable natural gas, renewable electricity, and climate smart agricultural practices.