Tensions Rise Over U.S. SAF Subsidies Spat

An arcane accounting argument between federal departments, sustainable aviation fuel (SAF) producers and environmental groups is set to hobble SAF production in the U.S. for years to come.

The disagreement is over whether SAF derived from agricultural crops, instead of waste byproducts, should qualify for tax credits. Converting land for biofuel production can cause carbon emissions even as the use of biofuel reduces emissions elsewhere.

There are two accounting methodologies for determining whether a SAF is sufficiently sustainable: the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), and Greenhouse Gases, Regulated Emissions, and Energy use in Transportation (GREET).

The U.S. Treasury, supported by environmental groups, currently employs CORSIA to determine tax credits, whereas the Energy Department and SAF producers prefer the more lenient GREET approach. A group of senators, led by Sen. Tammy Duckworth, has written to the Treasury and co-sponsored a bill to advocate for federal departments to use GREET multilaterally.

Through the SAF Grand Challenge, the government wants industry to produce enough SAF to fuel all flights by 2050. However, the government’s support has been limited.

The Treasury Department took nearly a year to issue comprehensive guidance on qualifying SAF feedstocks and technologies for tax credits, a scheme that will expire by the end of 2024. Without an extension, the US SAF industry faces a looming deadline to receive the necessary boost for substantial growth.