NASAO Legislative Alert | August 8, 2022

Yesterday, the Senate passed the Inflation Reduction Act (H.R.5376) along party lines with a vote of 50 to 50 with Vice President Kamala Harris breaking the tie. This is the largest investment in combating climate change in the United States and is projected to help cut greenhouse gas (GHG) emissions by 40 percent from 2005 levels by the end of the decade. The bill will now go to the House, which will reconvene on Friday to consider the bill.

The bill includes more than $300 billion to address climate change and promote clean energy, a new minimum tax on large corporations, and provisions to lower prescription drug prices. Specifically, the bill includes a sustainable aviation fuel (SAF) blenders tax credit (BTC) for SAF producers and an enhanced value for SAF under the Clean Fuel Production Credit (CFPC) for a total of five years combined. It also includes $297 million for the U.S. Department of Transportation to provide grants to state and local governments, airport sponsors, air carriers, nonprofits, and others to support SAF and low-emission aviation technology projects. View below for more details of the SAF BTC and the new U.S. DOT grant program.

View bill text, one-page bill summary, and summary of energy/climate change investments

SAF BTC

The SAF BTC would be in place from 2023 to 2024 only (2 years) at $1.25-$1.75 gallon. The CFPC, applicable to all transportation fuel and providing an enhanced value for SAF relative to ground transportation would apply from 2025 to 2027 (3 years) at up to $1.75.

The SAF BTC provision was originally introduced as the Sustainable Skies Act by Representatives Brad Schneider (D-IL-10), Dan Kildee (D-MI-5) and Julia Brownley (D-CA-26) and Senators Sherrod Brown (D-OH), Reverend Raphael Warnock (D-GA), Maria Cantwell (D-WA), and Patty Murray (D-WA). NASAO worked as part of a broad coalition of stakeholders to encourage inclusion of this provision in a reconciliation package.

·     View the full list of SAF BTC Coalition

·     View Coalition Letter of Support for SAF BTC – April 2022

U.S. DOT Alternative Fuel and Low-Emission Aviation Technology Program

The bill provides $297 million for a competitive grant program carried out by the U.S. Department of Transportation for projects that produce, transport, blend, or store SAF, or develop, demonstrate, or apply low-emission aviation technologies. Of the $297 million:

·     $244.5 million is for projects related to the production, transportation, blending, or storage of SAF;

·     $46.5 is for projects related to low-emission aviation technologies; and

·     $5.9 is to administer and oversee the program.

In carrying out the program, the U.S. Department of Transportation must consider:

·     The capacity for the eligible entity to increase the domestic production and deployment of SAF or the use of low-emission aviation technologies among the U.S. commercial aviation/aerospace industry;

·     Projected GHG emissions from a project, including emissions resulting from the development of the project, and the potential the project has to reduce or displace on a lifecycle basis U.S. GHG associated with travel;

·     The capacity to create new jobs and develop supply chain partnerships in the United States;

·     For projects related to the production of SAF, the projected lifecycle GHG emissions benefits from the proposed project, which must include feedstock and fuel production and potential direct and indirect GHG emissions, including resulting from changes in land use; and

·     Benefits of ensuring a diversity of feedstocks for SAF, including the use of carbon oxides and direct air capture.

Entities eligible to apply for the program are state and local governments, air carriers, airport sponsors, higher education institutions, research institutions, and nonprofits, among others. The federal share is 75 percent of the proposed project but increases to 90 percent if the eligible entity is a small hub airport or nonhub airport.