US TREASURY DEPARTMENT ISSUES GUIDELINES AROUND A NEW TAX CREDIT FOR SUSTAINABLE AVIATION FUEL

The Biden administration released long-awaited guidance around tax credits for aviation fuel that reduces emissions of greenhouse gases compared with fuel made from crude oil.

Some environmentalists expressed concern that the Treasury Department guidelines could allow credits for fuel made from corn and other crops that they consider poor choices because of the water and other resources needed to grow them.

Midwest lawmakers and companies that produce corn-based ethanol praised the guidelines, although their enthusiasm could be short-lived.

Congress approved the credits as part of President Joe Biden’s Inflation Reduction Act of 2022, which included provisions designed to boost cleaner energy. The credits are designed to increase the supply and bring down the current high price of sustainable aviation fuel, or SAF.

Producers will be eligible for tax credits ranging from $1.25 to $1.75 per gallon, depending on how much their fuel reduces emissions compared with conventional products such as kerosene-based jet fuel.