The Internal Revenue Service issued Notice 2024-37, detailing the implementation of the Sustainable Aviation Fuel (SAF) Credit, introduced under the Inflation Reduction Act of 2022. This new credit offers $1.25 per gallon for sustainable aviation fuel blends that achieve a 50% reduction in lifecycle greenhouse gas emissions, with an additional credit for reductions exceeding this threshold.
Developed in consultation with several federal agencies including the EPA and the Department of Energy, this notice outlines the use of the 40BSAF-GREET 2024 model for calculating the emissions reduction percentage and for certifying compliance. It also includes a safe harbor provision using the USDA Climate Smart Agriculture Pilot Program to further enhance the emissions reduction calculations for domestic feedstocks like soybeans and corn.
The Renewable Fuels Association and Clean Fuels Alliance America responded to the notice, praising the integration of climate-smart agricultural practices and other carbon reduction strategies into the model. However, they highlighted the need for less prescriptive agricultural practices and more flexibility in the model to reflect ongoing innovations in the industry.
The GREET model updates are crucial as they allow SAF producers to calculate tax incentives accurately, encouraging the production of low-carbon aviation fuels. These incentives are seen as essential for boosting the production of sustainable fuels which utilize climate-smart agricultural practices, potentially leading to significant environmental benefits and supporting U.S. agriculture and energy independence.
