NATSO said Illinois’s new tax credit for sustainable aviation fuel bought or used in the state starting June 1 is a bad policy that will increase costs and increase emissions by incentivizing SAF over biodiesel.
In a late interview with OPIS Feb. 6, 2023, NATSO said it “makes no sense” that the airline industry is requiring Illinois taxpayers to underwrite their ESG comments that they have made to their shareholders and that SAF should only displace biodiesel if it is either cheaper or better for the environment. Currently it achieves neither of those outcomes.
Under a new law signed by Illinois Gov. J.B. Pritzker, effective June 1 airlines operating in Illinois will receive a $1.50 per gallon credit for sustainable aviation fuel bought or used in the state. The credit expires on Jan. 1, 2033, and applies to fuels that achieve a minimum 50 percent reduction in lifecycle greenhouse gas emissions when compared with petroleum-based jet fuel. The amount of soybean-oil derived SAF is capped at 10 million gallons.
Responding to questions as to whether the soybean-oil based SAF cap was meant to “appease” ground transportation groups, NATSO Executive Vice President of Government Affairs David Fialkov said, “Capping the volume of SAF derived from soybean oil makes a bad bill far less bad, but this is a bailout for the airline industry.”
The Illinois SAF tax credits come on the heels of federal tax credits for biofuels included in the Inflation Reduction Act. The IRA included a higher tax credit for SAF than for biodiesel. The lack of parity between the tax credits incentivizes producers to make SAF over longstanding renewable fuels such as biodiesel, which has been reducing carbon emissions in ground transportation for more than a decade.
The Biden Administration late last year also kicked off an SAF Grand Challenge that calls for 3 billion gallons per year of SAF domestic production by 2030.
On January 10, 2023, the Biden Administration released a framework for cutting transportation emissions. NATSO said in a public statement that touting sustainable aviation fuel as a "new method" for reducing transportation carbon emissions ignores the fact that it will unravel decades of existing carbon reductions in over-the-road transportation and increase fuel prices for commercial fleets. SAF proponents inaccurately assert that SAF production results in new, incremental reductions in carbon emissions. This is false. In fact, renewable jet fuel production is simply designed to displace existing and future, less expensive renewable diesel production.
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