Author of 40B SAF tax credit introduces bill to extend 45Z for 10 years

Reps. Brad Schneider, D-Illinois, Dan Kildee, D-Michigan and Julia Brownley, D-California, introduced the Expanding Clean Fuel Production Act, which would extend for 10 years the section 45Z clean fuel production credit. 

The Inflation Reduction Act created the clean fuel production credit for transportation fuel with zero or low greenhouse-gas emissions, including sustainable aviation fuel (SAF).

This credit currently expires at the end of 2027 and this bill would extend it for 10 additional years, making the credit available through 2037. 

Schneider

“I’m proud to introduce this legislation with Reps. Kildee and Brownley to extend the SAF credit, boost production of clean fuels and position the U.S. as a global leader in production and use of sustainable fuels,” Schneider said. “A 10-year extension would allow for sustained investment in production to accelerate the transition to cleaner fuels and to significantly cut greenhouse-gas emissions from the aviation industry, in particular. We are already seeing the impact of the Inflation Reduction Act’s investments on U.S. production of sustainable fuels.” 

Schneider authored the tax credit for the production of SAF, which was included in the IRA and aims to halve carbon emissions in the aviation sector.  

The credit was inspired by the SAF credit included in the Sustainable Skies Act, which Schneider authored with Kildee and Brownley in 2021.

The credit was ultimately enacted in the IRA in 2022, will transition into the clean fuel production credit in 2025 and will expire in 2027.

SAF producers are eligible for a tax credit of $1.25 to $1.75 per gallon. 

“The 45Z tax credit has been critical in helping to ramp up U.S. production of sustainable aviation fuel,” Brownley said. “However, we needed to extend the credit long-term to provide market certainty and to ensure a safe and reliable supply of SAF to meet the needs of the aviation industry. I appreciate Congressman Schneider and Congressman Kildee’s partnership on this bill, and I look forward to working with stakeholders in the environmental, energy and aviation community to extend the 45Z credit and promote U.S. investment in this critical domestic fuel source.”

Kildee added, “In my home state of Michigan, we have already seen the harmful effects of climate change on our Great Lakes. This legislation will help us continue producing clean energy and fuels here in the United States, to help create good paying jobs, provide new markets to Michigan farmers, and reduce carbon emissions from airplanes and other vehicles.”

Lauren Riley, the chief sustainability officer for United Airlines, said, “As the leading U.S. airline in SAF use and advocacy, we know that extending incentives for U.S. SAF producers by a full 10 years is a necessary first step to grow the industry. The continued leadership of Reps. Schneider, Kildee and Brownley is helping to assure U.S. competitiveness in SAF and clean fuels, while boosting U.S. agricultural producers and rural communities. We look forward to working with Reps. Schneider, Kildee and Brownley and their colleagues on both sides of the aisle to ensure that this tax credit is both extended and enhanced in a way that will maximize investment in SAF and other clean, low-carbon fuels.” 

Jimmy Samartzis, LanzaJet CEO, added, “SAF is the single most important method to decarbonize aviation in the coming decades, and LanzaJet applauds the leadership of Reps. Schneider, Kildee and Brownley in advancing SAF tax incentives that will catalyze domestic investment in this critical sector. As the original sponsors of the IRA’s SAF blenders tax credit via the Sustainable Skies Act, Reps. Schneider, Kildee and Brownley continue to lay the foundation for a vibrant U.S. SAF industry by providing for 10 years of policy certainty for domestic SAF producers via this important bill.  We look forward to continuing to work with Reps. Schneider, Kildee and Brownley to develop policy proposals that will both extend and enhance the IRA’s short-term SAF tax credits and enable achievement of the goals of the SAF Grand Challenge.”   

Alison Graab, the executive director of the SAF Coalition, said, “We applaud Rep. Schneider and his colleagues Reps. Kildee and Brownley for their efforts to extend incentives for SAF. We look forward to working with them on both an extension as well as enhancing and strengthening the incentive. Advancing sustainable aviation fuel demonstrates a clear commitment to the environmental and economic promises SAF holds, and incentives that are durable and attract investment are essential to unlocking that potential and driving the progress needed to sustain and grow the SAF industry.”