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New Sustainable Aviation Fuel IRS tax credit emerges for 2023 and 2024 from Inflation Reduction Act

There is much to write about Biodiesel but certainly more importantly it is the SAF credit of $1.25 per Gallon that will apply to blending of such if it meets a minimum of 50% Green House Gas savings which is rather easy to achieve with Soybean oil. However the attractiveness of this credit grows when you use other feedstock as the credit can grow $0.01 for each 1% so essentially SAF from UCO that can reach up to 90% GHG savings could yield an additional 40 cents per gallon for a total of $1.65 per gallon (This is the equivalent of $552 per Metric Ton using 0.79 for density of SAF) direct subsidy for aviation fuel produced for the United States Market. This credit applies only ASTM D7566 and excludes any biomass co-processing, This is of course in addition to RINs generation. The Big question for the IRS will be how this will affect US imports of SAF from both Singapore and Europe where significant SAF capacity is already installed. My initial view is that this will divert some of the current HVO volumes being imported by US to SAF in order to take advantage of this significant tax credit as no other country in the world provides such rich subsidy for SAF production.

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