For decades, Congress has made available a range of tax credits aimed at encouraging the production and blending of biofuels into the U.S. transportation fuel supply. Each $1 credit promoting the use of renewable fuel over fossil-based alternatives translates to a concrete reduction in CO2 emissions in the atmosphere, often averaging between 10 to 20 pounds per dollar. The Inflation Reduction Act restructured these tax credits while providing longer-term certainty, more closely tying the value of these incentives to carbon emissions reductions.
 
Tax credits are far more effective market drivers if they are certain and consistent. It wasn’t until 2019 that many tax credits were extended on a multi-year basis, and since then, investment in fuels covered by these credits have flourished. To support President Biden’s target of reducing U.S. carbon emissions by 50-52% by 2030, ABFA urges Congress to provide certainty for these credits through the end of the decade.
 
Among the changes created by the Inflation Reduction Act, the law created new tax credits that rely on modeling emissions reductions to determine credit values. ABFA supports producers’ ability to use the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model developed by Argonne National Lab under these credits, including for sustainable aviation fuel (SAF).