US Senate passes major climate, sustainable aviation fuels legislation in dramatic weekend vote; bill moves the US House

In Washington, the US Senate passed the Inflation Reduction Act, 51-50, after Vice President Kamala Harris provided the tie-breaking vote. The bill contains five years of dedicated Sustainable Aviation Fuel tax provisions aimed at incentivizing production of the renewable jet fuel.

The climate, healthcare and tax package now moves to the US House of Representatives; the House is expected to take up the legislation on Friday. The voting was on a party-line basis, and the final hours were marked by tense negotiations with Senator Kyrsten Sinema as well as a flock of amendments. Senate Republicans did, with some Democratic support, strip out some health care provisions — but the climate package elements remained in place.

Originally, a dedicated SAF Blender’s Tax Credit to stimulate investment in the nascent industry and provide economic parity with other renewable fuels emerged in the Sustainable Skies Act (S. 2263 and H.R. 3440) introduced in 2021. A coalition of industry stakeholders worked to bring two years of such tax credits into the Inflation Reduction Act of 2022, valued at $1.25-$1.75 per gallon depending on percentage of lifecycle greenhouse gas emissions compared to fossil-based jet fuel. Beginning in 2025, the legislation creates three years of a Clean Fuel Production Credit with an enhanced value for SAF of up to $1.75 per gallon.

We covered the Act in detail here last week, when a historic compromise with Senator Joe Manchin of West Virginia put the bill on track for Senate passage. Our coverage here includes the major benefits for renewable fuels and the bioeconomy.

Reaction from the stakeholders

The National Air Transportation Association commented, “Just as business aviation closes distances, propels innovation, and supports vibrant economic growth throughout our nation, the commercialization and scale-up of sustainable aviation fuel will accelerate our industry’s progress to net-zero carbon emissions. The SAF tax credits included in the Inflation Reduction Act of 2022 are a crucial first step toward meeting the Biden Administration’s SAF Grand Challenge goal of 3 billion gallons of domestically produced SAF by 2030; equally crucial is the removal of regulatory roadblocks that hinder SAF participation in the Environmental Protection Agency’s Renewable Fuel Standard program. NATA applauds the U.S. Senate for taking action to incentivize SAF production, and we encourage Congress to work just as diligently to equip federal agencies, including EPA, with the necessary tools to support SAF production in line with industry demand,” stated NATA President and CEO Timothy Obitts.

“NATA thanks Senate negotiators for including SAF in the clean energy provisions of the Inflation Reduction Act, and we recognize the tireless leadership of Sustainable Skies Act sponsors on this critical issue. Sustainable aviation fuel represents a lower-carbon, domestically produced energy source that will reduce aviation’s CO2 emissions, extend American global leadership, and support high-paying jobs. Today’s vote is another step toward bridging the gap between federal incentives for energy innovation and the associated costs of establishing a vibrant domestic SAF industry. The business aviation industry has already demonstrated a consistent demand for SAF; now we call on government leaders to adopt sound legislative and regulatory policies to foster consistent production.”

The Clean Energy Buyers Association said that it “applauds the Senate passage of the Inflation Reduction Act. The historic investments in clean energy reduce the cost of energy for customers and send signals and certainty to the market to spur private investment and accelerate the uptake of a wide range of clean energy technologies. CEBA encourages the House to promptly consider and approve this legislation enabling us to make momentous progress on emissions reductions in the power sector. We look forward to building on this success with long-term, bipartisan support for further reducing barriers to clean energy.”