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August 8, 2022

Fuel retailers raise concerns against tax credit on SAF

Fuel retailers noted that SAF is less efficient in comparison to renewable diesel and is more carbon intense.

US fuel retailers have voiced their concerns against the government’s inclusion of a tax credit for sustainable aviation fuel (SAF) in the spending bill, Reuters reported.

According to retailers, SAF is less efficient in comparison to renewable diesel and is more carbon intense.

Under the new bill, the government plans to include a tax credit ranging from $1.25 to $1.75 per gallon of SAF, depending on the feedstock used in the production of SAF.

Retailers are concerned that the tax credit would shift vegetable oil and other renewable feedstocks to aviation, thereby impacting the supply for fuel producers who are involved in the production of renewable diesel.

The tax and climate bill aims at reducing the country’s carbon emissions by 40% by the end of this decade and cutting the budget deficit by $300bn.

The aviation industry makes up 3% of global carbon emissions. Owing to the unavailability of alternative technologies, this industry is said to be one of the hardest to reduce emission levels.

However, the White House aims to reduce aviation carbon emission levels by 20% by 2030.

It also plans to increase SAF production to 3 billion gallons by 2030 to meet the industry’s fuel demand, which is estimated to reach 35 billion gallons annually by 2050.    

NATSO government affairs executive vice-president David Fialkov was quoted by the news agency as saying: “SAF cannot compete with other renewable fuels on an environmental basis.” The bill is anticipated to get passed in the Senate and move to the House with the SAF credit added next week.

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