A bill introduced in the House Thursday by Rep. Brad Schneider, D-Ill., would use targeted tax credits to ramp-up production of sustainable aviation fuel (SAF).
The bill, called the Sustainable Skies Act, has garnered support from a cross-section of stakeholders, including airlines, airline industry unions, environmental groups and fuel producers. It is also expected to soon have a Senate companion bill, to be introduced by Democratic Ohio Sen. Sherrod Brown. However, the House bill has yet to secure any Republican support.
Under the provisions of the Sustainable Skies Act, energy producers would receive a $1.50-per-gallon tax credit for the supply of SAF that reduces greenhouse emissions by 50% or more. Producers would also receive a credit of 1 cent per gallon for each percentage point the fuel reduces emissions over 50%. For example, SAF that reduces emission by 80% compared with conventional kerosene-based jet fuel would garner a tax credit of $1.80 per gallon. The tax credit would expire at the end of 2031.
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The bill also includes safeguards that are important to the environmental community. For example, it excludes palm oils as an SAF feedstock since palm oil producers often clear rainforests in order to establish oil palm plantations.
Speaking at a press conference on Thursday, United CEO Scott Kirby said he hopes the Sustainable Skies Act will be the start of a new trend of industry working together with the environmental community to tackle climate change.
"This is the biggest issue that our generation has to solve," Kirby said.
Entering the Covid-19 pandemic, aviation accounted for an estimated 2.5% of the world's greenhouse gas emissions, according to the International Energy Agency. Globally, airlines have committed to reducing emissions by 50% from 2005 levels by 2050. But that standard has largely given way to stronger promises by the carriers themselves. In the U.S., for example, the members of Airlines for America (A4A) have pledged to reach net-zero emissions by 2050.
A4A members have also pledged to work with the government, producers and other stakeholders toward a goal of making 2 billion gallons of sustainable aviation fuel available to U.S. aircraft operators by 2030, a target that will require an annual average production increase of 84% until that time.
IATA estimates that annual global production of SAF is currently 13 million gallons, a tiny fraction of the approximately 80 billion gallons per year of fuel that airlines were using prior to the Covid-19 pandemic.
SAF can be produced from various feedstocks, including animal fats, vegetable oils, forestry residue and garbage.