Minnesota extends SAF tax credits
While the federal incentives for sustainable aviation fuel (SAF) producers face uncertainty, US State of Minnesota Senate Taxes Committee approved an extension and expansion of SAF credits launched in 2023.
The legislation for the credits was introduced by Senators Anne Rest, Bill Weber, Robert Kupec, John Jasinski, and Scott Dibble last month on February 13th.
“SAF has the potential to rapidly decarbonise the aviation industry, provide additional revenue streams for a wide array of farmers, communities, and industries, and create good-paying jobs throughout Minnesota. But this only happens if we take steps to bring production to scale,” Kupec said.
“This is more than just a win-win for our state, it’s a win-win-win-win. We can support our farmers, reduce our carbon emissions and grow our economy, and this bill will help us do so.”
The state current SAF tax credit allows for a $1.5 per gallon incentive for fuel produced from biomass-derived sources that achieves at least 50% reduction in greenhouse gas (GHG) emissions. In order to qualify, producers or blenders must do so within in the state for use at one of state’s airports.
In case of blending, the credit only applies on the portion of SAF in the blended fuel.
Earlier, when the credits were enacted, the term for those was set to fall between July 1, 2024 and June 30, 2030.
The new legislation aims to extend the credit for five more years, through July 1, 2035.
In addition, the legislation will also incentivise additional GHG reductions by allowing qualified taxpayers to claim a supplemental tax credit of 2 cents per gallon for each additional whole percentage carbon intensity (CI) reduction beyond 50%, with a cap of 50 cents.