One Big Beautiful Bill – lots of changes for SAF

opinion

by Fayaz Hussain

July 23, 2025

History is riddled with bizarrely named legislation. Take the US ‘Non-Intercourse Act’ of 1809 which aimed to regulate trade with Great Britain and France. This replaced the ‘Embargo Act’ of 1807 that was famously dubbed ‘Oh-Grab-Me Act’ spelled backwards. Fast forward to July 2025, and President Trump has signed the most transformative piece of legislation in modern history: “One Big Beautiful Bill” (OBBB). The bill covers tax cuts, border security spending and biofuel credits, but you’d never know it from the title.

For sustainable aviation fuel (SAF), the bill brings with it a plethora of changes including reduction in credit value of 45Z credits, adjustments to the indirect land usage (ILUC), extension of tax credits and limiting feedstocks which qualify for incentives.

“The OBBB significantly modifies the section 45Z PTC [producers tax credit] for clean transportation fuel, including SAF. The credit is extended by two years to cover fuel sold through December 31st, 2029, but reduces the value of the credit for SAF from $1.75/gallon to $1.00/gallon beginning for fuel produced after 2025,” said law firm Latham & Watkins.

These changes, which reduce the credit value by 43%, to the 45Z will come into force from December 31st, 2025 allowing SAF producers some room to adjust their operations and supply chains to align with the new reality.

While producers wait for next year to apply for 45Z credits, the bill also reinstates and extends the SAF blenders credits and complementary income under the section 40B to end of September 2025.

“The OBBB also eliminates the excise tax credit for SAF with respect to any sale or use after September 30th, 2025 and prohibits double counting by barring 45Z credits on any fuel produced from fuel that would have qualified for 45Z credits on its own,” said Latham & Watkins.

Another key change has been the indirect land use change (ILUC) from lifecycle emissions to determine carbon intensity scores. This benefits production pathways using corn and soy-derived feedstocks. Under the previous version of the bill, the ILUC calculations penalised these feedstocks due to their high ILUC scores.

Moreover, to qualify for 45Z credits, fuel feedstock will have to come from the United States, Mexico, or Canada to qualify for a credit. The American Farm Bureau Federation sees this as a “significant win” for agriculture-linked, domestic renewable fuels.

“To qualify, eligible fuels must be produced by American-controlled firms using feedstocks from the US, Mexico or Canada. These changes support a broad range of agricultural feedstocks such as corn, soybeans and other biomass-based materials, expanding markets for farmers while reducing reliance on fossil fuels,” said the American Farm Bureau Federation in a statement.

While the Embargo Act had the courtesy to warn you that trade barriers were involved in whatever legal drama was unfolding, the ‘One Big Beautiful Bill’ offers all the descriptive power of a fortune cookie.