United States gasoline merchants vehemently oppose green aviation fuel tax credit

U.S. gasoline retailers reject the inclusion of a tax credit for sustainable aviation fuel (SAF) in the Democrats' $430 billion budget package on the grounds that SAF is more carbon intensive and less efficient than renewable diesel.

As part of a tax and climate legislation that aims to decrease U.S. carbon emissions by 40 percent by 2030 and the federal budget deficit by $300 billion, Congress are providing a SAF credit ranging from $1.25 to $1.75 per gallon, depending on the feedstock used.

With the inclusion of the SAF credit, the bill is expected to pass the Senate and go to the House the next week. The Democrats dominate the House, therefore passage with the credit is likely.

Fuel dealers are worried that the credit would redirect vegetable oil and other renewable feedstocks to the aviation industry, leaving less for renewable diesel producers.

National Association of Truckstop Operators (NATSO) and Society of Independent Gasoline Marketers of America (SIGMA) are pressing lawmakers to oppose the Inflation Reduction Act of 2022 unless it provides tax parity between the biodiesel tax credit (BTC) and predicted SAF tax credit.

Agricultural marketing consultancy LMC International stated in a 2021 study that SAF production is less successful at reducing carbon emissions than renewable diesel because it takes more feedstock per gallon of output.

David Fialkov, executive vice president of government affairs at NATSO, remarked, "On an environmental perspective, SAF cannot compete with other renewable fuels."

Other environmental activists have asserted that all biofuels that deplete lipid-based feedstocks from established markets, such as animal fats and used cooking oils, present significant sustainability challenges.

In a briefing held in August, experts from the International Council on Clean Transportation noted, "Increasing the global supply of vegetable oils, whether directly or indirectly, must must come at the price of forests and other natural lands."

In an effort to reduce carbon emissions from air travel, airlines have notified investors that they will increasingly employ sustainable aviation fuel produced from vegetable oil and other low-carbon feedstocks. Due to poor economics, the fuel accounts for less than 0.5% of jet fuel today.

Due to a lack of alternative technologies, the aviation industry is recognized as one of the most challenging industries to cut carbon emissions.

In the meanwhile, the White House has vowed to cut aviation emissions by 20 percent by 2030, to increase SAF production to 3 billion gallons per year by 2030, and to meet 100 percent of aviation fuel demand of around 35 billion gallons by 2050.