Governor Pillen recently signed into law a tax credit for development of sustainable aviation fuel ...

Governor Pillen recently signed into law a tax credit for development of sustainable aviation fuel (SAF). This credit is the first of its kind in the Midwest and will help this emerging sector to get off the ground and encourage a shift to jet fuel created from renewable sources such as corn and soybeans.

During the 2024 legislative session, Senator Dungan introduced LB1072, proposing to create an income tax credit for production of SAF if the fuel reduced emissions by 50% compared to petroleum jet-A. According to the Nebraska Ethanol Board, ethanol and oils from corn and soybean processing serve as low-carbon, low-cost feedstocks to produce SAF, which can reduce emissions by more than 50% compared to conventional jet fuel. To calculate the emissions, the SAF producer may use either the GREET model or the International Civil Aviation Organization model. When this bill was not given priority designation, it was amended into Senator Bostar's LB937, which passed with no votes against it.

The market for SAF is projected to see extraordinary growth from $1.1 billion in 2023 to $16.8 billion by 2030, boasting a vigorous compound annual growth rate of 47.7%. This untapped potential leaves ample opportunity for leading the charge on the issue.

The tax credit will provide $0.75 per gallon of SAF meeting the requirements, and $0.01 per gallon for each percent of emissions reduction above 50%. The credit is available to SAF producers for five years, starting in 2027. Along with being one of the highest producing states for feedstock sources, this credit will position Nebraska to become the SAF hub of America, providing the world with renewable and sustainable energy for air travel.

The report on SAF market growth is available here on the official website of MarketsandMarkets. As always, if you have any questions, please feel free to reach out to Kole Pederson, Director of Environmental & Regulatory Affairs, at [email protected].