Why Sustainable Aviation Fuel Should Play a Growing Role in Federal Legislation
In the wake of COVID-19, Congressional policymakers have moved to address crises across a range of industries. One of the worst hit industries was commercial aviation, which received $25 billion in federal bailout funds earlier this year. With relief efforts underway, legislators must ensure that COVID-19 emergency legislation not only addresses immediate circumstances, but also enhances the competitiveness of the commercial aviation sector for continued growth in a carbon-constrained future.
The Atlantic Council’s new report, Sustainable aviation fuel policy in the United States: A pragmatic way forward, presents policy options to address aviation emissions through incentivizing the production and use of low carbon sustainable aviation fuel (SAF).
As both the House and the Senate debate their visions for a post-COVID-19 energy landscape, SAF-enabling policies will need champions on both sides of the aisle if effective policies are to be implemented. Although Republican policymakers have thus far opposed broad legislation containing measures encouraging SAF, Republican legislators have supported clean energy innovation in other sectors.
As other major countries increase their commitments to climate goals, both Democrats and Republicans should support SAF, which will enable the continued competitiveness of a major US industry.
SAF-encouraging policies were included in both June’s Moving Forward Act and the new report by the Majority Staff of the House Select Committee on the Climate Crisis. Additionally, the version of the CARES Act passed by the House also included SAF-related provisions, indicating that SAF has moved higher on House Democrats’ policy agenda.
The Moving Forward Act calls for a $1.5 trillion investment in transportation and infrastructure projects over the next five years and includes provisions to support SAF development. The House Select Committee report also recommends significant grants and investments in R&D for SAF, as well as consideration of an SAF-specific tax credit. The Moving Forward Act, as passed by the House, and the Majority Staff report of the House Select Committee are both highly ambitious, and hit the key points that will speed the development of SAF and allow it to lead the decarbonization of the aviation sector.
However, it is critical that SAF measures gain bipartisan support, which will also reduce the risk of legislative reversal. The range of policies that will enable a robust SAF industry are, in large part, derived from measures proven successful in other clean energy and clean fuel sectors. For example, fuel tax credits that encourage blending low-carbon fuels with fossil fuels have been proven effective for biodiesel, renewable diesel, and ethanol.
For legislation to target all aspects of SAF production and use, it should include measures that can be implemented in the near-term and that will ramp up greater domestic production of SAF, potentially by creating structural demand by including aviation fuels in an expanded Renewable Fuel Standard (RFS) or a prospective federal Low Carbon Fuel Standard (LCFS).
Additional measures that will also enable greater production of SAF include attracting capital to expand SAF supply (e.g., through loan guarantees or investment tax credits); assisting SAF facility operations (e.g., through the blender’s or producer’s tax credits); and accounting for the environmental benefits of SAF through mechanisms like a carbon price. Continued federal support for research and development into new SAF technologies and feedstocks will also be necessary for SAF to overcome barriers to further deployment.
The Moving Forward Act —which includes a range of clean energy tax provisions—and the House Select Committee Majority Staff’s report pick up on a number of policy options presented in the Atlantic Council report. The Act calls for a generous grant and cost share programs, authorizing $100 million per year for five years for SAF-related projects. The Act also calls for $30 million per year for five years for additional R&D to develop SAF technology further, building upon the seven SAF fuel technology pathways currently being commercialized.
While these long-term investments are necessary to create ongoing production capacity to realize SAF’s environmental benefits, the Moving Forward Act would be strengthened by including a long-term demand signal for SAF that could unleash the investment necessary to scale this important yet nascent industry.
In keeping with the recommendations of the House Select Committee, Congress should consider complementing the Moving Forward Act’s provisions for grants, R&D, and infrastructure with a tax credit specific to SAF and other policy mechanisms that will help create enduring demand in the form of a SAF blending requirement or aviation fuel carbon intensity reduction requirement.
As COVID-19 has left the US economy reeling, policymakers have recognized the urgent need to provide aid to industries that have been especially hit by the pandemic, while—at the same time—there is an opportunity to craft legislation that encourages clean energy development.
While SAF seems to be an increasingly important part of the Democrats’ clean energy agenda, SAF-enabling policies have, so far, not been included in Senate proposals. In an era in which clean technology innovation is critical, both sides of the aisle would do well to seek opportunities to collaborate to advance SAF production and use.
Fred Ghatala (@fredghatala) is the Director for Carbon and Sustainability of Advanced Biofuels Canada, a partner of Waterfall Group, and author of the Atlantic Council’s new report on Sustainable Aviation Fuels.
Jennifer T. Gordon (@JenniferThea11) is the Managing Editor of the Atlantic Council Global Energy Center.