Washington State Roundtable on Scaling Sustainable Aviation Fuel

• Washington’s recent state policy successes, the culmination of more than a decade of work through the state’s Alternative Jet Fuels Working Group, have positioned the state to be a leader on Sustainable Aviation Fuel (SAF) development and utilization. These successes include the 2022 passage of a Clean Fuel Standard, the 2023 passage of SB 5447 to attract investment in SAF production, and HB 1216 to streamline the clean energy siting process. Additional federal policy support can enable even greater support for SAF in Washington and nationally.
• SB 5447 is the only SAF tax credit in the United States which provides the flexibility of allowing it to be claimed by either the producer, blender, or end-user. Stakeholders cite the importance of the credit remaining adaptable to changing conditions as the alternative jet fuel market develops.

• To support scaling the entire SAF industry from the earliest stage of production to the end user, the Inflation Reduction Act of 2022 (IRA) created interlocking tax credits that provide incentives to actors across the SAF supply chain. These credits include 40B for SAF blending (ending 2024), 45Z for SAF production (starting 2025), 45V for clean hydrogen production, 48(a)(15)(c) for clean hydrogen facilities, and 45Q for carbon dioxide sequestration. At present, 45Z cannot be stacked at a facility that also uses the other aforementioned credits during the same taxable year.
• Fueling Aviation’s Sustainable Transition (FAST) is a federal grant program that provides $244.5 million to invest in projects that will build out SAF related infrastructure (FAST-SAF) and $46.5 million to develop and demonstrate new low-carbon aviation technologies (FAST-Tech).
• Federal funding of research and development offices, programs, and labs support the technological development and implementation of SAF. This includes the aviation sustainability center ASCENT, co-led by Washington State University and Massachusetts Institute of Technology to pursue commercial scale SAF production.
• The SAF Grand Challenge is a federal interagency effort designed to identify specific activities that should be undertaken by the government to achieve 3 billion gallons per year of domestic SAF production by 2030 and 100 percent of the projected U.S. aviation fuel demand by 2050. This wholeof-government approach pursues expanded SAF supply and use, reduced cost, and enhanced sustainability for SAF

• The early stage of SAF production is lacking funds both for research and development (R&D) efforts and to bring new production online to increase supply.
• SAF is more expensive to produce than fossil jet fuel (jet-A) and renewable diesel, and existing SAF tax credits are too short in duration to attract private capital investment for new projects, especially “first-of-a-kind” projects.
• There are restrictions on the ability of airports to play a role in supporting the use of SAF at their facilities.
• Decision making is siloed among agencies who are collaborating on the SAF Grand Challenge. There is a need for increased transparency about the progress made on the SAF Grand Challenge among the lead agencies involved in the existing SAF Interagency Working Group (IAG).
• Existing research into the technical feasibility of converting biomass-based feedstocks into SAF is based on ideal feedstock quality. More research is required to understand the implications of sourcing and using feedstocks which may be sub-standard due to degredation, contamination, or other difficult-to-control quality issues.
• Critical SAF infrastructure, such as SAF blending facilities, is currently operated by a small number of companies who can control supply and access to SAF.
• Blending infrastructure needs are unique to different regions depending on whether the airports are served by fuel trucks, shipping, or pipelines. • Current federal and state permitting complexity and timelines are major impediments to the development of clean en

Congress should extend tax credits to cover at least 10 years from when a SAF production facility is placed in service.

The Inflation Reduction Act’s (IRA) two new SAF tax credits, 40B and 45Z, are designed to increase SAF’s competitiveness and spur new production, but the duration of the tax credits—which expire at the end of 2024 and 2027, respectively—does not align with the time needed to bring new production online (approximately 5 to 7 years). Extending the eligibility period of SAF tax credits to 10 years following the date a facility is placed into service would provide the economic certainty needed for investments in new capital-intensive SAF facilities. The extension would also align SAF credits with the duration afforded to other tax credits created by the IRA, including the 45V Clean Hydrogen Production Tax Credit.

Congress should provide not less than $244,500,000 annually for FAST-SAF.

The SAF Grand Challenge estimates that $30 billion dollars of capital investment is needed to build out the production and delivery infrastructure to meet the U.S. goal of producing 3 billion gallons of SAF domestically by 2030. Meeting the U.S. goal to provide 100 percent of the aviation fuel demand with SAF by 2050, estimated to be 35 billion gallons, will require hundreds of billions of dollars in capital investment. The FAST-SAF grant program, created by the IRA section 40007, aims to unlock capital for investments in large-scale SAF infrastructure projects. But the one-time, $244.5 million program will not be able to catalyze the scale of private capital needed to accelerate the nascent industry.

Congress should direct the Federal Aviation Administration (FAA) to allow SAF purchasing and investments in SAF infrastructure as an appropriate use of airport revenue.

Under federal law, there are strict regulations on permitted and prohibited uses of revenue generated from any airport that receives federal assistance. While direct procurement of SAF and offsite infrastructure investments are not explicitly prohibited, there is a risk that they could be considered revenue diversion. The most recent amendments to the FAA’s Policy and Procedures Concerning Use of Airport Revenue were published in 2014, predating commercially available SAF in the United States. It is important to clarify the resources available to U.S. airports, should they determine it is in their best interest to become more active stakeholders in the development of the domestic SAF market.

Congress should direct federal agencies administering SAF-related funding to require applicants to consider how the project will support equitable workforce development.

The FAST-SAF notice of funding opportunity mentions addressing equity as a key criterion for application evaluation in second-level review and is an example of the type of considerations that should be made to encourage equitable workforce development. This includes the use of demonstrated strong labor standards, practices, and policies; safety and health standards; the use of Local Hire Provisions; and registered apprenticeships. These conditions of positive workforce development should be considered for all federal SAF-related funding applications and expanded to include access to wraparound services, such as access to transportation to work and childcare during work hours.