Notice 2024-6: Additional guidance on new sustainable aviation fuel credits
Sustainable aviation fuel credit applies to qualified fuel mixture containing sustainable aviation fuel for certain sales or uses
Additional guidance on new sustainable aviation fuel credits
The U.S. Treasury Department and IRS today released Notice 2024-6 [PDF 197 KB] providing additional guidance on the new sustainable aviation fuel (SAF) credits under sections 40B and 6426(k), created by H.R. 5376 (commonly called the “Inflation Reduction Act of 2022” (IRA)). The Treasury Department and IRS provided initial guidance on the new SAF credits in December 2022 in Notice 2023-6. Read TaxNewsFlash
As explained in the accompanying IRS release—IR-2023-240 (December 15, 2023)—the SAF credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024. The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50%, for a maximum increase of $0.50.
The IRA provides two methods to determine the lifecycle greenhouse gas emissions reduction percentage that can be used to qualify for and calculate the credit. These are the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) method and any similar method that meets certain requirements of the Clean Air Act (CAA). Additionally, the IRA requires certain aspects of each method to be certified by an unrelated party.
Notice 2024-6 provides additional safe harbors using the Environmental Protection Agency's Renewable Fuel Standard (RFS) program and related guidance. The RFS program uses a methodology similar to CORSIA and meets the requirements of the CAA, and the safe harbors in the notice can be used to calculate the emissions reduction percentage and for the corresponding unrelated party certification for the SAF credit.
The notice also explains that the current Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model of the Argonne National Laboratory and other GREET-based models do not currently satisfy the applicable statutory requirements for the SAF credit.
The notice announces that the Department of Energy (DOE) is collaborating with other federal agencies to develop a modified version of the GREET model that would satisfy the statutory requirements for the SAF credit. The agencies developing this modified GREET model currently anticipate its release in early 2024.
Finally, the notice provides a superseding Model Certificate for SAF Synthetic Blending Component that is required to file a claim for SAF credits for claims filed after December 15, 2023.
Read a related Treasury release
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