New SAF Act Extends Clean Fuel Tax Credit to 2034, Boosts Aviation Fuel Subsidy Up to $1.75 Per Gallon

The “Securing Americas Fuels Act,” or the SAF Act, is designed to give a major shot in the arm to the sustainable fuel industry, specifically focusing on the aviation sector. This bill extends the existing clean fuel production tax credit (known as Section 45Z) for another four years, pushing its expiration date from the end of 2029 to January 1, 2034. More importantly, it creates a much higher, specialized tax credit for Sustainable Aviation Fuel (SAF), aiming to accelerate its production and use starting after December 31, 2025.

The Fuel That Flies: Defining SAF and Its New Incentives

If you’re wondering what qualifies for this big incentive, the bill is pretty clear. Sustainable Aviation Fuel must be a liquid fuel sold for aircraft use that meets specific technical standards (ASTM International Standard D7566 or the Fischer Tropsch provisions of ASTM D1655). Crucially, the bill draws a line in the sand, explicitly excluding fuels derived from palm fatty acid distillates or petroleum-based kerosene. This definition means producers need to stick to other feedstocks—like used cooking oil, agricultural waste, or algae—to qualify for the credits.

The real headline here is the size of the subsidy. The standard clean fuel credit is being replaced with significantly higher rates for SAF. For producers who manage to capture and sequester carbon dioxide during the process, the credit goes up from the standard 20 cents to 35 cents per gallon. For everyone else producing qualified SAF without carbon capture, the credit jumps from $1.00 to a substantial $1.75 per gallon. That’s a massive financial incentive designed to make producing sustainable jet fuel much more profitable than producing traditional fuel.

What This Means for Your Wallet and the Skies

For the companies making the fuel, the extension through 2034 provides crucial long-term certainty, which is exactly what’s needed for multi-million dollar investments in new refineries and technology. When the government commits to a subsidy for nearly a decade, it de-risks the investment, making it easier for producers to secure financing and scale up operations. This is a direct play to get more SAF into the tanks of commercial airlines, which could eventually help stabilize fuel prices by diversifying the supply chain.

However, this subsidy doesn't come free. The substantial increase in the tax credit rate—going from $1.00 to $1.75 per gallon in the non-carbon capture category—represents a significant fiscal commitment. While the goal is to drive down emissions and support a cleaner aviation sector, taxpayers ultimately bear the cost of this generous subsidy program. Think of it this way: the government is essentially paying fuel producers an extra 75 cents per gallon compared to the old rate to make sure this cleaner fuel gets made. Also, by explicitly excluding petroleum-based kerosene, the bill reinforces the transition away from traditional petroleum producers in the aviation market, focusing the subsidy exclusively on renewable sources.