Treasury Department Issues Proposed Rule on SAF Credit Modeling Requirements

The Department of Treasury on Friday issued a guidance document governing the implementation of the new sustainable aviation fuel (SAF) blenders’ tax credit. Treasury has proposed to allow a new version of the Argonne GREET model, along with a model used under the Renewable Fuel Standard, to be used to calculate the value of the credit. Treasury will also allow the use of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) model to calculate the value of the credit.  

Treasury determined that the GREET model in its current form, “is not sufficient to calculate lifecycle greenhouse gas emissions,” but clarified that a new version of the GREET model, currently under development, will be eligible when finalized. The updated version of the GREET model is expected to be announced in March of next year, though details about the updates to the model were not included in the guidance. 

The SAF tax credit, originally enacted under the Inflation Reduction Act of 2022, would allow for up to a $1.75 per gallon credit for SAF blended into the jet fuel supply. To qualify for the incentive, SAF producers must certify that the fuel reduces carbon emissions by 50 percent compared to petroleum-based jet fuel. SAF, which uses the same feedstocks as biodiesel and renewable diesel, was afforded a higher tax credit beginning this year despite offering no additional environmental benefits.  

NATSO has long maintained that the use of GREET model to calculate the SAF credit was explicitly disallowed by Congress under the law. NATSO appreciates that Treasury acknowledges that the current GREET model does not qualify. NATSO is now reviewing the details of the guidance and will provide a more fulsome analysis in the coming days. 

NATSO Statement on the Department of Treasury Guidance Document on the Implementation of the SAF Tax Credit