HR1594-119

1. Short title This Act may be cited as the Sustainable Aviation Fuel Act.

2. National goal It is hereby declared that it is the national goal for the United States to reach— a net 35-percent reduction in greenhouse gas emissions for United States domestic and international aviation flights by 2035, as compared to 2005; and net zero greenhouse gas emissions for United States domestic and international aviation flights by 2050.

3. Definitions In this Act: The term sustainable aviation fuel has the meaning given such term in section 40B of the Internal Revenue Code of 1986. The term qualified feedstock means sources of hydrogen and carbon not originating from unrefined or refined petrochemicals. The term lifecycle greenhouse gas emissions means the combined greenhouse gas emissions from feedstock production, collection of feedstock, transportation of feedstock to fuel production facilities, conversion of feedstock to fuel, transportation and distribution of fuel, and fuel combustion in an aircraft engine, as well as from induced land-use change emissions, as calculated using appropriate modeling techniques approved by a regulating authority. The term induced land-use change emissions means the greenhouse gas emissions resulting from the conversion of land to the production of feedstocks and from the conversion of other land due to the displacement of crops or animals for which the original land was previously used, as calculated using appropriate modeling techniques approved by a regulating authority. The term conventional jet fuel means liquid hydrocarbon fuel used for aviation that is derived or refined from petrochemicals.

5. Low carbon aviation fuel standard Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by adding at the end the following: In this subsection: The term aviation fuel means fuel that is produced, sold, or dispensed in the United States, for civil or military purposes, for turbine-powered aviation. The term carbon intensity means the quantity of lifecycle greenhouse gas emissions per unit of fuel energy. The term credit exchange means a central marketplace with established rules and regulations where buyers and sellers meet to conduct trades. The term fuel standard means the low carbon fuel standard established under paragraph (2). Not later than 1 year after the date of enactment of this subsection, the Administrator shall promulgate regulations to establish a low carbon fuel standard for aviation fuels that requires a reduction in carbon intensity for aviation fuels each calendar year such that by 2050, and thereafter, the average carbon intensity of all aviation fuel used annually in the United States is reduced by at least 50 percent, as compared to the average carbon intensity of all aviation fuel used in the United States in 2005. In promulgating regulations under paragraph (2), the Administrator shall set a target of a reduction of at least 20 percent in the average carbon intensity of all aviation fuel used annually in the United States by 2030, and of at least 50 percent by 2050, as compared to the average carbon intensity of all aviation fuel used in the United States in 2005. In promulgating regulations under paragraph (2), the Administrator shall— establish a benchmark for the average carbon intensity of aviation fuels for each calendar year, beginning with the first full calendar year that begins 2 years after the date of enactment of this subsection, suitable to achieving the targets specified in paragraph (3); apply the fuel standard to persons who produce or import aviation fuel; establish procedures for calculating the carbon intensity of an aviation fuel, expressed in grams of carbon dioxide equivalent per megajoule, in accordance with— the standards, recommended practices, requirements and criteria, supporting documents, implementation elements, and any other technical guidance for sustainable aviation fuels that are adopted by the International Civil Aviation Organization with the agreement of the United States; and any other more stringent accounting practices determined by the Administrator to be the best lifecycle greenhouse gas emission accounting practices, provided that such practices account for the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes), as determined by the Administrator, related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential; determine how long the calculation of the carbon intensity of an aviation fuel (pursuant to the procedures established under subparagraph (C)), will remain in effect before needing to be reevaluated; allow a person described in subparagraph (B), who, for a calendar year, produces or imports aviation fuel— that has an average carbon intensity that is less than the benchmark for average carbon intensity for that calendar year to, except as provided in paragraph (8), generate credits, to be used, or transferred to another person, to demonstrate compliance with this subsection; and that has an average carbon intensity that is greater than the benchmark for average carbon intensity for that calendar year to purchase credits to be used to demonstrate compliance with this subsection; determine the— appropriate amount of credits generated and used to demonstrate compliance pursuant to subparagraph (E); appropriate conditions, if any, on— the duration of such credits; and the transfer of such credits through a credit exchange; and consult with all relevant stakeholders, including aviation industry groups, renewable fuel industry groups, researchers at institutions of higher education, labor unions, consumer advocates, and any other stakeholders the Administrator determines to be appropriate. In carrying out this subsection, the Administrator shall consult with the Administrator of the Federal Aviation Administration, the Secretary of Energy, and the Secretary of Agriculture. The Administrator shall, after notice and opportunity for public hearing, waive application of the fuel standard in any State that has adopted a standard for aviation fuels that the Administrator determines is at least as stringent as the fuel standard. If Congress enacts a standard or similar law that the Administrator, in consultation with the Administrator of the Federal Aviation Administration, determines accomplishes the purposes of the fuel standard for sectors of the economy that include the aviation sector, the Administrator may revoke the fuel standard in favor of the other standard or law. No credit may be generated under this subsection with respect to renewable fuel for which a credit is generated under subsection (o). Not later than 180 days after the date of enactment of this subsection, the Administrator shall submit to Congress and make publicly available a report describing— the status of the development of the fuel standard; and the considerations the Administrator is using in developing the fuel standard. Section 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is amended— in paragraph (1)— by striking or (o) of this section or the regulations and inserting (o), or (w) of this section or the regulations; by striking or (o) of this section or who fails and inserting (o), or (w) of this section or who fails; and by striking or (o) of this section which establishes and inserting (o), or (w) of this section which establishes; and in paragraph (2), by striking and (o) of this section each place it appears and inserting (o), and (w) of this section. (w)Low carbon aviation fuel standard (1)DefinitionsIn this subsection: (A)Aviation fuelThe term aviation fuel means fuel that is produced, sold, or dispensed in the United States, for civil or military purposes, for turbine-powered aviation. (B)Carbon intensityThe term carbon intensity means the quantity of lifecycle greenhouse gas emissions per unit of fuel energy. (C)Credit exchangeThe term credit exchange means a central marketplace with established rules and regulations where buyers and sellers meet to conduct trades. (D)Fuel standardThe term fuel standard means the low carbon fuel standard established under paragraph (2). (2)EstablishmentNot later than 1 year after the date of enactment of this subsection, the Administrator shall promulgate regulations to establish a low carbon fuel standard for aviation fuels that requires a reduction in carbon intensity for aviation fuels each calendar year such that by 2050, and thereafter, the average carbon intensity of all aviation fuel used annually in the United States is reduced by at least 50 percent, as compared to the average carbon intensity of all aviation fuel used in the United States in 2005. (3)TargetsIn promulgating regulations under paragraph (2), the Administrator shall set a target of a reduction of at least 20 percent in the average carbon intensity of all aviation fuel used annually in the United States by 2030, and of at least 50 percent by 2050, as compared to the average carbon intensity of all aviation fuel used in the United States in 2005. (4)RequirementsIn promulgating regulations under paragraph (2), the Administrator shall— (A)establish a benchmark for the average carbon intensity of aviation fuels for each calendar year, beginning with the first full calendar year that begins 2 years after the date of enactment of this subsection, suitable to achieving the targets specified in paragraph (3); (B)apply the fuel standard to persons who produce or import aviation fuel; (C)establish procedures for calculating the carbon intensity of an aviation fuel, expressed in grams of carbon dioxide equivalent per megajoule, in accordance with— (i)the standards, recommended practices, requirements and criteria, supporting documents, implementation elements, and any other technical guidance for sustainable aviation fuels that are adopted by the International Civil Aviation Organization with the agreement of the United States; and (ii)any other more stringent accounting practices determined by the Administrator to be the best lifecycle greenhouse gas emission accounting practices, provided that such practices account for the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes), as determined by the Administrator, related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential; (D)determine how long the calculation of the carbon intensity of an aviation fuel (pursuant to the procedures established under subparagraph (C)), will remain in effect before needing to be reevaluated; (E)allow a person described in subparagraph (B), who, for a calendar year, produces or imports aviation fuel— (i)that has an average carbon intensity that is less than the benchmark for average carbon intensity for that calendar year to, except as provided in paragraph (8), generate credits, to be used, or transferred to another person, to demonstrate compliance with this subsection; and (ii)that has an average carbon intensity that is greater than the benchmark for average carbon intensity for that calendar year to purchase credits to be used to demonstrate compliance with this subsection; (F)determine the— (i)appropriate amount of credits generated and used to demonstrate compliance pursuant to subparagraph (E); (ii)appropriate conditions, if any, on— (I)the duration of such credits; and (II)the transfer of such credits through a credit exchange; and (G)consult with all relevant stakeholders, including aviation industry groups, renewable fuel industry groups, researchers at institutions of higher education, labor unions, consumer advocates, and any other stakeholders the Administrator determines to be appropriate. (5)ConsultationIn carrying out this subsection, the Administrator shall consult with the Administrator of the Federal Aviation Administration, the Secretary of Energy, and the Secretary of Agriculture. (6)Coordination with statesThe Administrator shall, after notice and opportunity for public hearing, waive application of the fuel standard in any State that has adopted a standard for aviation fuels that the Administrator determines is at least as stringent as the fuel standard. (7)RevisionIf Congress enacts a standard or similar law that the Administrator, in consultation with the Administrator of the Federal Aviation Administration, determines accomplishes the purposes of the fuel standard for sectors of the economy that include the aviation sector, the Administrator may revoke the fuel standard in favor of the other standard or law. (8)Relationship to renewable fuel programNo credit may be generated under this subsection with respect to renewable fuel for which a credit is generated under subsection (o). (9)ReportNot later than 180 days after the date of enactment of this subsection, the Administrator shall submit to Congress and make publicly available a report describing— (A)the status of the development of the fuel standard; and (B)the considerations the Administrator is using in developing the fuel standard..

6. Procurement of sustainable aviation fuel by the department of defense Effective October 1, 2025, the Secretary of Defense shall make a bulk purchase of an amount of sustainable aviation fuel that is not less than 10 percent of the total amount of aviation fuel procured for operational purposes (as defined in section 2922h of title 10, United States Code) if— the cost of sustainable aviation fuel is competitive with the fully burdened cost of conventional jet fuel available for the same purpose; and the sustainable aviation fuel is refined or produced in the United States. If the Secretary of Defense purchases sustainable aviation fuel that is blended with conventional jet fuel, the percentage of sustainable aviation fuel in such blend will be counted towards the percentage described in subsection (a). Before making a purchase under subsection (a), the Secretary of Defense or the Secretary concerned (as defined in section 101(a)(9) of title 10, United States Code) shall certify that the sustainable aviation fuel is suitable for use in aircrafts of the Department of Defense. Subject to the requirements of paragraph (2), the Secretary of Defense may waive the requirement under subsection (a) for reasons of national security, including the lack of available, qualifying sustainable aviation fuel. Not later than 30 days after issuing a waiver under this subsection, the Secretary shall submit to the congressional defense committees (as defined in section 101(a)(16) of title 10, United States Code) notice of the waiver. Any such notice shall include each of the following: The rationale of the Secretary for issuing the waiver. A certification that the waiver is in the national security interest of the United States. The terms fully burdened cost and operational purposes have the meanings given such terms, respectively, in section 2922h of title 10, United States Code.

8. Department of energy research The Secretary of Energy shall carry out a program to research the use of cover crops or other crops grown for conservation purposes rather than for sale in the production of sustainable aviation fuel. In carrying out the program under subsection (a), the Secretary shall collaborate with the national laboratories, the Department of Agriculture, and industry partners. In this section: The term sustainable aviation fuel means liquid fuel consisting of synthesized hydrocarbons that— is derived from a qualified feedstock; and conforms to the standards, recommended practices, requirements and criteria, supporting documents, implementation elements, and any other technical guidance for sustainable aviation fuels that are adopted by the International Civil Aviation Organization with the agreement of the United States. The term national laboratory has the meaning given the term in section 2(3) of the Energy Policy Act of 2005 (42 U.S.C. 15801(3)). There are authorized to be appropriated such sums as may be necessary to carry out this section.

9. Extension of clean fuel production credit for sustainable aviation fuel Section 45Z(g) of the Internal Revenue Code of 1986 is amended to read as follows: This section shall not apply— in the case of transportation fuel which is not sustainable aviation fuel, to fuel sold after December 31, 2027, and in the case of sustainable aviation fuel, to fuel sold after December 31, 2032. The amendments made by this section shall apply to fuel produced after December 31, 2027. (g)TerminationThis section shall not apply— (1)in the case of transportation fuel which is not sustainable aviation fuel, to fuel sold after December 31, 2027, and (2)in the case of sustainable aviation fuel, to fuel sold after December 31, 2032. .

10. Sustainable aviation fuel production property added to Energy Credit Section 48 of the Internal Revenue Code of 1986 is amended— in subsection (a)— in paragraph (2)(A)(i)— in subclause (VIII), by striking and, and by adding at the end the following new subclause: sustainable aviation fuel production property, and in paragraph (3)(A), by striking or at the end of clause (x), inserting or at the end of clause (xi), and by adding at the end the following new clause: sustainable aviation fuel production property, by redesignating paragraph (16) as paragraph (17) and by inserting after paragraph (15) the following new paragraph: In the case of any energy property described in paragraph (3)(A)(xii) the construction of which begins before January 1, 2039, the energy percentage determined under paragraph (2) shall be equal to— in the case of any property the construction of which begins after December 31, 2030, and before January 1, 2032, 24 percent, in the case of any property the construction of which begins after December 31, 2031, and before January 1, 2033, 18 percent, and in the case of any property the construction of which begins after December 31, 2032, and before January 1, 2039, 12 percent. in subsection (c), by adding at the end the following new paragraph: The term sustainable aviation fuel production property means— property which produces sustainable aviation fuel (as defined in section 40B(d)), or property directly related to enabling the production or distribution of sustainable aviation fuel. The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a)(3)(A)(xii) with respect to any sustainable aviation fuel production property if the sustainable aviation fuel production of such property comprises less than 80 percent of the total fuel production of such property in any of the 5 taxable years immediately following the taxable year in which such property was placed in service. The amendments made by this section shall apply to fuel produced after December 31, 2025. (X)sustainable aviation fuel production property, and, (xii)sustainable aviation fuel production property, , and (16)Phaseout for sustainable aviation fuel production propertyIn the case of any energy property described in paragraph (3)(A)(xii) the construction of which begins before January 1, 2039, the energy percentage determined under paragraph (2) shall be equal to— (A)in the case of any property the construction of which begins after December 31, 2030, and before January 1, 2032, 24 percent, (B)in the case of any property the construction of which begins after December 31, 2031, and before January 1, 2033, 18 percent, and (C)in the case of any property the construction of which begins after December 31, 2032, and before January 1, 2039, 12 percent., and (9)Sustainable aviation fuel production property (A)In generalThe term sustainable aviation fuel production property means— (i)property which produces sustainable aviation fuel (as defined in section 40B(d)), or (ii)property directly related to enabling the production or distribution of sustainable aviation fuel. (B)Recapture of creditThe Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a)(3)(A)(xii) with respect to any sustainable aviation fuel production property if the sustainable aviation fuel production of such property comprises less than 80 percent of the total fuel production of such property in any of the 5 taxable years immediately following the taxable year in which such property was placed in service..