The 45Z clean fuel production tax credit would be extended by ten years under legislation introduced this week by Reps. Brad Schneider (D-IL), Dan Kildee (D-MI) and Julia Brownley (D-CA).

The tax credit, created under the Inflation Reduction Act, is slated to start in 2025 and expire in 2027, even though no rules have been developed for it yet. The Expanding Clean Fuel Production Act would extend the credit for transportation fuel with zero or low greenhouse gas emissions, including sustainable aviation fuel (SAF), through 2037.

“A ten-year extension would allow for sustained investment in production to accelerate the transition to cleaner fuels and to significantly cut greenhouse gas emissions from the aviation industry, in particular. We are already seeing the impact of the Inflation Reduction Act’s investments on U.S. production of sustainable fuels,” said Rep. Schneider who authored the tax credit for the production of SAF which was included in the Inflation Reduction Act in 2022 and aims to halve carbon emissions in the aviation sector.

The credit was inspired by a SAF credit included in the Sustainable Skies Act, which Rep. Schneider authored with Reps. Kildee and Brownley in 2021. The credit was ultimately enacted in the Inflation Reduction Act in 2022, will transition into the CFPC in 2025, and will expire in 2027. SAF producers are eligible for a tax credit of $1.25 to $1.75 per gallon.

Alison Graab, Executive Director of the SAF Coalition, said they look forward to working with Congress extending as well as strengthening the incentive. “Advancing sustainable aviation fuel demonstrates a clear commitment to the environmental and economic promises SAF holds, and incentives that are durable and attract investment are essential to unlocking that potential and driving the progress needed to sustain and grow the SAF industry.”