By Jamie Martin
Congress and several U.S. states are working together to grow the sustainable aviation fuel (SAF) industry through tax incentives and legislative support.
This movement is seen as a step toward reducing airline emissions and opening new markets for agriculture.
The clean fuel tax credit, originally passed in the 2022 Inflation Reduction Act, was set to end in 2027. However, a new Republican-led budget law, signed by President on July 4, 2025, extended it through 2029.
Although the law reduced some credits for SAF and reclaimed unused federal grants, the extension still offers vital long-term support.
“Momentum still exists for SAF but it’s not nearly as strong as it was under the Biden administration,” said Paul Greenough of Capstone DC, an energy policy advisor group.
Sustainable aviation fuel is critical to helping the airline industry achieve its goal of net-zero emissions by 2050. The International Air Transport Association says SAF could help reduce 65% of emissions.
Corn ethanol, often used in car fuels, is a key feedstock in making SAF, giving corn-producing states a new economic opportunity.
States like Iowa, Illinois, Minnesota, Nebraska, and Washington have already passed SAF tax credit laws. New proposals in New York, Michigan, and Wisconsin are under consideration.
Wisconsin Rep. David Steffen introduced a bill requiring that SAF be made using only U.S.-sourced materials. He said, “It’s a great opportunity for not only the environmental benefits that come with it but for our farmers, dairies and timber producers to access a brand-new market for their product.”
Despite federal credit reductions, analysts expect the SAF industry will still benefit. U.S. production grew from 5,000 to over 30,000 barrels per day in early 2025, according to the U.S. Energy Information Administration.
Airlines continue to push for broader SAF access, and states may now create stronger local incentives to make up for federal policy changes. Together, these efforts could help scale up commercial production and support rural economies.
Photo Credit: photo-credit-vista-mipan
Categories: National