SUSTAINABLE AVIATION FUEL CREDIT.

SEC. 13203. SUSTAINABLE AVIATION FUEL CREDIT.(a) In General.—Subpart D of part IV of subchapter A of chapter 1 is amended by inserting after section 40A the following new section:“SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT.“(a) In General.—For purposes of section 38, the sustainable aviation fuel credit determined under this section for the taxable year is, with respect to any sale or use of a qualified mixture which occurs during such taxable year, an amount equal to the product of—“(1) the number of gallons of sustainable aviation fuel in such mixture, multiplied by “(2) the sum of—“(A) $1.25, plus136 STAT. 1933 “(B) the applicable supplementary amount with respect to such sustainable aviation fuel. “(b) Applicable Supplementary Amount.—For purposes of this section, the term ‘applicable supplementary amount’ means, with respect to any sustainable aviation fuel, an amount equal to $0.01 for each percentage point by which the lifecycle greenhouse gas emissions reduction percentage with respect to such fuel exceeds 50 percent. In no event shall the applicable supplementary amount determined under this subsection exceed $0.50. “(c) Qualified Mixture.—For purposes of this section, the term ‘qualified mixture’ means a mixture of sustainable aviation fuel and kerosene if—“(1) such mixture is produced by the taxpayer in the United States, “(2) such mixture is used by the taxpayer (or sold by the taxpayer for use) in an aircraft, “(3) such sale or use is in the ordinary course of a trade or business of the taxpayer, and “(4) the transfer of such mixture to the fuel tank of such aircraft occurs in the United States. “(d) Sustainable Aviation Fuel.—“(1) In general.—For purposes of this section, the term ‘sustainable aviation fuel’ means liquid fuel, the portion of which is not kerosene, which—“(A) meets the requirements of—“(i) ASTM International Standard D7566, or “(ii) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1, “(B) is not derived from coprocessing an applicable material (or materials derived from an applicable material) with a feedstock which is not biomass, “(C) is not derived from palm fatty acid distillates or petroleum, and “(D) has been certified in accordance with subsection (e) as having a lifecycle greenhouse gas emissions reduction percentage of at least 50 percent. “(2) Definitions.—In this subsection—“(A) Applicable material.—The term ‘applicable material’ means—“(i) monoglycerides, diglycerides, and triglycerides, “(ii) free fatty acids, and “(iii) fatty acid esters. “(B) Biomass.—The term ‘biomass’ has the same meaning given such term in section 45K(c)(3). “(e) Lifecycle Greenhouse Gas Emissions Reduction Percentage.—For purposes of this section, the term ‘lifecycle greenhouse gas emissions reduction percentage’ means, with respect to any sustainable aviation fuel, the percentage reduction in lifecycle greenhouse gas emissions achieved by such fuel as compared with petroleum-based jet fuel, as defined in accordance with—“(1) the most recent Carbon Offsetting and Reduction Scheme for International Aviation which has been adopted by the International Civil Aviation Organization with the agreement of the United States, or “(2) any similar methodology which satisfies the criteria under section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 136 STAT. 1934 7545(o)(1)(H)), as in effect on the date of enactment of this section. “(f) Registration of Sustainable Aviation Fuel Producers.—No credit shall be allowed under this section with respect to any sustainable aviation fuel unless the producer or importer of such fuel—“(1) is registered with the Secretary under section 4101, and “(2) provides—“(A) certification (in such form and manner as the Secretary shall prescribe) from an unrelated party demonstrating compliance with—“(i) any general requirements, supply chain traceability requirements, and information transmission requirements established under the Carbon Offsetting and Reduction Scheme for International Aviation described in paragraph (1) of subsection (e), or “(ii) in the case of any methodology established under paragraph (2) of such subsection, requirements similar to the requirements described in clause (i), and “(B) such other information with respect to such fuel as the Secretary may require for purposes of carrying out this section. “(g) Coordination With Credit Against Excise Tax.—The amount of the credit determined under this section with respect to any sustainable aviation fuel shall, under rules prescribed by the Secretary, be properly reduced to take into account any benefit provided with respect to such sustainable aviation fuel solely by reason of the application of section 6426 or 6427(e). “(h) Termination.—This section shall not apply to any sale or use after December 31, 2024.” . (b) Credit Made Part of General Business Credit.— Section 38(b), as amended by the preceding provisions of this Act, is amended by striking “plus” at the end of paragraph (33), by striking the period at the end of paragraph (34) and inserting “, plus”, and by inserting after paragraph (34) the following new paragraph:“(35) the sustainable aviation fuel credit determined under section 40B.” . (c) Coordination With Biodiesel Incentives.—(1) In general.—Section 40A(d)(1) is amended by inserting “or 40B” after “determined under section 40”. (2) Conforming amendment.—Section 40A(f) is amended by striking paragraph (4). (d) Sustainable Aviation Fuel Added to Credit for Alcohol Fuel, Biodiesel, and Alternative Fuel Mixtures.—(1) In general.—Section 6426 is amended by adding at the end the following new subsection:“(k) Sustainable Aviation Fuel Credit.—“(1) In general.—For purposes of this section, the sustainable aviation fuel credit for the taxable year is, with respect to any sale or use of a qualified mixture, an amount equal to the product of—“(A) the number of gallons of sustainable aviation fuel in such mixture, multiplied by “(B) the sum of—136 STAT. 1935“(i) $1.25, plus “(ii) the applicable supplementary amount with respect to such sustainable aviation fuel. “(2) Definitions.—Any term used in this subsection which is also used in section 40B shall have the meaning given such term by section 40B. “(3) Registration requirement.—For purposes of this subsection, rules similar to the rules of section 40B(f) shall apply.” . (2) Conforming amendments.—(A) Section 6426 is amended—(i) in subsection (a)(1), by striking “and (e)” and inserting “(e), and (k)”, and (ii) in subsection (h), by striking “under section 40 or 40A” and inserting “under section 40, 40A, or 40B”. (B) Section 6427(e) is amended—(i) in the heading, by striking “or Alternative Fuel” and inserting, “Alternative Fuel, or Sustainable Aviation Fuel”, (ii) in paragraph (1), by inserting “or the sustainable aviation fuel mixture credit” after “alternative fuel mixture credit”, and (iii) in paragraph (6)—(I) in subparagraph (C), by striking “and” at the end, (II) in subparagraph (D), by striking the period at the end and inserting “, and”, and (III) by adding at the end the following new subparagraph:“(E) any qualified mixture of sustainable aviation fuel (as defined in section 6426(k)(3)) sold or used after December 31, 2024.” . (C) Section 4101(a)(1) is amended by inserting “every person producing or importing sustainable aviation fuel (as defined in section 40B),” before “and every person producing second generation biofuel”. (D) The table of sections for subpart D of subchapter A of chapter 1 is amended by inserting after the item relating to section 40A the following new item: “Sec. 40B. Sustainable aviation fuel credit.”. (e) Amount of Credit Included in Gross Income.—Section 87 is amended by striking “and” in paragraph (1), by striking the period at the end of paragraph (2) and inserting “, and”, and by adding at the end the following new paragraph:“(3) the sustainable aviation fuel credit determined with respect to the taxpayer for the taxable year under section 40B(a).” . (f) Effective Date.—The amendments made by this section shall apply to fuel sold or used after December 31, 2022.