State-level tax credits play a critical role in accelerating SAF production, but their impact hinges on ensuring broad, inclusive definitions that encompass Twelve’s E-Jet® and other power-to-liquid fuels.
By: Ira Dassa and Derek Phelps
The Cost Challenge of SAF
It is well understood that sustainable aviation fuel (SAF), now and for the foreseeable future, is more expensive than conventional, petroleum-based jet fuel. This is true for the HEFA SAF that comprises virtually all of the SAF being produced throughout the world today, and it will also be the case for Twelve’s E-Jet®, the power-to-liquid (PtL) SAF that we expect to begin producing later this year at AirPlant™ One, our first-of-a-kind, demonstration-scale facility in Moses Lake, Washington. For this reason, tax credits and other governmental incentive programs are critical, as they effectively reduce the purchase price differential and, in turn, increase demand for our ultra-low carbon intensity E-Jet fuel.
State Tax Credits Are Key to Making SAF Cost-Competitive
With a new Administration in Washington, D.C., our eyes at present are fixed firmly on the section 45V (clean hydrogen production) and section 45Z (clean fuel production) tax credits that Congress created through the Inflation Reduction Act (IRA). But as we have detailed before, Twelve’s focus is not and never will be solely on what happens at the federal level. State-level tax credits, especially for SAF, are also of great significance, particularly as they are stackable with (i.e., in addition to) whatever federal tax credits are available.
Defining “Sustainable Aviation Fuel” Correctly is Crucial
Thus far in 2025, forward-thinking legislators in several states have introduced measures to create SAF-specific tax credits on a per gallon basis similar to the tax credits that are already in place in Illinois, Minnesota, Nebraska, and Washington.[1] These measures include bills in Arkansas, Hawaii, Kentucky, and New York, while in Nebraska and Minnesota, legislation has been introduced to improve the existing SAF tax credits. In all of these instances, what usually matters most to Twelve is the proposed definition of the term “sustainable aviation fuel.”
More specifically, we are always pleased to see and are fully supportive of a SAF definition that, like the definitions in section 45Z and the now-expired SAF blender’s tax credit in section 40B of the federal tax code, unmistakably encompasses our E-Jet. When a proposed definition of SAF does not expressly reference liquid fuel that meets the requirements of the ASTM International D7566 specification, as is the case for example in Arkansas House Bill 1303, we will seek to engage with the bill sponsor(s) and advocate for a broad definition that at the very least includes PtL SAF and Twelve’s E-Jet. And where a proposed definition alludes to particular SAF feedstocks, as for example in New York Senate Bill 4065A, we support and, where necessary, push for the explicit inclusion of gaseous carbon oxides, just as Congress delineated in the IRA provision (i.e., section 40007) that established the Federal Aviation Administration’s so-called FAST-SAF grant program.
State-Level Support is Essential for Scaling SAF Production
State-level SAF tax credits are not only desirable, but in Twelve’s view they are crucial to enabling the successful lift-off of the SAF production industry in the United States. To be sure, the section 45Z federal tax credit for SAF must be extended well beyond 2027, but even with that, support for SAF at the state level is also essential. In this regard, state legislators must ensure that the term “sustainable aviation fuel” is defined broadly within the relevant tax credit provision and clearly includes fuels like Twelve’s E-Jet and gaseous carbon oxides, the key feedstock for any PtL SAF.
[1] In Hawaii, the Renewable Fuels Production Tax Credit encompasses a number of renewable fuels, including renewable jet fuel, and is allocated on a per BTU rather than on a per gallon basis.