House Infrastructure Package Grows Taxpayer Subsidies For Aviation Fuel

After 10 p.m. Friday night the House dropped their 645 page infrastructure reconciliation package. I haven’t read the whole thing yet, just the 41 page summary. U.S. airlines last week increased their commitment to use biofuels. It’s no wonder why:

Sec. 136203. Sustainable aviation fuel credit.

Beginning in 2023, this provision provides a refundable blenders tax credit for each gallon of sustainable aviation fuel sold as part of a qualified fuel mixture. The value of the credit is determined on a sliding scale, equal to $1.25 plus an additional $.01 for each percentage point by which the lifecycle emissions reduction of such fuel exceeds 50%. Taxpayers may elect to claim this credit as an excise tax credit against section 4041 excise tax liability.

To claim the credit taxpayers must certify to the Secretary that such fuel reduces emissions reduction by at least 50%, determined by a methodology conforming with all the requirements of the most recent Carbon Offsetting and Reduction Scheme for International Aviation adopted by the International Civil Aviation Organization with the support of the United States. Within two years of date of enactment of this provision, the Secretary of the Treasury, in consultation with the Secretary of Energy and the EPA Administrator, shall establish procedures by which taxpayers may obtain a certification from the Secretary consistent with such requirements. This provision terminates the $1.00 section 40A tax credit for aviation fuel produced from biodiesel beginning after December 31, 2022.

This provision shall apply for fuel sold or used after December 31, 2022. The credits allowed under this provision expire after December 31, 2031.

The federal government will be subsidizing aviation biofuel mixtures at at least $1.25 per gallon, and going up from their depending on the emission reductions those fuel achieve. And here you thought you were done paying the airlines after $79 billion in direct pandemic aid.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The only surprise is that airline labor couldn’t figure out how to get in on the action.
    Sara Nelson is beside herself.

  2. This is not “the infrastructure” bill. The bipartisan infrastructure bill that passed the Senate last month is different.

    This is the House Ways and Means Committee’s portion of the reconciliation bill. And in essence it’s pointless because the actual details are really being negotiated behind the scenes between House and Senate leaders (ie, what will Joe Manchin accept).

  3. @ Gary — Congress needs to begin by removing every single cent that goes to subsidize the fossil fuel industry. It is disgusting that we pay wealthy, profitable corporations to destroy our common environment. They should being paying taxes to cover the cost imposed upon society.

  4. How much fossil fuel is used to harvest all these “biofuels”? How about the gas used for people to drive to and from the airport to take these unnecessary flights. Promoting more air travel will increase fossil fuel use regardless of the fuel that the airplanes burn. People are naive to think that promoting “clean” fuel while keeping o”the global economy humming along will actually reduce total emissions. Pretty much the only thing at this point that will reduce carbon emissions is to reduce economic growth…hence this global pandemic training exercise.

  5. And that adds to the cost of food as the “bio” product (corn?) now is used for fuel instead of food.

  6. @Vijay and @Patrick

    Totally agree! While Dems pretend to care about the environment, no one in DC actually cares about policy that would make a real difference (e.g. carbon tax), only about picking winners and losers themselves and trading favors.

  7. Wasn’t happy about 100% expensing for planes for the rich under the prior administration along with subsidizing yachts, stadiums, carried interest, stock buybacks, billions in free PPP no strings attached. At least in the financial crisis the taxpayer got a cut in the bailouts.
    America should only be a welfare state for Billionaires and large corporations.

    The need to subsidize our Airlines in any way is open for discussion. Much of the rest of the world subsidize their airlines. Do we need to in order to compete? Maybe

  8. Amazing to me the things that Congress can be very concerned with when likely the congressmen are getting campaign finance funds from big companies. What consumers are concerned with are outrageous fees from airlines, from fuel surcharges to fees for cancellations or changing tickets to everything else they can get away with and then not even pay taxes on as those “fees” are not taxable income for the airlines.

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