[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2263 Introduced in Senate (IS)]
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117th CONGRESS
1st Session
S. 2263
To amend the Internal Revenue Code of 1986 to provide a tax credit for
sustainable aviation fuel, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 24, 2021
Mr. Brown (for himself, Ms. Cantwell, Mr. Warnock, and Mrs. Murray)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit for
sustainable aviation fuel, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sustainable Skies Act''.
SEC. 2. SUSTAINABLE AVIATION FUEL CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 40A the following new section:
``SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT.
``(a) In General.--
``(1) Credit amount.--For purposes of section 38, the
sustainable aviation fuel credit for the taxable year is, with
respect to each gallon of sustainable aviation fuel which is
used by the taxpayer in the production of a qualified mixture--
``(A) a base credit amount of $1.50, plus
``(B) the applicable supplementary credit amount.
``(2) Applicable supplementary credit amount.--
``(A) In general.--For purposes of paragraph (1),
the applicable supplementary credit amount is $0.01 for
every percentage point above 50 percent for which the
sustainable aviation fuel is certified under subsection
(f) to reduce emissions in comparison with petroleum-
based jet fuel as described in subsections (d)(2)(A) or
(d)(2)(B).
``(B) Maximum supplementary credit amount.--For
purposes of subparagraph (A), the maximum applicable
supplementary credit amount allowable is $0.50.
``(3) 40A exception.--If the biodiesel fuels credit under
section 40A is not in effect for a taxable year, paragraph
(1)(A) shall by applied by substituting `$1.15' for `$1.50'.
``(b) Qualified Mixture.--For purposes of this section, the term
`qualified mixture' means a mixture of sustainable aviation fuel and
kerosene, which--
``(1) is sold by the taxpayer producing such mixture for
use in an aircraft that has fuel uplift in the United States,
or
``(2) is used--
``(A) by the taxpayer producing such mixture, and
``(B) in an aircraft that has fuel uplift in the
United States.
``(c) Sale or Use Must Be in Trade or Business, etc.--Sustainable
aviation fuel used in the production of a qualified mixture shall be
taken into account--
``(1) only if the sale or use described in subsection (b)
is in a trade or business of the taxpayer, and
``(2) for the taxable year in which such sale or use
occurs.
``(d) Sustainable Aviation Fuel.--For purposes of this section, the
term `sustainable aviation fuel' means liquid fuel--
``(1) that--
``(A) consists of synthesized hydrocarbons,
``(B) meets the requirements of--
``(i) ASTM International Standard D7566, or
``(ii) the Fischer Tropsch provisions of
ASTM International Standard D1655, Annex A1,
``(C) is derived from biomass (as such term is
defined in section 45K(c)(3)), waste streams, renewable
energy sources, or gaseous carbon oxides, and
``(D) is not derived from palm fatty acid
distillates, and
``(2) that achieves at least a 50 percent lifecycle
greenhouse gas emissions reduction in comparison with
petroleum-based jet fuel, as determined by a test that shows--
``(A) the fuel production pathway achieves at least
a 50 percent reduction of the aggregate attributional
core lifecycle emissions and the positive induced land
use change values under the lifecycle methodology for
sustainable aviation fuels adopted by the International
Civil Aviation Organization with the agreement of the
United States, or
``(B) the fuel production pathway achieves at least
a 50 percent reduction of the aggregate attributional
core lifecycle greenhouse gas emissions values and the
positive induced land use change values under another
methodology that the Secretary, in consultation with
the Administrator of the Environmental Protection
Agency and the Secretary of Energy working jointly,
determines is--
``(i) reflective of the latest scientific
understanding of lifecycle greenhouse gas
emissions, and
``(ii) as stringent as the requirement
under subparagraph (A).
``(e) Time Limit for Adoption of New Sustainable Aviation Fuel
Emissions Reduction Test.--For purposes of subparagraph (B) of
subsection (d)(2), the Secretary, in consultation with the
Administrator of the Environmental Protection Agency and the Secretary
of Energy working jointly, shall, within 24 months after the date of
the enactment of this section, adopt at least one methodology for
testing lifecycle greenhouse gas emissions that meets the requirements
of such subparagraph.
``(f) Certification Requirements.--
``(1) In general.--No credit shall be allowed under
subsection (a) unless the taxpayer meets certification
requirements demonstrating the sustainable aviation fuel
conforms with one of the lifecycle greenhouse gas emissions
reduction tests under subsection (d)(2).
``(2) Certification requirement for test in (d)(2)(a).--For
purposes of paragraph (1), with respect to certifications based
on the test under subparagraph (A) of subsection (d)(2), the
taxpayer shall obtain from the fuel producer a certification
from a sustainability certification scheme approved by the
International Civil Aviation Organization demonstrating that
the fuel conforms with the Carbon Offsetting and Reduction
Scheme for International Aviation's sustainability criteria and
the traceability and information transmission requirements
approved by the International Civil Aviation Organization with
the agreement of the United States.
``(3) Certification requirements for test in (d)(2)(b).--
For purposes of paragraph (1), with respect to certifications
based on the test under subparagraph (B) of subsection (d)(2)--
``(A) the taxpayer shall obtain from the fuel
producer a certification that the fuel has been
determined by the Environmental Protection Agency to
qualify under the requirements of such subparagraph,
and
``(B) the taxpayer shall obtain from the fuel
producer an additional certification that the fuel
conforms with the sustainability criteria and the
traceability and information transmission requirements
that the Secretary, in consultation with the
Administrator of the Environmental Protection Agency
and the Secretary of Energy working jointly, determines
are equivalent with those necessary to claim emissions
reductions from sustainable aviation fuel use under the
Carbon Offsetting and Reduction Scheme for
International Aviation adopted by the International
Civil Aviation Organization with the agreement of the
United States.
``(g) Termination.--This section shall not apply to any sale or use
after December 31, 2031.''.
(b) Credit Made Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 is amended by striking ``plus'' at
the end of paragraph (32), by striking the period at the end of
paragraph (33) and inserting ``, plus'', and by inserting after
paragraph (33) the following new paragraph:
``(34) the sustainable aviation fuel credit determined
under section 40B.''.
(c) Conforming Amendment.--Section 40A(f) of such Code is amended
by striking paragraph (4).
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
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