I 

117TH CONGRESS 

1ST SESSION H. R. 3440 

To amend the Internal Revenue Code of 1986 to provide a tax credit for 

sustainable aviation fuel, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 20, 2021 

Mr. SCHNEIDER (for himself, Mr. KILDEE, and Ms. BROWNLEY) introduced 

the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax credit for sustainable aviation fuel, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Sustainable Skies 

5 Act’’. 

6 SEC. 2. SUSTAINABLE AVIATION FUEL CREDIT. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 40A the fol10 lowing new section: 


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1 ‘‘SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT. 

2 ‘‘(a) IN GENERAL.— 

3 ‘‘(1) CREDIT AMOUNT.—For purposes of sec4 tion 38, the sustainable aviation fuel credit for the 

5 taxable year is, with respect to each gallon of sus6 tainable aviation fuel which is used by the taxpayer 

7 in the production of a qualified mixture— 

8 ‘‘(A) a base credit amount of $1.50, plus 

9 ‘‘(B) the applicable supplementary credit 

10 amount. 

11 ‘‘(2) APPLICABLE SUPPLEMENTARY CREDIT

12 AMOUNT.— 

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the applicable supplementary credit 

15 amount is $0.01 for every percentage point 

16 above 50 percent for which the sustainable avia17 tion fuel is certified under subsection (f) to re18 duce emissions in comparison with petroleum19 based jet fuel as described in subsections 

20 (d)(2)(A) or (d)(2)(B). 

21 ‘‘(B) MAXIMUM SUPPLEMENTARY CREDIT

22 AMOUNT.—For purposes of subparagraph (A), 

23 the maximum applicable supplementary credit 

24 amount allowable is $0.50. 

25 ‘‘(3) 40A EXCEPTION.—If the biodiesel fuels 

26 credit under section 40A is not in effect for a taxVerDate Sep 11 2014 05:30 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3440.IH H3440

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1 able year, paragraph (1)(A) shall by applied by sub2 stituting ‘$1.15’ for ‘$1.50’. 

3 ‘‘(b) QUALIFIED MIXTURE.—For purposes of this 

4 section, the term ‘qualified mixture’ means a mixture of 

5 sustainable aviation fuel and kerosene, which— 

6 ‘‘(1) is sold by the taxpayer producing such 

7 mixture for use in an aircraft that has fuel uplift in 

8 the United States, or 

9 ‘‘(2) is used— 

10 ‘‘(A) by the taxpayer producing such mix11 ture, and 

12 ‘‘(B) in an aircraft that has fuel uplift in 

13 the United States. 

14 ‘‘(c) SALE OR USE MUST BE IN TRADE OR BUSI15 NESS, ETC.—Sustainable aviation fuel used in the produc16 tion of a qualified mixture shall be taken into account— 

17 ‘‘(1) only if the sale or use described in sub18 section (b) is in a trade or business of the taxpayer, 

19 and 

20 ‘‘(2) for the taxable year in which such sale or 

21 use occurs. 

22 ‘‘(d) SUSTAINABLE AVIATION FUEL.—For purposes 

23 of this section, the term ‘sustainable aviation fuel’ means 

24 liquid fuel— 

25 ‘‘(1) that— 


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1 ‘‘(A) consists of synthesized hydrocarbons, 

2 ‘‘(B) meets the requirements of— 

3 ‘‘(i) ASTM International Standard 

4 D7566, or 

5 ‘‘(ii) the Fischer Tropsch provisions of 

6 ASTM International Standard D1655, 

7 Annex A1, and 

8 ‘‘(C) is derived from biomass (as such term 

9 is defined in section 45K(c)(3)), waste streams, 

10 renewable energy sources, or gaseous carbon ox11 ides, 

12 ‘‘(D) is not derived from palm fatty acid 

13 distillates, and 

14 ‘‘(2) that achieves at least a 50 percent lifecycle 

15 greenhouse gas emissions reduction in comparison 

16 with petroleum-based jet fuel, as determined by a 

17 test that shows— 

18 ‘‘(A) the fuel production pathway achieves 

19 at least a 50 percent reduction of the aggregate 

20 attributional core lifecycle emissions and the 

21 positive induced land use change values under 

22 the lifecycle methodology for sustainable avia23 tion fuels adopted by the International Civil 

24 Aviation Organization with the agreement of 

25 the United States, or 


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1 ‘‘(B) the fuel production pathway achieves 

2 at least a 50 percent reduction of the aggregate 

3 attributional core lifecycle greenhouse gas emis4 sions values and the positive induced land use 

5 change values under another methodology that 

6 the Secretary, in consultation with the Adminis7 trator of the Environmental Protection Agency, 

8 determines is— 

9 ‘‘(i) reflective of the latest scientific 

10 understanding of lifecycle greenhouse gas 

11 emissions, and 

12 ‘‘(ii) as stringent as the requirement 

13 under subparagraph (A). 

14 ‘‘(e) TIME LIMIT FOR ADOPTION OF NEW SUSTAIN15 ABLE AVIATION FUEL EMISSIONS REDUCTION TEST.— 

16 For purposes of subparagraph (B) of subsection (d)(2), 

17 the Secretary, in consultation with the Administrator of 

18 the Environmental Protection Agency, shall, within 24 

19 months after the date of the enactment of this section, 

20 adopt at least one methodology for testing lifecycle green21 house gas emissions that meets the requirements of such 

22 subparagraph. 

23 ‘‘(f) CERTIFICATION REQUIREMENTS.— 

24 ‘‘(1) IN GENERAL.—No credit shall be allowed 

25 under subsection (a) unless the taxpayer meets cerVerDate Sep 11 2014 05:30 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3440.IH H3440

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1 tification requirements demonstrating the sustain2 able aviation fuel conforms with one of the lifecycle 

3 greenhouse gas emissions reduction tests under sub4 section (d)(2). 

5 ‘‘(2) CERTIFICATION REQUIREMENT FOR TEST

6 IN (D)(2)(A).—For purposes of paragraph (1), with 

7 respect to certifications based on the test under sub8 paragraph (A) of subsection (d)(2), the taxpayer 

9 shall obtain from the fuel producer a certification 

10 from a sustainability certification scheme approved 

11 by the International Civil Aviation Organization 

12 demonstrating that the fuel conforms with the Car13 bon Offsetting and Reduction Scheme for Inter14 national Aviation’s sustainability criteria and the 

15 traceability and information transmission require16 ments approved by the International Civil Aviation 

17 Organization with the agreement of the United 

18 States. 

19 ‘‘(3) CERTIFICATION REQUIREMENTS FOR TEST

20 IN (D)(2)(B).—For purposes of paragraph (1), with 

21 respect to certifications based on the test under sub22 paragraph (B) of subsection (d)(2)— 

23 ‘‘(A) the taxpayer shall obtain from the 

24 fuel producer a certification that the fuel has 

25 been determined by the Environmental ProtecVerDate Sep 11 2014 05:30 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3440.IH H3440

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1 tion Agency to qualify under the requirements 

2 of such subparagraph, and 

3 ‘‘(B) the taxpayer shall obtain from the 

4 fuel producer an additional certification that 

5 the fuel conforms with the sustainability criteria 

6 and the traceability and information trans7 mission requirements that the Secretary, in 

8 consultation with the Administrator of the En9 vironmental Protection Agency, determines are 

10 equivalent with those necessary to claim emis11 sions reductions from sustainable aviation fuel 

12 use under the Carbon Offsetting and Reduction 

13 Scheme for International Aviation adopted by 

14 the International Civil Aviation Organization 

15 with the agreement of the United States. 

16 ‘‘(g) TERMINATION.—This section shall not apply to 

17 any sale or use after December 31, 2031.’’. 

18 (b) CREDIT MADE PART OF GENERAL BUSINESS

19 CREDIT.— Section 38(b) (relating to current year busi20 ness credit) is amended by striking ‘‘plus’’ at the end of 

21 paragraph (32), by striking the period at the end of para22 graph (33) and inserting ‘‘, plus’’, and by inserting after 

23 paragraph (33) the following new paragraph: 

24 ‘‘(34) the sustainable aviation fuel credit deter25 mined under section 40B.’’. 


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1 (c) CONFORMING AMENDMENT.—Section 40A(f) of 

2 such Code is amended by striking paragraph (4). 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years ending after the 

5 date of the enactment of this Act. 

Æ 


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