Sustainable Aviation Fuel Act
Bill: S.1608 | Sponsor: Sen. Whitehouse, Sheldon (D-RI)
Policy area: Energy

Summary:
Sustainable Aviation Fuel Act
This bill establishes targets and standards for reducing greenhouse gas emissions from airplane flights and provides incentives for the production and use of sustainable aviation fuel.
Specifically, this bill establishes a national goal to achieve a net 35% reduction in greenhouse gas emissions from flights by 2035 and net zero emissions by 2050.
The Environmental Protection Agency (EPA) must establish a low carbon fuel standard for aviation fuels. Under the standard, the EPA must set annual targets in order to reduce certain greenhouse gas emissions associated with aviation fuel by at least (1) 20% by 2030, and (2) 50% by 2050.
Beginning in FY2023, the Department of Defense must make a bulk purchase of an amount of sustainable aviation fuel that is not less than 10% of the total amount of aviation fuel procured for operational purposes.
Additionally, the Department of Transportation must implement a program that offers grants and cost-sharing agreements for projects to produce, transport, blend, or store sustainable aviation fuel. The projects must be located in the United States.
Finally, the bill provides tax credits for the production of sustainable aviation fuel.

To support the sustainable aviation fuel market, 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 Aviation Fuel Act''.

SEC. 2. NATIONAL GOAL.

    It is hereby declared that it is the national goal for the United 
States to reach--
            (1) a net 35-percent reduction in greenhouse gas emissions 
        for United States domestic and international aviation flights 
        by 2035, as compared to 2005; and
            (2) net zero greenhouse gas emissions for United States 
        domestic and international aviation flights by 2050.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Sustainable aviation fuel.--The term ``sustainable 
        aviation fuel'' means liquid fuel consisting of synthesized 
        hydrocarbons that--
                    (A) meets the requirements of a Department of 
                Defense specification for military jet fuel or an 
                American Society of Testing and Materials specification 
                for aviation turbine fuel;
                    (B) is derived from qualified feedstock; and
                    (C) is certified by the Environmental Protection 
                Agency Administrator that such fuel--
                            (i) either--
                                    (I) conforms to the standards, 
                                recommended practices, requirements and 
                                criteria, supporting documents, 
                                implementation elements, and any other 
                                technical guidance for sustainable 
                                aviation fuels that are adopted by the 
                                International Civil Aviation 
                                Organization with the agreement of the 
                                United States; or
                                    (II) meets the definition of 
                                ``advanced biofuel'' under section 
                                211(o)(1) of the Clean Air Act (42 
                                U.S.C. 7545(o)(1)), as demonstrated by 
                                compliance with Environmental 
                                Protection Agency implementing 
                                regulations under subpart M of part 80 
                                of title 40, Code of Federal 
                                Regulations; and
                            (ii) achieves at least a 50-percent 
                        reduction in lifecycle greenhouse gas emissions 
                        compared to conventional jet fuel.
            (2) Qualified feedstock.--The term ``qualified feedstock'' 
        means sources of hydrogen and carbon not originating from 
        unrefined or refined petrochemicals.
            (3) Lifecycle greenhouse gas emissions.--The term 
        ``lifecycle greenhouse gas emissions'' means the combined 
        greenhouse gas emissions from feedstock production, collection 
        of feedstock, transportation of feedstock to fuel production 
        facilities, conversion of feedstock to fuel, transportation and 
        distribution of fuel, and fuel combustion in an aircraft 
        engine, as well as from induced land-use change emissions, as 
        calculated using appropriate modeling techniques approved by a 
        regulating authority.
            (4) Induced land-use change emissions.--The term ``induced 
        land-use change emissions'' means the greenhouse gas emissions 
        resulting from the conversion of land to the production of 
        feedstocks and from the conversion of other land due to the 
        displacement of crops or animals for which the original land 
        was previously used, as calculated using appropriate modeling 
        techniques approved by a regulating authority.
            (5) Conventional jet fuel.--The term ``conventional jet 
        fuel'' means liquid hydrocarbon fuel used for aviation that is 
        derived or refined from petrochemicals.

SEC. 4. GRANT PROGRAM.

    (a) In General.--The Secretary of Transportation, in consultation 
with the Administrator of the Environmental Protection Agency, shall 
carry out a competitive grant and cost-sharing agreement program for 
eligible entities to carry out projects located in the United States to 
produce, transport, blend, or store sustainable aviation fuel.
    (b) Selection.--In selecting an eligible entity to receive a grant 
or cost-share agreement under subsection (a), the Secretary shall 
consider--
            (1) the anticipated public benefits of a project proposed 
        by the eligible entity;
            (2) the potential to increase the domestic production and 
        deployment of sustainable aviation fuel;
            (3) the potential greenhouse gas emissions from such 
        project;
            (4) the potential for creating new jobs in the United 
        States;
            (5) the potential net greenhouse gas emissions impact of 
        different feedstocks to produce sustainable aviation fuel on a 
        lifecycle basis, which shall include potential direct and 
        indirect greenhouse gas emissions (including resulting from 
        changes in land use); and
            (6) the proposed utilization of non-Federal contributions 
        by the eligible entity.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated $200,000,000 for each of fiscal years 2022 through 2026 to 
carry out this section.
    (d) Report.--Not later than October 1, 2027, the Secretary shall 
submit to the Committee on Commerce, Science, and Transportation and 
the Committee on Environment and Public Works of the Senate and the 
Committee on Transportation and Infrastructure and the Committee on 
Energy and Commerce of the House of Representatives a report describing 
the results of the grant program under this section. The report shall 
include the following:
            (1) A description of the entities and projects that 
        received grants or other cost-sharing agreements under this 
        section.
            (2) A detailed explanation for why each entity received the 
        type of funding disbursement such entity did.
            (3) A description of whether the program is leading to an 
        increase in the production and deployment of sustainable 
        aviation fuels and whether that increase is enough to keep the 
        United States on track to achieve the goals described in 
        section 2 of this Act.
            (4) A description of the economic impacts resulting from 
        the funding to and operation of the project.
    (e) Eligible Entity Defined.--In this section, the term ``eligible 
entity'' means--
            (1) a State or local government other than an airport 
        sponsor;
            (2) an air carrier;
            (3) an airport sponsor; and
            (4) a person or entity engaged in the production, 
        transportation, blending or storage of sustainable aviation 
        fuel in the United States or feedstocks in the United States 
        that could be used to produce sustainable aviation fuel.

SEC. 5. LOW CARBON AVIATION FUEL STANDARD.

    (a) Establishment of Low Carbon Aviation Fuel Standard.--Section 
211 of the Clean Air Act (42 U.S.C. 7545) is amended by adding at the 
end the following:
    ``(w) Low Carbon Aviation Fuel Standard.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Aviation fuel.--The term `aviation fuel' 
                means fuel that is produced, sold, or dispensed in the 
                United States, for civil or military purposes, for 
                turbine-powered aviation.
                    ``(B) Carbon intensity.--The term `carbon 
                intensity' means the quantity of lifecycle greenhouse 
                gas emissions per unit of fuel energy.
                    ``(C) Credit exchange.--The term `credit exchange' 
                means a central marketplace with established rules and 
                regulations where buyers and sellers meet to conduct 
                trades.
                    ``(D) Fuel standard.--The term `fuel standard' 
                means the low carbon fuel standard established under 
                paragraph (2).
            ``(2) Establishment.--Not later than 1 year after the date 
        of enactment of this subsection, the Administrator shall 
        promulgate regulations to establish a low carbon fuel standard 
        for aviation fuels that requires a reduction in carbon 
        intensity for aviation fuels each calendar year such that by 
        2050, and thereafter, the average carbon intensity of all 
        aviation fuel used annually in the United States is reduced by 
        at least 50 percent, as compared to the average carbon 
        intensity of all aviation fuel used in the United States in 
        2005.
            ``(3) Targets.--In promulgating regulations under paragraph 
        (2), the Administrator shall set a target of a reduction of at 
        least 20 percent in the average carbon intensity of all 
        aviation fuel used annually in the United States by 2030, and 
        of at least 50 percent by 2050, as compared to the average 
        carbon intensity of all aviation fuel used in the United States 
        in 2005.
            ``(4) Requirements.--In promulgating regulations under 
        paragraph (2), the Administrator shall--
                    ``(A) establish a benchmark for the average carbon 
                intensity of aviation fuels for each calendar year, 
                beginning with the first full calendar year that begins 
                2 years after the date of enactment of this subsection, 
                suitable to achieving the targets specified in 
                paragraph (3);
                    ``(B) apply the fuel standard to persons who 
                produce or import aviation fuel;
                    ``(C) establish procedures for calculating the 
                carbon intensity of an aviation fuel, expressed in 
                grams of carbon dioxide equivalent per megajoule, in 
                accordance with--
                            ``(i) the standards, recommended practices, 
                        requirements and criteria, supporting 
                        documents, implementation elements, and any 
                        other technical guidance for sustainable 
                        aviation fuels that are adopted by the 
                        International Civil Aviation Organization with 
                        the agreement of the United States; and
                            ``(ii) any other more stringent accounting 
                        practices determined by the Administrator to be 
                        the best lifecycle greenhouse gas emission 
                        accounting practices, provided that such 
                        practices account for the aggregate quantity of 
                        greenhouse gas emissions (including direct 
                        emissions and significant indirect emissions 
                        such as significant emissions from land use 
                        changes), as determined by the Administrator, 
                        related to the full fuel lifecycle, including 
                        all stages of fuel and feedstock production and 
                        distribution, from feedstock generation or 
                        extraction through the distribution and 
                        delivery and use of the finished fuel to the 
                        ultimate consumer, where the mass values for 
                        all greenhouse gases are adjusted to account 
                        for their relative global warming potential;
                    ``(D) determine how long the calculation of the 
                carbon intensity of an aviation fuel (pursuant to the 
                procedures established under subparagraph (C)), will 
                remain in effect before needing to be reevaluated;
                    ``(E) allow a person described in subparagraph (B), 
                who, for a calendar year, produces or imports aviation 
                fuel--
                            ``(i) that has an average carbon intensity 
                        that is less than the benchmark for average 
                        carbon intensity for that calendar year to, 
                        except as provided in paragraph (8), generate 
                        credits, to be used, or transferred to another 
                        person, to demonstrate compliance with this 
                        subsection; and
                            ``(ii) that has an average carbon intensity 
                        that is greater than the benchmark for average 
                        carbon intensity for that calendar year to 
                        purchase credits to be used to demonstrate 
                        compliance with this subsection;
                    ``(F) determine the--
                            ``(i) appropriate amount of credits 
                        generated and used to demonstrate compliance 
                        pursuant to subparagraph (E); and
                            ``(ii) appropriate conditions, if any, on--
                                    ``(I) the duration of such credits; 
                                and
                                    ``(II) the transfer such credits 
                                through a credit exchange; and
                    ``(G) consult with all relevant stakeholders, 
                including aviation industry groups, renewable fuel 
                industry groups, researchers at institutions of higher 
                education, labor unions, consumer advocates, and any 
                other stakeholders the Administrator determines to be 
                appropriate.
            ``(5) Consultation.--In carrying out this subsection, the 
        Administrator shall consult with the Administrator of the 
        Federal Aviation Administration, the Secretary of Energy, and 
        the Secretary of Agriculture.
            ``(6) Coordination with states.--The Administrator shall, 
        after notice and opportunity for public hearing, waive 
        application of the fuel standard in any State that has adopted 
        a standard for aviation fuels that the Administrator determines 
        is at least as stringent as the fuel standard.
            ``(7) Revision.--If Congress enacts a standard or similar 
        law that the Administrator, in consultation with the 
        Administrator of the Federal Aviation Administration, 
        determines accomplishes the purposes of the fuel standard for 
        sectors of the economy that include the aviation sector, the 
        Administrator may revoke the fuel standard in favor of the 
        other standard or law.
            ``(8) Relationship to renewable fuel program.--No credit 
        may be generated under this subsection with respect to 
        renewable fuel for which a credit is generated under subsection 
        (o).
            ``(9) Report.--Not later than 180 days after the date of 
        enactment of this subsection, the Administrator shall submit to 
        Congress and make publicly available a report describing--
                    ``(A) the status of the development of the fuel 
                standard; and
                    ``(B) the considerations the Administrator is using 
                in developing the fuel standard.''.
    (b) Enforcement.--Section 211(d) of the Clean Air Act (42 U.S.C. 
7545(d)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``or (o) of this section or the 
                regulations'' and inserting ``(o), or (w) of this 
                section or the regulations'';
                    (B) by striking ``or (o) of this section or who 
                fails'' and inserting ``(o), or (w) of this section or 
                who fails''; and
                    (C) by striking ``or (o) of this section which 
                establishes'' and inserting ``(o), or (w) of this 
                section which establishes''; and
            (2) in paragraph (2), by striking ``and (o) of this 
        section'' each place it appears and inserting ``(o), and (w) of 
        this section''.

SEC. 6. PROCUREMENT OF SUSTAINABLE AVIATION FUEL BY THE DEPARTMENT OF 
              DEFENSE.

    (a) In General.--Effective October 1, 2023, the Secretary of 
Defense shall make a bulk purchase of an amount of sustainable aviation 
fuel that is not less than 10 percent of the total amount of aviation 
fuel procured for operational purposes (as defined in section 2922h of 
title 10, United States Code) if--
            (1) the cost of sustainable aviation fuel is competitive 
        with the fully burdened cost of conventional jet fuel available 
        for the same purpose; and
            (2) the sustainable aviation fuel is refined or produced in 
        the United States.
    (b) Blended Fuel.--If the Secretary of Defense purchases 
sustainable aviation fuel that is blended with conventional jet fuel, 
the percentage of sustainable aviation fuel in such blend will be 
counted towards the percentage described in subsection (a).
    (c) Certification.--Before making a purchase under subsection (a), 
the Secretary of Defense or the Secretary concerned (as defined in 
section 101(a)(9) of title 10, United States Code) shall certify that 
the sustainable aviation fuel is suitable for use in aircrafts of the 
Department of Defense.
    (d) Waiver.--
            (1) In general.--Subject to the requirements of paragraph 
        (2), the Secretary of Defense may waive the requirement under 
        subsection (a) for reasons of national security, including the 
        lack of available, qualifying sustainable aviation fuel.
            (2) Notice.--Not later than 30 days after issuing a waiver 
        under this subsection, the Secretary shall submit to the 
        congressional defense committees (as defined in section 
        101(a)(16) of title 10, United States Code) notice of the 
        waiver. Any such notice shall include each of the following:
                    (A) The rationale of the Secretary for issuing the 
                waiver.
                    (B) A certification that the waiver is in the 
                national security interest of the United States.
    (e) Definitions.--The terms ``fully burdened cost'' and 
``operational purposes'' have the meanings given such terms, 
respectively, in section 2922h of title 10, United States Code.

SEC. 7. FEDERAL AVIATION ADMINISTRATION RESEARCH.

    (a) In General.--Section 911(a) of the FAA Modernization and Reform 
Act of 2012 (49 U.S.C. 44504 note) is amended--
            (1) by striking ``assist in the development'' and inserting 
        the following:
            ``(1) assist in the development'';
            (2) by striking ``and other'' and inserting ``, other'';
            (3) by striking the period and inserting ``, and 
        sustainable fuel that can be used without the need to blend 
        with any other type of aviation fuel;''; and
            (4) by adding at the end the following:
            ``(2) promote the efforts of the aviation sector to become 
        a net-zero greenhouse gas emitting sector;
            ``(3) study the climate impacts of non-carbon dioxide 
        greenhouse gas emissions, water vapor, and contrails and ways 
        to minimize such impacts; and
            ``(4) develop a methodology for quantifying the non-carbon 
        dioxide climate impacts of aviation in a lifecycle analysis, 
        including the benefits of sustainable aviation fuel other than 
        the reduction in carbon dioxide emissions.''.
    (b) Definitions.--Section 911 of such Act is amended by adding at 
the end the following:
    ``(e) Definitions.--In this section:
            ``(1) Sustainable aviation fuel.--The term `sustainable 
        aviation fuel' means liquid fuel consisting of synthesized 
        hydrocarbons that--
                    ``(A) is derived from a qualified feedstock; and
                    ``(B) conforms to the standards, recommended 
                practices, requirements and criteria, supporting 
                documents, implementation elements, and any other 
                technical guidance for sustainable aviation fuels that 
                are adopted by the International Civil Aviation 
                Organization with the agreement of the United States.
            ``(2) Qualified feedstock.--The term `qualified feedstock' 
        means sources of hydrogen and carbon not originating from 
        unrefined or refined petrochemicals.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to the Administrator of the Federal Aviation 
Administration $35,000,000 for each of fiscal years 2022 through 2026 
to carry out this section.''.

SEC. 8. DEPARTMENT OF ENERGY RESEARCH.

    (a) In General.--The Secretary of Energy shall carry out a program 
to research the use of cover crops or other crops grown for 
conservation purposes rather than for sale in the production of 
sustainable aviation fuel.
    (b) Collaboration.--In carrying out the program under subsection 
(a), the Secretary shall collaborate with the national laboratories, 
the Department of Agriculture, and industry partners.
    (c) Definitions.--In this section:
            (1) Sustainable aviation fuel.--The term ``sustainable 
        aviation fuel'' means liquid fuel consisting of synthesized 
        hydrocarbons that--
                    (A) is derived from a qualified feedstock; and
                    (B) conforms to the standards, recommended 
                practices, requirements and criteria, supporting 
                documents, implementation elements, and any other 
                technical guidance for sustainable aviation fuels that 
                are adopted by the International Civil Aviation 
                Organization with the agreement of the United States.
            (2) National laboratory.--The term ``national laboratory'' 
        has the meaning given the term in section 2(3) of the Energy 
        Policy Act of 2005 (42 U.S.C. 15801(3)).
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.

SEC. 9. 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.--For purposes of section 38, the sustainable 
aviation fuel credit for the taxable year is, with respect to each 
gallon of neat sustainable aviation fuel blending component used by the 
taxpayer in the production of a qualified mixture--
            ``(1) $1.50, plus
            ``(2) the applicable supplementary credit amount.
    ``(b) Applicable Supplementary Credit Amount.--
            ``(1) In general.--For purposes of subsection (a), the 
        applicable supplementary credit amount is $0.25, reduced (but 
        not below zero) by the emissions reduction certification 
        amount.
            ``(2) Emissions reduction certification amount.--For 
        purposes of paragraph (1), the emissions reduction 
        certification amount is $0.01 for every 2 percentage points 
        below 100 percent for which the neat sustainable aviation fuel 
        blending component is certified to reduce emissions in 
        comparison with conventional fuel under section 10 of the 
        Sustainable Aviation Fuel Act.
    ``(c) Neat Sustainable Aviation Fuel Blending Component.--For 
purposes of this section, the term `neat sustainable aviation fuel 
blending component' means unblended liquid fuel--
            ``(1) that consists of synthesized hydrocarbons, and
            ``(2) that--
                    ``(A) meets the requirements of a Department of 
                Defense specification for military jet fuel or an 
                American Society of Testing and Materials specification 
                for aviation turbine fuel,
                    ``(B) is derived from qualified feedstock, and
                    ``(C) is certified by the Environmental Protection 
                Agency to--
                            ``(i) either--
                                    ``(I) comply with such standards of 
                                the International Civil Aviation 
                                Organization for sustainable aviation 
                                fuels as have been adopted by the 
                                United States, or
                                    ``(II) meet the definition of 
                                advanced biofuel under section 
                                211(o)(1)(B) of the Clean Air Act (42 
                                U.S.C. 7545(o)(1)(B)), and
                            ``(ii) achieve at least a 50-percent 
                        reduction in lifecycle greenhouse gas emissions 
                        in comparison with conventional jet fuel.
    ``(d) Qualified Mixture.--For purposes of this section, the term 
`qualified mixture' means a mixture of neat sustainable aviation fuel 
blending component and kerosene, which--
            ``(1) is used by the taxpayer as aircraft fuel in a trade 
        or business, or
            ``(2) is sold by the taxpayer to any person for use as 
        aircraft fuel.
    ``(e) Definitions.--For purposes of this section, the terms 
`qualified feedstock', `lifecycle greenhouse gas emissions', and 
`induced land-use change emissions' have the meanings given such terms 
in section 3 of the Sustainable Aviation Fuel Act.
    ``(f) Sale or Use Must Be in Trade or Business, etc.--Neat 
sustainable aviation fuel blending component used in the production of 
a qualified mixture shall be taken into account--
            ``(1) only if the sale or use described in subsection (d) 
        is in a trade or business of the taxpayer or other person, and
            ``(2) for the taxable year in which such sale or use 
        occurs.
    ``(g) Application of Section.--This section shall only apply to 
fuel produced before January 1, 2032.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit) 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 fuel produced after December 31, 2021.

SEC. 10. EPA CERTIFICATION OF NEAT SUSTAINABLE AVIATION FUEL BLENDING 
              COMPONENT.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Administrator of the Environmental 
Protection Agency shall promulgate regulations, for purposes of section 
40B of the Internal Revenue Code of 1986, to certify--
            (1) whether a liquid fuel produced by a fuel producer 
        qualifies as a neat sustainable aviation fuel blending 
        component under subsection (c)(2)(C) of such section; and
            (2) the percent reduction of greenhouse gas emissions from 
        a gallon of neat sustainable aviation fuel blending component 
        produced by a fuel producer in comparison to the greenhouse gas 
        emissions from a gallon of conventional jet fuel.
    (b) Considerations and Inclusions.--In promulgating regulations 
under subsection (a), the Administrator of the Environmental Protection 
Agency shall--
            (1) establish procedures for fuel producers to apply to, 
        and receive from, the Environmental Protection Agency--
                    (A) a certification, with respect to liquid fuel 
                produced by such fuel producer, that such fuel 
                qualifies as a neat sustainable aviation fuel blending 
                component under section 40B(c)(2)(C) of the Internal 
                Revenue Code of 1986; and
                    (B) if the fuel described in (A) so qualifies, a 
                certification of the percent reduction of greenhouse 
                gas emissions from a gallon of such fuel in comparison 
                to the greenhouse gas emissions from a gallon of 
                conventional jet fuel;
            (2) determine methods for calculating greenhouse gas 
        emissions from a gallon of conventional jet fuel, and for 
        reviewing and updating such calculations every three years;
            (3) for purposes of calculating the greenhouse gas 
        emissions from a liquid fuel that does or may qualify as a neat 
        sustainable aviation fuel blending component, determine whether 
        to use--
                    (A) the Sustainability Certification Schemes 
                approved by the International Civil Aviation 
                Organization with agreement by the United States; or
                    (B) other methods that take into account lifecycle 
                greenhouse gas emissions from the applicable fuel 
                pathway;
            (4) require different certifications for each fuel pathway 
        used by a fuel producer;
            (5) determine how long a certification under subsection 
        (a)(1) or (a)(2) will be in effect for a fuel producer; and
            (6) include procedures for--
                    (A) notifying a fuel producer and the Internal 
                Revenue Service that a certification under subsection 
                (a) will expire, at least 180 days before such 
                expiration;
                    (B) expedited review and recertification under 
                subsection (a), during the 180-day period described in 
                subparagraph (A), of the greenhouse gas emissions from 
                a neat sustainable aviation fuel blending component 
                produced by a fuel producer; and
                    (C) submission of a certification under subsection 
                (a) to the Internal Revenue Service.
    (c) Definitions.--For purposes of this section--
            (1) Fuel pathway.--The term ``fuel pathway'' means the 
        production process through which feedstock is converted into 
        neat sustainable aviation fuel blending component, and includes 
        the type of feedstock, the region in which such feedstock is 
        located, the harvesting and collection method of such 
        feedstock, the transportation of such feedstock to a fuel 
        producing facility, and the method by which such feedstock is 
        converted into neat sustainable aviation fuel blending 
        component.
            (2) Fuel producer.--The term ``fuel producer'' means a 
        person or entity engaged in the production of neat sustainable 
        aviation fuel blending component.

SEC. 11. SUSTAINABLE AVIATION FUEL PRODUCTION PROPERTY ADDED TO ENERGY 
              CREDIT.

    (a) In General.--Section 48 of the Internal Revenue Code of 1986 is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)(A)(i)--
                            (i) in subclause (III), by striking 
                        ``and'', and
                            (ii) by adding at the end the following new 
                        subclause:
                                    ``(V) sustainable aviation fuel 
                                production property, and'',
                    (B) in paragraph (3)(A), by striking ``or'' at the 
                end of clause (vi), inserting ``or'' at the end of 
                clause (vii), and by adding at the end the following 
                new clause:
                            ``(viii) sustainable aviation fuel 
                        production property,'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(8) Phaseout for sustainable aviation fuel production 
        property.--In the case of any energy property described in 
        paragraph (3)(A)(viii) the construction of which begins before 
        January 1, 2035, the energy percentage determined under 
        paragraph (2) shall be equal to--
                    ``(A) in the case of any property the construction 
                of which begins after December 31, 2026, and before 
                January 1, 2028, 24 percent,
                    ``(B) in the case of any property the construction 
                of which begins after December 31, 2027, and before 
                January 1, 2029, 18 percent, and
                    ``(C) in the case of any property the construction 
                of which begins after December 31, 2028, and before 
                January 1, 2035, 12 percent.'', and
            (2) in subsection (c), by adding at the end the following 
        new paragraph:
            ``(5) Sustainable aviation fuel production property.--
                    ``(A) In general.--The term `sustainable aviation 
                fuel production property' means--
                            ``(i) property which produces sustainable 
                        aviation fuel (as defined in section 40B(b)) 
                        from qualified feedstock (as defined in section 
                        40B(d)), or
                            ``(ii) property directly related to 
                        enabling the production or distribution of 
                        sustainable aviation fuel.
                    ``(B) Recapture of credit.--The Secretary shall, by 
                regulations, provide for recapturing the benefit of any 
                credit allowable under subsection (a)(3)(viii) with 
                respect to any sustainable aviation fuel production 
                property if the sustainable aviation fuel production of 
                such property comprises less than 80 percent of the 
                total fuel production of such property in any of the 5 
                taxable years immediately following the taxable year in 
                which such property was placed in service.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to fuel produced after December 31, 2021.
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