Platts proposes using California LCFS data to calculate SAF tax credit

Platts, part of S&P Global Commodity Insights, is proposing to use California's Low Carbon Fuel Standard data to incorporate the new federal tax credit for sustainable aviation fuel in its US West Coast SAF without credits prices, effective Jan. 3, 2023.

The new tax credit was passed under the Inflation Reduction Act and grants a federal tax credit of $1.25-$1.75/gal, depending on the greenhouse gas emissions reduction of the SAF. The new SAF tax credit replaces blenders' qualification for the existing $1/gal blender's tax credit for biodiesel and renewable diesel.

Platts proposes using data from the California Air Resources Board under the states Low Carbon Fuel Standard to calculate the emissions reduction of the SAF consumed in California.

Platts currently calculates the average carbon intensity of SAF consumed in California on a quarterly basis using the quarterly LCFS reporting data from the California Air Resources Board. Platts proposes dividing that average carbon intensity by the jet fuel carbon intensity baseline of 89.37 gCO2e/MJ from the Air Resources Board to calculate the emissions reduction.

Platts would then add $0.01/gal to $1.25/gal for every percentage point reduction above 50% up to a maximum of $1.75/gal, in line with the methodology in section 13202 of the Inflation Reduction Act. SAF must reduce GHG emissions by at least 50% to qualify for the tax credit.

Please send any feedback, questions or comments to Americas_ags@spglobal.com and pricegroup@spglobal.com by Oct. 28, 2022.

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