The Michigan Senate Committee on Energy and Environment on March 14 held a hearing to consider legislation introduced last year that aims to create a tax credit to support the purchase of sustainable aviation fuel (SAF). 

The legislation, SB 447, was introduced by State Sen. Sam Singh on June 28, 2023, and referred to the Seante Committee on Energy and Environment. The committee on March 14 received testimony in support of the bill from a variety of stakeholders, including the Coalition for Renewable Natural Gas (RNG Coalition), the Michigan Agri Business Association, Clean Fuels Michigan, Delta Air Lines, Twelve Benefit Corp., Growth Energy, the American Biogas Council, and Gevo Inc.

SB 447 aims to allow taxpayers engaged in the use of SAF to claim a tax credit of $1 per gallon of SAF purchased in the state during the tax year by a business for use as fuel for flights departing the state. The credit would increase by 2 cents for each additional 1% reduction in carbon dioxide equivalent emissions above 50%, with a cap set at $2 per gallon. 

“Sustainable aviation fuel is the single most important tool in our journey toward achieving net zero carbon emissions by 2050, and SB 447 represents a key example of how we can turn local solutions into global solutions to protect the health of our planet,” said Amelia DeLuca, chief sustainability officer for Delta Air Lines. “The beauty of SAF is that it is available now and can be used in our industry’s existing fuel infrastructure. It’s a drop-in fuel that can be blended up to 50 percent today with even higher blends possible in the immediate future.” 

“SB 447 is pivotal legislation that fosters a market for sustainable aviation fuel (SAF) in the Midwest,” added Kent Hartwig, director of state government affairs at Gevo. “This initiative supports producers like Gevo in expanding production capabilities by providing outlets for fuel beyond the West Coast. Such forward-thinking policies are instrumental in transforming airports like DTW and others across Michigan into hubs for cleaner burning, low-carbon, renewable aviation fuel.”

In its testimony, the RNG Coalition said the bill provides a strong incentive for adopting SAF, which will help the state improve air quality, generate revenue and create jobs in rural areas, and defray the cost of procuring SAF. By dovetailing the state incentive with existing federal incentives, the RNG Coalition also noted the bill would also make Michigan a desirable location for investment in SAF production facilities.

Growth Energy said that SB 447 offers an opportunity for Michigan farmers and biofuel producers to benefit from the still-nascent SAF market, which is poised to skyrocket in the coming decades. The group also noted that the bill would enhance Michigan’s status as a leading state for corn and ethanol production while allowing the state to capitalize on the economic and employment benefits of the low-carbon economy. 

According to the ABC, SB 447 represents an innovative and complementary energy policy that utilizes industry-standard lifecycle emissions accounting to ensure fuels deliver the environmental benefits intended. The group also noted that Michigan has vast resources to produce biogas, which can be used as an input in SAF production. In addition, the ABC noted that the development of infrastructure that can recycle organic waste creates a huge opportunity for new investments and jobs while also improving air quality, creating healthier soil and protecting waterways from nutrient runoff. 

Full copies of written testimony are available on the Michigan Senate Energy and Environment Committee website.