US SAF policy At a federal level, the 45Z Inflation Reduction Act (IRA) tax credits for SAF have been renewed as part of the One Big Beautiful Bill, but only for fuels produced from US, Mexican and Canadian feedstocks. This is part of a wider US government effort to scale up domestic feedstock and boost the American farming and biofuel industry, contributing to US energy security and “dominance”. Across the clean fuels industry, wider proposals from the Environmental Protection Agency to raise its biofuels mandate to an all-time high in 2026 (65% higher than in 2025) and 2027 (75% higher than in 2025), also contribute to this vision, with these rules expected to be finalized in the first quarter of 2026.67,68 Final biofuels blending quotas are expected to remain close to the initial proposal, with expectations among industry that penalties for imports of renewable fuels and feedstocks may be reduced, over fears raised by US refiners that this could disrupt fuel markets and raise costs.69 SAF incentives extended until 2029 Meanwhile, for SAF, new proposals and guidance released by the US Department of the Treasury and the Internal Revenue Service in February 2026 extend the 45Z tax credits to 31 December 2029, providing a longer window for producers to benefit from the incentives than originally expected.70 Despite continuation of these incentives, the higher rates of support for SAF (up to $1.75/gallon based on the carbon intensity of the fuel) are now expected to be phased out from this year, to level the playing field with other biofuels for road transport. This means the value of SAF credits will be capped at $1/gallon, like all other fuels. The reduction in support was expected by industry and had already prompted a new bi-partisan bill – the Securing America’s Fuels Act introduced in December 2025 – to restore the initial level of credit support.71 Additionally, new guidance on how to calculate the life-cycle carbon intensity of alternative fuels no longer considers the impact of indirect land use change (ILUC). Not including ILUC in life-cycle emissions calculations will increase incentives for US-grown feedstocks such as corn and soybeans while the tax credit remains proportional to the carbon intensity of the fuel, but will also reward new feedstocks such as canola oil, which to date has failed to qualify for incentives because of its ILUC impact. These changes seem to favour biofuel pathways, such as ethanol and alcohol-to- jet production, over other waste-based and e-SAF production pathways. Tax credits for renewables and clean hydrogen face phase-out Whether power-to-liquids can remain competitive is linked to the IRA’s 45V clean hydrogen production tax credit, as well as to the changes in government support for renewable electricity. Federal clean hydrogen tax credits will only remain available for hydrogen production facilities beginning construction before 2028, rather than by 2032 as originally provisioned. Tax credits for wind and solar energy, however, will be phased out for projects whose construction begins after July 2026. This is likely to make it harder for electrolytic hydrogen developers to secure the competitive clean electricity they need to produce green hydrogen. The renewal of the IRA’s 45Q incentives for carbon capture and storage (up to $85 per metric tonne of CO2 captured and stored) imply that blue hydrogen production could remain an attractive option. Although it’s consistent with pro-farmer support that also incentivizes no-till practices, cover crop cultivation, and reductions in nutrient overuse, the U.S. government’s choice to eliminate ILUC for SAF is still controversial. From a sustainability standpoint, the policy will create inconsistency with ICAO and EU requirements. However, it could also encourage other regions to incorporate regenerative agriculture practices into their policies, along with the system to verify those actions. Ultimately, the demand from airlines and their corporate customers will determine if SAF producers adopt these new feedstocks. Adam Klauber, Chief Sustainability Officer, World Energy Global Aviation Sustainability Outlook 2026 23