US §45Z post-OBBB.
The Clean Fuel Production Credit replaced the IRA §40B blender credit in 2025. The One Big Beautiful Bill (OBBB) tightened the SAF bracket · capped at $1.00 per gallon, sunset in 2029. What that means for the US SAF investment case, and how it stacks up against Europe.
US Inflation Reduction Act SAF Credit
Effective 2023-01-01
Section 40B and 13203 of the IRA provide a blenders tax credit of $1.25-$1.75 per gallon for SAF that achieves at least 50% lifecycle GHG reduction.
How we got here
From 2023 through the end of 2024, US SAF economics ran on §40B of the Internal Revenue Code · the blender's credit introduced under the Inflation Reduction Act. §40B paid $1.25 per gallon as a base for SAF meeting a 50% lifecycle GHG reduction, with supplemental 1-cent increments for each additional percentage point up to a maximum of $1.75/gallon at 100% GHG reduction. The credit was attached to the blender rather than the producer, and could be claimed against excise tax liability.
On 1 January 2025 that regime ended. §45Z · the Clean Fuel Production Credit took over · different structure, different payer, different cap. Unlike §40B, §45Z is a production credit (paid to the facility that makes the fuel, not the blender). It covers all transportation fuels with lifecycle emissions under 50 kgCO₂e/mmBTU, with SAF receiving a higher bracket than ground transport fuels to reflect the larger cost gap versus fossil jet.
The One Big Beautiful Bill Act (OBBB, enacted 2025) is the near-term wildcard. Among other changes, it tightened the §45Z SAF bracket to a $1.00/gallon cap and brought the expiration forward to 31 December 2029. Further OBBB-driven amendments are actively being debated in Congress.
Scope and numbers · who qualifies
The eligibility gate has three components: (1) the fuel must be produced at a facility within the United States, (2) the fuel's lifecycle GHG score (via the GREET model or an approved equivalent) must place it in the SAF-eligible bracket, and (3) the producer must hold registration under §4101 as a qualified facility. The lifecycle assessment methodology is the single biggest operational question for producers · GREET updates have moved individual pathways by ±10% in past revisions.
The $1/gallon cap, worked
Under the post-OBBB rules, a SAF pathway with a 70% lifecycle GHG reduction receives the full $1.00/gallon credit · the cap is the binding constraint, not the GHG bonus formula that applied under §40B. For comparison, §40B would have paid that same pathway $1.45/gallon (base $1.25 + 20¢ supplemental for the 20 points above 50% reduction).
Post-OBBB §45Z credit per gallon of SAF = min(formula_value, $1.00)
The practical effect: pathways with GHG reductions significantly above 50% no longer receive marginal incentive to push lower. A PtL pathway at 90% reduction and a HEFA pathway at 65% reduction both receive $1.00/gallon · an economic narrowing that weakens the US support for deep-decarbonisation pathways relative to the pre-OBBB landscape.
How it compares to EU/UK mandates
| US §45Z | ReFuelEU | UK SAF Mandate | |
|---|---|---|---|
| Instrument type | Production tax credit | Binding blend mandate | Blend mandate + RCM backstop |
| Demand pull | None · supply-side only | Legal demand floor | Legal demand floor + revenue certainty |
| Value signal | $1.00/gal (~$330/t) | Penalty-enforced demand, no explicit value | £4.70/L buy-out (~$6.00/L) |
| Favors e-SAF? | No · cap neutralises GHG bonus | Yes · 1.2-35% sub-mandate | Indirectly via RCM for PtL |
| Certainty horizon | To 2029 | To 2050 | To 2040 |
Structurally: the US provides a short-dated supply-side subsidy with a binding cap; Europe provides long-dated, demand-side legal certainty. The two are complements, not substitutes. Producers optimizing for bankability tend to site PtL in Europe (where the 25-year demand is legally guaranteed) and HEFA in the US (where the existing refining base + lipid supply makes §45Z economics workable at scale).
Primary source
US Congress · external reference →
Secondary references: IRS Clean Fuel Production Credit landing page · Argonne GREET model (lifecycle emissions basis).