Purpose

This bill changes who can qualify for Minnesota’s sustainable aviation fuel (SAF) tax credit and tightens the rules around what counts as SAF. It updates the definitions used to determine eligibility and sets specific environmental performance standards that SAF must meet to qualify for the credit.

Main Provisions

• Amends Minnesota Statutes 2024, section 41A.30, subdivision 1, to redefine terms related to the SAF credit.
• Defines “sustainable aviation fuel” as a liquid fuel derived from biomass (not palm fatty acid distillates) that achieves at least a 50% reduction in life cycle greenhouse gas (GHG) emissions compared with petroleum-based aviation fuels, using either:
  • The most recent Argonne National Laboratory GREET model to measure life cycle emissions, or
  • The life cycle method adopted by the International Civil Aviation Organization (ICAO), with U.S. agreement, which accounts for core life cycle emissions and any positive induced land use change.
• Defines “qualifying taxpayer” as a taxpayer engaged in producing SAF or blending SAF with aviation gasoline or jet fuel.
• Excludes certain SAF producers from eligibility:
  • A taxpayer that, by contract, provides air transportation services for a federal agency conducting immigration enforcement activities in the taxable year.
  • A taxpayer that sells SAF to an air transportation services business described in the clause above.
• Keeps references to key terms:
  • Aircraft, aviation gasoline, jet fuel (as defined in related statutes).
  • Biomass as the source material for SAF (per defined biomass provisions).
  • The “commissioner” refers to the commissioner of agriculture.

Definitions and Eligibility Details

• SAF must be produced from biomass (not palm fatty acid distillates) and meet the 50% life cycle GHG reduction threshold.
• The 50% reduction can be demonstrated via:
  • GREET model calculations (latest version), or
  • ICAO methodology with U.S. adoption, including consideration of land use changes where applicable.
• The bill preserves existing definitions for aviation-related fuels and aircraft, while explicitly tying SAF eligibility to the life cycle performance standard and feedstock restrictions.

Notable Changes to the Law

• Adds a strict 50% life cycle GHG reduction requirement for SAF to qualify for the credit, with measurement via GREET or ICAO methodology.
• Prohibits SAF derived from palm fatty acid distillates from qualifying for the credit.
• Introduces eligibility exclusions based on contractual relationships with federal immigration enforcement and the nature of SAF sales to certain air transportation service businesses.
• Expands and clarifies definitions (SAF, qualifying taxpayer, biomass, etc.) to align with the new eligibility criteria.

Potential Impacts

• Shifts which SAF producers can claim the credit, potentially reducing eligibility for some producers that rely on palm-derived feedstocks or have institutional contracts with immigration-enforcement-related air transport.
• Encourages higher environmental performance by requiring a minimum 50% life cycle GHG reduction, using established measurement frameworks (GRE and ICAO).
• Provides clearer criteria for what constitutes SAF and who qualifies, potentially affecting project planning, feedstock sourcing, and accounting for the credit.

Compliance Considerations

• SAF projects must verify life cycle GHG reductions using GREET (latest version) or ICAO methodology with U.S. agreement.
• Feedstock choices are constrained to non-palm sources derived from biomass.
• Entities must review contractual arrangements and customers (air transportation service businesses) to determine eligibility under the new exclusions.

Relevant Terms - sustainable aviation fuel (SAF) - life cycle greenhouse gas emissions (life cycle GHG reductions) - GREET model (Argonne National Laboratory) - International Civil Aviation Organization (ICAO) - biomass - palm fatty acid distillates - aviation fuel (jet fuel, aviation gasoline) - qualifying taxpayer - air transportation services business - federal agency - immigration enforcement - commissioner of agriculture - Minnesota Statutes 41A.30 - Sunderland (biomass definitions per section 41A.15)