Kentucky Gov. Andy Beshear signed new legislation establishing a tax credit aimed at encouraging production and use of sustainable aviation fuel (SAF), part of broader efforts to reduce emissions in the aviation sector. The policy introduces a tiered incentive structure that allows eligible producers or blenders to claim credits based on the environmental performance of the fuel, with higher benefits tied to greater reductions in lifecycle greenhouse gas emissions compared to conventional jet fuel. To qualify, SAF must meet a minimum threshold of emissions reduction, reinforcing the state’s focus on cleaner energy alternatives.
Sustainable aviation fuels are key to energy independence and generate job creation in tech, agriculture and other parts of the economy.
The new Kentucky credit can reach up to $3 per gallon depending on how significantly the fuel lowers emissions, and it is designed to stimulate investment, production, and market growth for SAF within the state. This new policy provides a way to strengthen Kentucky’s role in the emerging biofuels industry while contributing to decarbonization goals in aviation. The legislation aligns with a growing trend of state and federal policies aimed at scaling up sustainable fuel technologies and supporting industries tied to renewable energy development.
Sustainable Aviation Fuel (SAF) is a biofuel used to power aircraft that has similar properties to conventional jet fuel, but with a smaller carbon footprint. SAF, which is made from renewable biomass and waste-based feedstocks, can be used in all existing turbine aircraft, and reduces aviation lifecycle greenhouse gas emissions (GHG) by as much as 80%.
