4AIR’s Take: What Does the “One Big Beautiful Bill” Mean for Aviation Sustainability?
The recently passed U.S. federal spending bill—dubbed the “One Big Beautiful Bill” (OBBB)—includes several wins for aviation: investments in workforce development, air traffic modernization, and more. But it also carries major implications (and opportunities) for business aviation sustainability. Here are three key updates to know:
1. The 45Z Clean Fuel Production Credit was extended—with caveats.
Originally introduced under the Inflation Reduction Act, the 45Z credit incentivizes production of low-carbon fuels, including SAF. The OBBB extends the credit through 2029, but with several important changes:
Feedstock sourcing rules were tightened. Only feedstocks grown or produced in the U.S., Canada, or Mexico will qualify—limiting eligibility for fuels relying on global supply chains.
The value of the SAF credit was reduced. Previously increased from $1 to $1.75, it will drop back to $1 per gallon in 2026, aligning the credit with the same value for Renewable Diesel (RD). Given the cheaper costs of producing RD, this could make other renewable fuels more attractive to producers in the near term—potentially affecting SAF supply growth.
ILUC (indirect land use change) was removed. This factor had previously penalized crop-based fuels in lifecycle emissions calculations. Without it, SAF from crops may earn higher tax credits—but critics argue this could reduce emissions accounting accuracy and increases the discrepancy between US and Global lifecycle accounting, increasing emissions reporting complexity.
While these changes don’t reflect the industry’s ideal structure, the extension of 45Z is still a positive signal: policymakers continue to support SAF as a decarbonization pathway.
2. Shortened 45V Hydrogen Credit timeline puts pressure on eSAF.
The 45V credit supports clean hydrogen production—a key input for power-to-liquid SAF (or eSAF). Under the OBBB, this credit sunsets sooner: only projects that begin construction by the end of 2027 will qualify.
This compressed timeline raises the stakes for SAF developers relying on hydrogen. Projects already underway may continue, but new facilities will need to act quickly to remain eligible.
3. Full expensing of aircraft upgrades could support efficiency improvements.
The OBBB restores 100% bonus depreciation, allowing aircraft owners to immediately write off aircraft purchases and capital expenditures, potentially including some sustainability upgrades.
Take winglets, for example: they improve fuel efficiency, extend range, and enhance takeoff performance. As highlighted by our partners at Aviation Partners, operators may be able to deduct up to 100% of the cost of winglet installation in the year they’re installed, provided the aircraft is primarily used for business. This creates a meaningful tax advantage—and may make previously out-of-reach efficiency upgrades worth reconsidering.
Bottom line for operators:
These policy changes are a mixed bag but overall shows continued support for aviation sustainability. Whether you’re planning capital upgrades or monitoring U.S SAF supply and developments, aviation sustainability progress continues—even as public debate around sustainability grows louder.
You can explore this and other updates in 4AIR’s PolicyWatch.