Purpose

• The bill changes how Minnesota’s sustainable aviation fuel (SAF) tax credit works. It aims to strengthen environmental standards for SAF and to exclude certain taxpayers from qualifying for the credit. Specifically, it adds definitions and criteria for what counts as SAF and who can qualify, and it creates exclusions for taxpayers connected to immigration-enforcement activities.

Main Provisions

• Qualifying taxpayer definition

  • A qualifying taxpayer is a taxpayer defined in Minnesota law who is engaged in:
  • Producing sustainable aviation fuel, or
  • Blending sustainable aviation fuel with aviation gasoline or jet fuel.

• Definition of sustainable aviation fuel (SAF)

  • SAF must be:
  • Liquid fuel derived from biomass (biomass is defined in state law),
  • Not derived from palm fatty acid distillates,
  • Able to achieve at least a 50% life cycle greenhouse gas (GHG) emissions reduction compared with petroleum-based aviation fuel (gasoline, turbine fuel, or jet fuel).
  • How the 50% reduction is determined:
  • Option 1: The fuel production pathway shows a 50%+ life cycle GHG reduction using the most recent Argonne National Laboratory GREET model, reflecting reduced emissions throughout production.
  • Option 2: The fuel production pathway shows a 50%+ reduction in aggregate attributional core life cycle emissions and the positive induced land use change values, using the life cycle methodology for SAF adopted by the ICAO with U.S. agreement.
  • Other terminology:
  • The emissions test accounts for reduced emissions across the fuel’s production process.

• Exclusions (to limit who can qualify)

  • A taxpayer does not qualify if they:
  • Contract to provide air transportation services for a federal agency conducting activities related to immigration enforcement at any time during the taxable year, or
  • Sell SAF to an air transportation services business described in the above clause (i.e., the immigrant-enforcement contracting entity or its related businesses).

• Related definitions and references

  • The bill aligns with existing terms such as aircraft, aviation gasoline, jet fuel, and the “commissioner” (agriculture commissioner) for administering the provisions.
  • SAF must meet the biomass definition and the feedstock exclusions (not palm fatty acid distillates).

Significant Changes to Existing Law

• Adds new criteria for SAF eligibility under the Minnesota tax credit program.
• Introduces explicit 50% life cycle GHG reduction standards for SAF, using GREET or ICAO methodologies to determine eligibility.
• Establishes a clear exclusion list for taxpayers connected to immigration-enforcement activities, narrowing who can claim the SAF credit.
• Broadly redefines who qualifies as a SAF producer or blender (qualifying taxpayer) and ties eligibility to specific environmental performance benchmarks.

Practical Implications

• Environmental focus: The bill strengthens the environmental performance requirements for SAF eligible for the credit, emphasizing life cycle GHG reductions and recognized modeling standards.
• Eligibility narrowing: Taxpayers involved with federal immigration enforcement activities (or supplying SAF to such entities) would no longer qualify for the credit.
• Feedstock and sustainability rules: SAF must come from biomass (excluding palm fatty acid distillates) and meet strict emissions reduction standards, potentially shaping the SAF supply chain toward higher sustainability.

Potential Questions for Consideration

• How will “air transportation services business described in clause 1” be defined in practice for eligibility and enforcement?
• What entities will be affected by the exclusions, and how might this influence SAF production and sales to government vs. civilian markets?
• How will updates to the GREET model or ICAO methodology affect ongoing eligibility as standards evolve?

Relevant Terms

• Sustainable aviation fuel (SAF)
• Qualifying taxpayer
• 50 percent life cycle greenhouse gas (GHG) emissions reduction
• Life cycle emissions
• GREET model (Argonne National Laboratory)
• ICAO methodology
• Biomass
• Palm fatty acid distillates (PFAD)
• Air transportation services
• Immigration enforcement
• Minnesota Statutes 41A.30
• Aircraft, aviation gasoline, jet fuel
• Induced land use change
• Aggregate attributional core life cycle emissions