Restoring the 45Z SAF Differential is Critical for U.S. Energy Dominance

SAF is key to an America-first energy policy and advancing American industrial innovation.

By: Derek Phelps, Head of Governmental Affairs, Twelve

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Advancing the next generation of American-made fuels

At Twelve, we’re building the next generation of American-made fuels—like sustainable aviation fuel (SAF)—with carbon transformation technology developed right here in the United States. But just as this promising domestic industry begins to scale, Congress has made a change that could undercut U.S. leadership in this strategic sector.

We’re building the next generation of American-made fuels—like sustainable aviation fuel (SAF)—with carbon transformation technology developed right here in the United States

Under the recent reconciliation bill—formally known as the One Big Beautiful Bill Act (OBBBA)—Congress amended Section 45Z of the tax code, eliminating the $0.75 per gallon differential for SAF in the Clean Fuel Production Credit.

That differential existed for a reason. SAF is significantly more complex and costly to produce than other clean fuels. It requires capital-intensive production facilities, cutting-edge technology, and certification under stringent aviation fuel standards. The differential wasn’t a handout—it was a recognition of real economic and technical hurdles facing a still-nascent industry.

Removing it now sends the wrong message: just as companies like Twelve are commissioning their first commercial demonstration-scale SAF facilities, the rug is being pulled out from under them.

For those who value strengthening America’s energy independence, this should be deeply concerning.

SAF strengthens American energy independence

Unlike many energy transitions that threaten legacy jobs, SAF is already building on America’s industrial and agricultural strengths by:

• Reducing our reliance on foreign oil 

• Securing the aviation sector—vital to commerce and national defense, and responsible for roughly 4% of U.S. GDP and nearly 10 million American jobs

• Creating new demand for U.S.-produced electricity, carbon, and agricultural inputs

The good news is this misstep can be corrected.

Congress has the opportunity to restore the SAF differential in 45Z

Through future legislation, Congress can restore the 45Z SAF differential. Doing so would reaffirm the commitment to American energy leadership and ensure we don’t cede ground to foreign competitors just as this new sector begins to take off.

It’s about leveling the playing field for U.S. innovation and advancing a fuel that supports American jobs, national security, and energy dominance.

Restoring the differential isn’t about subsidies. It’s about leveling the playing field for U.S. innovation and advancing a fuel that supports American jobs, national security, and energy dominance.

Let’s fix this misstep, and let American SAF soar.