New tax credits for sustainable aviation fuel in U.S. raise concerns in South Korea

In South Korea, Pulse reported that the recent decision of the U.S. government to subsidize sustainable aviation fuel in the form of tax credits is raising concerns among South Korean refiners as it may affect their exports. The U.S. Treasury Department recently announced the detailed regulations for SAF tax credits awarded under the Inflation Reduction Act (IRA). Under the regulations, a tax credit of $1.25 per gallon is provided to SAF that reduces lifecycle carbon emissions by 50% compared to jet fuel made from oil. If the reduced emissions exceed 50%, an additional $0.01 is deducted for each percentage point, bringing the maximum tax credit to $1.75. The report noted that these rules are likely to have a ripple effect on the Korean refining sector as the U.S. currently relies on Korea for more than half of its jet fuel imports. According to the U.S. Energy Information Administration (EIA), 53% of the U.S. daily average import of oil-based jet fuel came from Korea, the report added.

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