Senators to IRS: Block plastic-based fuels from IRA tax credits

By Erin Voegele | October 30, 2023

Sen. Jeff Merkley, D-Ore., and five of his colleagues are urging the Internal Revenue Service to ensure that fuels made from petroleum products, specifically plastic feedstocks, are unable to qualify for the Inflation Reduction Act’s sustainable aviation fuel (SAF) and clean fuels production tax credits.

Merkley and Sens. Edward Markey, D-Mass.; Elixabeth Warren, D-Mass.; Cory Booker, D-N.J.; and Sheldon Whitehouse, D-R.I.  Oct. 27 sent a letter to IRA Commissioner Danny Werfel explaining why the agency should ensure fuels made from plastic-based feedstocks will not qualify for the two tax credits. 

Within the letter, the senators describe the many emissions and human health related impacts of plastics industry, including facilities that take in plastic-based waste and refine it into chemicals used to make fuel, such as SAF. 

“The plain language of the IRA is clear that petroleum products do not qualify for the SAF tax incentives, and that should disqualify plastic-based fuels,” the senators wrote. “Both the Section 40B and Section 45Z credits include restrictions on the type of aviation fuel that is eligible to qualify for the tax incentives, and state that the fuel must not be ‘derived from … petroleum.’ These fuels made from plastic concentrated feedstocks are derived from petroleum, because plastic is a petroleum product. Raw feedstocks most commonly derived from fossil fuels are a basic building block in the plastics manufacturing process. If plastic-derived waste is processed to create aviation fuel, it is still a petroleum-based product being used to create the fuel. Just because the petroleum has gone through additional layers of processing does not change the reality that the end product is a petroleum-derived product.”

A full copy of the letter is available on Merkley’s website.