The mechanism: Section 45Z's clean fuel production credit — recently reshaped by Treasury and IRS guidance and narrowed by this year's tax legislation, which cut the maximum SAF credit from $1.75 to $1.00 per gallon and added a 2026 rule requiring North American feedstock — pays fuel producers, not airlines. To capture that subsidy, refiners need a buyer locked in for years. Airlines supply that buyer, signing offtake agreements running a decade or two, often at two-to-three-times the price of conventional jet fuel before the credit is netted in. The politics read as "Washington helps aviation go green." The cash-flow reality is that carriers are underwriting the credit risk and construction risk of unproven producers, prepaying for capacity that may never scale, at prices fixed years before delivery.
Markets
The Contrarian Case: SAF Credits Are a Trap for Airlines, Not a Subsidy
Washington's 45Z clean fuel credit was sold as an airline win, but the fine print locks Delta and United into decade-long, premium-priced fuel contracts with thinly capitalized producers — turning a policy "gift" into a margin and counterparty risk.
