Sustainable Vessel Fuel Act
The Sustainable Vessel Fuel Act would modify the Internal Revenue Code’s clean fuel production credit (Section 45Z) to add a special rate for sustainable vessel fuel (SVF). Introduced by Senator Hirono, the bill would treat SVF as a transportation fuel eligible for the clean fuel credit, expanding the program beyond sustainable aviation fuel. It creates a definition and eligibility criteria for SVF, requiring fuels to be suitable for use in commercial ships or ferries, not derived from palm fatty acid distillates or petroleum, and to have a zero-emissions life-cycle rate as determined under the credit rules. Standards for SVF would be identified by the Secretary in consultation with recognized standards organizations (like ASTM). The bill also extends the credit’s expiration for SVF through December 31, 2035 (while the existing framework continues). The amendments apply to SVF produced after December 31, 2025.
Key Points
- 1Adds sustainable vessel fuel to the list of fuels eligible for the clean fuel production credit and provides a special rate for SVF.
- 2Treats SVF as a transportation fuel, with a defined set of criteria: usable in commercial vessels or ferries, not derived from palm fatty acid distillates or petroleum, zero-emissions rate, and compliance with applicable standards identified by the Secretary (via ASTM or similar bodies).
- 3Establishes a sunset/termination extension: SVF’s credit expiration is set to December 31, 2035 (explicitly extending beyond the prior 2027 expiration for some fuels).
- 4Effective date: The changes apply to SVF produced after December 31, 2025.
- 5Secretary’s role: The Secretary must identify appropriate standards for SVF in consultation with recognized standards organizations to ensure the fuels meet the defined criteria.