Corporate income tax: other; sustainable aviation fuel incentive program; create. Creates new act.
SB 236 creates the Sustainable Aviation Fuel Incentive Program within the Department of Environment, Great Lakes, and Energy (EGLE) to encourage production of sustainable aviation fuel in Michigan. The bill defines what qualifies as sustainable aviation fuel, generally requiring that it be derived from biomass, waste streams, renewable or zero-emissions energy sources, or gaseous carbon oxides, meet ASTM fuel standards, and achieve at least a 50% life-cycle greenhouse gas emissions reduction compared with petroleum-based aviation fuel. Beginning in 2030, the fuel must also be derived from domestic feedstock resources and may not be produced through certain co-processing arrangements with non-biomass feedstocks.
The program is tied to a state tax credit under the Income Tax Act of 1967. Eligible producers or blenders must apply to EGLE within two months after the close of the tax year and provide documentation showing the fuel qualifies, including purchaser certifications that the fuel was used for aircraft departing from a Michigan airport. EGLE must review applications, approve or deny them within 30 days unless more information is needed, and issue certificates stating the amount of credit allowed. The bill also creates a misdemeanor penalty for knowingly false purchaser certifications.
The bill limits the amount of credits that may be approved and certified to $4.5 million in state fiscal year 2025-26 and $9 million in each later fiscal year. It also requires EGLE to report annually to legislative committees and fiscal agencies on the program’s operation, including the total credits certified and the number of applications received and approved. The act would take effect only if Senate Bill 235 is also enacted, making it part of a linked legislative package.
The overall sentiment appears favorable. The bill was reported favorably out of committee on a 7-0 vote and later passed the Senate 28-8, suggesting broad support for incentivizing cleaner aviation fuel production and related economic development. The absence of committee transcript material limits insight into detailed debate, but the recorded votes indicate the measure had meaningful bipartisan or cross-faction support while still drawing some opposition.
The main points of contention likely center on the use of state tax credits, the fiscal cap, and the policy choice to subsidize a relatively new fuel market. Potential concerns include whether the credits will produce measurable environmental benefits, whether the domestic feedstock and emissions-reduction requirements are sufficiently strict, and whether the program’s administrative and compliance burdens are justified. The bill’s linkage to SB 235 also suggests that some lawmakers may have viewed the package as dependent on companion legislation rather than as a standalone policy.
The bill would add a new chapter of state law creating an EGLE-administered incentive and certification framework for sustainable aviation fuel, while also effectively amending the operation of the Income Tax Act of 1967 by authorizing a new sustainable aviation fuel tax credit. It establishes eligibility standards, application procedures, certification requirements, reporting obligations, and penalties for false certifications, and it caps the amount of credits that can be approved each fiscal year. The measure primarily affects aviation fuel producers and blenders, purchasers certifying in-state airport use, EGLE, and the state tax system.
Recorded action suggests the bill was generally well received. It advanced from committee unanimously and passed the Senate by a comfortable margin, indicating support for encouraging lower-carbon aviation fuel production and related investment in Michigan. The lack of transcript excerpts means there is no detailed record here of floor or committee arguments, but the vote pattern points to a broadly positive reception with some opposition remaining.
Likely areas of disagreement include the cost of the tax credit to the state, whether the annual cap is appropriate, and whether the program will meaningfully reduce greenhouse gas emissions or simply subsidize a niche industry. Some lawmakers may also have questioned the administrative burden of verifying fuel origin, emissions reductions, and purchaser certifications, as well as the misdemeanor penalty for false statements. The requirement that the fuel be domestically sourced starting in 2030 and the bill’s dependence on companion SB 235 may also have been points of concern or negotiation.