Mengying Wu, Kristen McCormack, William A. Scott, Aaron Smith, Jingran Zhang, and James H. Stock, “Effects of the Proposed New California SAF Tax Credit” (February 2026) | WP-357 | Blog Post
Abstract:
In Wu et al. (2025), we developed a detailed partial equilibrium model of road and air transportation fuel markets to compare policy options to incentivize the deployment of sustainable aviation fuel (SAF). We used the model to examine policy options for meeting a 3 billion gallon annual SAF target by 2030, which would result in SAF comprising about 12% of U.S. jet fuel consumption in that year. This goal, whether formally adopted or not, represents a useful near-term benchmark along a meaningful path toward decarbonizing aviation and appears to be feasible from a technological perspective. In this note, we add California’s proposed SAF tax credit to the model and evaluate the effects on fuel prices, volumes and emissions. See Wu et al. (2025) for details on the model.