Bill Summary
The "Sustainable Vessel Fuel Act" aims to amend the Internal Revenue Code of 1986 by enhancing the clean fuel production credit to include a special rate for sustainable vessel fuel. This legislation recognizes sustainable vessel fuel as a type of transportation fuel, expanding the existing provisions that currently apply primarily to sustainable aviation fuel.
Key provisions of the bill include:
1. **Inclusion of Sustainable Vessel Fuel**: The act introduces a specific definition of sustainable vessel fuel, which must be suitable for use in commercial vessels or ferries, not derived from palm fatty acid distillates or petroleum, and must have an emissions rate of zero. This fuel must also meet standards set by recognized organizations.
2. **Credit Extension**: The bill adjusts the clean fuel production credit timeline, extending the eligibility for sustainable vessel fuel until December 31, 2035, while allowing for certain credits to be claimed for fuels produced after December 31, 2025.
Overall, this legislation aims to promote the production and use of environmentally friendly fuels in the maritime sector, supporting efforts to reduce emissions and promote sustainability in transportation.
Possible Impacts
The "Sustainable Vessel Fuel Act" could have several impacts on different groups of people. Here are three examples:
1. **Commercial Shipping Industry**: The act provides a financial incentive for the production of sustainable vessel fuel, which could lead to a shift in the fuels used by commercial vessels and ferries. Companies in the shipping industry may benefit from reduced fuel costs, as they can take advantage of the clean fuel production credit. This could encourage investment in sustainable technologies and practices, ultimately leading to a more environmentally friendly shipping industry.
2. **Environmental Advocates and Communities**: By promoting sustainable vessel fuel, the legislation aims to reduce emissions from maritime transportation. Communities living near shipping routes, especially in coastal areas, may experience improved air quality and reduced environmental impact. Environmental advocates may see this legislation as a victory in the fight against climate change and pollution, potentially leading to greater public support for similar environmental initiatives.
3. **Fuel Producers and Innovators**: Companies involved in the production of sustainable fuels could see new market opportunities as a result of this act. The special rate under the clean fuel production credit could encourage innovation in developing alternative fuels that meet the specified sustainability criteria. This could lead to job creation in the renewable energy sector, as well as increased competition in the fuel market, benefiting consumers in the long run.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 692 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 692
To amend the Internal Revenue Code of 1986 to modify the clean fuel
production credit to provide a special rate for sustainable vessel
fuel.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 24, 2025
Ms. Hirono introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify the clean fuel
production credit to provide a special rate for sustainable vessel
fuel.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sustainable Vessel Fuel Act''.
SEC. 2. SPECIAL RATE UNDER CLEAN FUEL PRODUCTION CREDIT FOR SUSTAINABLE
VESSEL FUEL.
(a) In General.--Section 45Z(a)(3) of the Internal Revenue Code of
1986 is amended--
(1) in the heading, by inserting ``and sustainable vessel
fuel'' after ``sustainable aviation fuel'',
(2) in subparagraph (A), by inserting ``or sustainable
vessel fuel'' after ``sustainable aviation fuel'', and
(3) in subparagraph (B), by striking ``this subparagraph
(A)'' and inserting ``this section''.
(b) Inclusion as Transportation Fuel.--Section 45Z(d)(5) of the
Internal Revenue Code of 1986 is amended--
(1) by redesignating subparagraph (B) as subparagraph (C),
and
(2) by inserting after subparagraph (A) the following new
subparagraph:
``(B) Sustainable vessel fuel.--
``(i) In general.--The term `transportation
fuel' shall include sustainable vessel fuel
which satisfies the requirement under
subparagraph (A)(iii).
``(ii) Definition.--The term `sustainable
vessel fuel' means liquid fuel which--
``(I) is suitable for use as a fuel
in a commercial vessel or ferry (as
such terms are defined in section
4462(a)(4)) and is sold for such use,
``(II) is not derived from palm
fatty acid distillates or petroleum,
``(III) as determined pursuant to
subsection (b)(1), has an emissions
rate of zero, and
``(IV) satisfies the requirements
of any standards which have been
identified by the Secretary pursuant to
clause (iii).
``(iii) Standards.--The Secretary shall
identify any standards as are established by
the American Society for Testing and Materials
(or similar standards organization) with
respect to liquid fuel described in subclauses
(I) through (III) of clause (ii) which the
Secretary determines appropriate to carry out
the purposes of this subparagraph.''.
(c) Termination.--Section 45Z(g) of the Internal Revenue Code of
1986 is amended by inserting ``(or, in the case of transportation fuel
which is sustainable vessel fuel, December 31, 2035)'' after ``December
31, 2027''.
(d) Effective Date.--The amendments made by this section shall
apply to fuel produced after December 31, 2025.
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