The Sustainable Vessel Fuel Act modifies a federal tax credit to expand incentives for producing sustainable fuels used in ships and ferries. Specifically, it amends the clean fuel production credit under the tax code to include "sustainable vessel fuel"—defined as non-petroleum, zero-emission liquid fuels suitable for commercial vessels—alongside existing incentives for sustainable aviation fuel. The credit will apply to eligible sustainable vessel fuels that meet standards set by the American Society for Testing and Materials or similar organizations, with producers becoming eligible for the credit on fuel produced after December 31, 2025. Unlike the existing clean fuel credit that expires December 31, 2027, the sustainable vessel fuel credit would extend through December 31, 2035, giving producers a longer timeframe to invest in this technology. The legislation, introduced by Senator Hirono, does not specify the credit rate or amount, leaving those details to existing tax law.
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