The U.S. government decision to provide tax credits for sustainable aviation fuels (SAF) will likely impact Korean oil refiners, the largest exporters of aviation fuel to the United States.

The U.S. Treasury Department released its guidelines for SAF tax credits under the Inflation Reduction Act (IRA) on Friday.

Under the guidelines, producers, users, and sellers of aviation fuels from biomass, cellulose, ethanol and other non-fossil fuels will be eligible for tax credits.

Fuel producers can claim tax credits of between 1.25 and 1.75 dollars for each gallon of SAF that produces 50 percent or more less greenhouse gas than conventional aviation fuel.

According to the U.S. Energy Information Administration, the United States imported an average of 120,000 barrels of aviation fuel a day last year. Slightly over half of it or some 3.8 billion dollars worth of the fuel was exported from Korea.

If the U.S. aviation industry actively uses SAFs, Korean oil refiners will need to convert to SAF production quickly to remain competitive in the export market.