Sustainable Vessel Fuel Act

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.

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:

The term transportation fuel shall include sustainable vessel fuel which satisfies the requirement under subparagraph (A)(iii).

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).

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.

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.

The amendments made by this section shall apply to fuel produced after December 31, 2025.