Committee approves tax-credit framework for proposed sustainable aviation fuel plant in South Arkansas

Representative Jean introduced House Bill 1303 as a sustainable aviation fuel bill intended to support construction of a renewable-jet facility in southern Arkansas. "This is the house bill 13 o 3. This is a sustainable aviation fuel, bill that is designed to be built in South Arkansas," Representative Jean said, describing a company option on roughly 500 acres south of Camden.

Why it matters: The bill would create a tax-credit incentive tied to qualified machinery and equipment for SAF production, and it includes a mechanism by which the state may purchase up to $10 million in sellable credits per year at 80% of face value. Proponents said the project could bring $2 billion–$3 billion in capital investment, about 100–200 permanent jobs averaging roughly $100,000 a year, and 1,500 construction jobs.

Company and project details: Michael Newton of Natural State Renewables said the company has spent roughly $15 million in development to date, has an option on about 500 acres near Camden (the option cost is about $3.5 million), and expects to make a final investment decision late this year or early next year. Newton described feedstocks as logging tops, sawdust, bark and other low‑value roundwood and said the company would build on-site power generation (biomass boilers). He said markets include the U.K. and Europe, where cargo airlines face mandates for sustainable aviation fuel, and contracts with cargo carriers are under discussion.

How the tax mechanism works: Paul Gearing of the Department of Finance and Administration (DFA) explained the bill’s mechanics: once the Department of Energy and Environment (Energy & Environment) certifies qualifying capital expenditures, the company would receive tax-credit certificates equal to 30% of qualifying machinery and equipment purchases. The state would have a right of first refusal to buy up to $10 million in credits each year at 80% of face value; if the state declines, the taxpayer may sell the credits to third parties, who under the amendment would have three years to redeem them. "The Department of Commerce will have to certify the project as a positive cost benefit analysis," Gearing said.

Questions and oversight: Committee members pressed for detail on timing, administration and fiscal exposure. Gearing and Jim Hudson (Secretary, DFA) said credits would not be issued or purchased until Energy & Environment certifies expenditures after construction is complete and Commerce negotiates an incentive agreement that meets a positive cost-benefit standard. Commerce and DFA officials said they do not anticipate adding permanent staff to administer a single project; Lisonbee Hatfield, chief of staff for commerce, and Clint O’Neil, executive director of the Arkansas Economic Development Commission (AEDC), said existing processes and agreements would be used to evaluate agreements and verify performance.

Protections: DFA staff described contractual incentive agreements and clawback provisions: incentives would be subject to terms in a Commerce-issued incentive agreement and could be reduced or returned if job, payroll or other benchmarks are not met. Gearing described a certification and buy-back timeline tied to Energy & Environment certification and to the project completing construction.

Contested points and clarifications: Committee members asked whether the state purchasing credits at 80% still represents a cost, how credits would be monetized, and whether the project’s economics rely on European mandates. Newton said European mandates drive near-term market demand but that contracts with U.S. buyers (including California markets that generate RINs) are also under consideration. Members also asked whether credits are perpetual; DFA and AEDC officials explained the issuance and redemption windows are capped by the statute and by the term of negotiated incentive agreements, and that the bill sets a timeline for projects to commence (committee discussion referenced a commencement deadline of Dec. 2027).

Vote and next steps: The committee adopted an amendment on a voice vote and then voted the bill "do pass, as amended" on a voice vote. No roll-call tally was recorded in the transcript. The bill will proceed to the next stage of the legislative process.

Ending: Proponents framed HB1303 as an economic-development and forestry-market solution for a region that has lost industry, while some members emphasized caution about narrowly targeted tax policy and asked for further assurance about oversight and cost-benefit scoring.