© Reuters. U.S. President Joe Biden holds an occasion about American retirement economics within the State Eating Room on the White Home in Washington, U.S., October 31, 2023. REUTERS/Leah Millis/File Picture
By Stephanie Kelly and Leah Douglas
(Reuters) -The Biden administration mentioned on Friday it’ll acknowledge a strategy favored by the ethanol business in steerage to firms seeking to declare tax credit for sustainable aviation gasoline (SAF), a pivotal win for the politically highly effective U.S. corn foyer.
However the administration will even replace the methodology by March 1, which leaves some uncertainty for corn-based ethanol producers, because it may finally tighten necessities round SAF feedstocks.
The worldwide aviation business, which is anticipated to reap web earnings of over $20 billion in 2023 and accounts for about 2% of worldwide energy-related carbon dioxide emissions, is without doubt one of the hardest sectors to decarbonize, because the tools shouldn’t be straightforward to impress. Airways argue that incentives are wanted to spice up the marketplace for SAF, which might generate 50% much less greenhouse fuel emissions over its lifecycle than petroleum gasoline, however is often two to a few occasions dearer than fossil-fuel-based jet gasoline.
For months, the Biden administration has been divided over whether or not to acknowledge the Division of Vitality’s Greenhouse Gases, Regulated Emissions and Vitality Use in Applied sciences (GREET) mannequin. That mannequin permits ethanol-based SAF to qualify for tax credit below the Inflation Discount Act, President Joe Biden’s signature local weather legislation.
producers and corn farmers in rural states resembling Iowa and Illinois have been awaiting updates, because the business sees SAF as one of many solely routes to develop ethanol demand amid rising gross sales of electrical autos.
Biden, a Democrat, is searching for re-election and can depend upon votes from intently contested Midwestern states which might be the heaviest corn producers.
The steerage was first reported by Reuters on Thursday.
Whereas the steerage goals to cut back the value hole between SAF and conventional jet gasoline, administration officers couldn’t present knowledge to indicate the extent that the incentives would scale back value discrepancies between the fuels.
ETHANOL SEEKS ROLE IN SAF
Ethanol teams have lobbied the Biden administration fiercely to acknowledge the GREET mannequin for IRA credit, battling environmentalists who need requirements that elevate feedstocks like used cooking oil and animal fats as a substitute.
Farmers, ranchers and producers have the capability to offer feedstocks to assist airways and the transportation business meet a probably 36-billion-gallon market, mentioned Agriculture Secretary Tom Vilsack on a name with reporters.
“Key to this was the Treasury recognizing and appreciating the significance of the GREET platform for offering a pathway for corn-based ethanol and [other] biobased fuels to qualify for vital tax credit that have been included within the IRA,” Vilsack mentioned.
Nonetheless, the GREET mannequin now will likely be up to date to include new knowledge and modeling on emissions sources like land use change and livestock exercise, in addition to methods producers can use to decrease emissions like CCS, renewable , and climate-friendly farming practices, the Inside Income Service mentioned on Friday.
The IRA at present requires SAF producers to evaluate emissions with a mannequin backed by the Worldwide Civil Aviation Group (ICAO) or a “related methodology.”
“The true query is, come March, will the GREET mannequin be arrange in a manner that may effectuate the ICAO requirements,” mentioned Mark Brownstein, senior vp of power transition on the Environmental Protection Fund.
Below the brand new modifications, gasoline produced in 2023 that meets the brand new GREET requirements will likely be eligible for the credit score, administration mentioned on background throughout a name with reporters.
The Environmental Safety Company and the Departments of Agriculture, Vitality, and Transportation are working collectively on the scientific updates, an administration official advised reporters on a Thursday press name.
Ethanol commerce teams together with the Renewable Fuels Affiliation and Development Vitality cheered the information on Friday however mentioned extra data across the up to date steerage was wanted.
“New investments in SAF are extremely depending on the pending GREET modeling updates,” mentioned Development Vitality chief govt Emily Skor. “The business wants extra readability across the proposed modifications earlier than now we have certainty round market entry.
