Corn-based aviation fuel could earn tax credits under White House plan — at least for now.
The Biden administration released long-awaited guidance on Friday around tax credits for aviation fuel that reduces emissions of greenhouse gases compared with fuel made from crude oil.
Some environmentalists expressed concern that the Treasury Department guidelines could allow credits for fuel made from corn and other crops that they consider poor choices because of the water and other resources needed to grow them.
Midwest lawmakers and companies that produce corn-based ethanol praised the guidelines, although their enthusiasm could be short-lived.
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Congress approved the credits as part of President Joe Biden’s Inflation Reduction Act of 2022, which included provisions designed to boost cleaner energy. The credits are designed to increase the supply and bring down the current high price of sustainable aviation fuel, or SAF.
Producers will be eligible for tax credits ranging from $1.25 to $1.75 per gallon, depending on how much their fuel reduces emissions compared with conventional products such as kerosene-based jet fuel.
Government accepts emissions model favored by ethanol makers
On a key issue — and after months of deliberations — the Treasury Department accepted measuring those emission reductions by using a model that was developed by the U.S. Energy Department and which is supported by the ethanol industry.
However, Treasury said the Biden administration plans to update the model by March 1, leaving uncertainty around the eventual tax treatment of ethanol used to power airplanes.
Treasury said the update will include “new modeling of key feedstocks and processes used in aviation fuel,” and will consider the impact on emissions from growing crops used to make the fuel.
The Environmental Defense Fund said it would withhold final judgment on the guidelines until March, but that Friday's guidelines could put the U.S. out of step with international standards.
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“Our initial assessment is that this would be a blank check for fuels made from sugar cane, soybean and rapeseed — none of which are sustainable or consistent with Congress' intent,” said the group's senior vice president, Mark Brownstein.
Ethanol supporters countered that the Energy Department model provides a precise way to measure the benefits of agricultural feedstocks used in sustainable aviation fuel.
The standard, known as the GREET model (short for Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation), "is great, and I’m glad that Treasury is finally realizing it,” said U..S. Sen. Joni Ernst, an Republican from Iowa, the nation's leading producer of both corn and ethanol.
“Today’s news is incredible for biofuels producers and farmers because the SAF market represents the single-biggest opportunity for a rural transformation since the introduction of corn hybrids a century ago,” said Monte Shaw, the Iowa Renewable Fuels Association’s executive director, in a statement.
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But Shaw, a supporter of controversial projects to build a network of pipelines designed to capture and sequester the carbon produced in biofuel production, said "we should not forget that the key to unlocking the SAF market for ethanol continues to be carbon capture and sequestration.”
Without the pipelines “to reduce the carbon intensity score of ethanol, it is nearly impossible for our home-grown ethanol to qualify for SAF ― even with the GREET model,” he said.
Airlines for America, a trade group for the biggest U.S. carriers, praised the Treasury guidelines, which it said “will help to accelerate the production and availability of SAF and stimulate new investment.”
Around 2% to 3% of global greenhouse gas emissions come from aviation, according to estimates, but that share is expected to grow as air travel continues to boom. Widespread use of electric-powered airplanes is generally considered decades away.
The Associated Press contributed to this article.
This article originally appeared on Des Moines Register: Sustainable aviation fuel standard gets praise from Iowa ethanol makers
