Ethanol-Based Sustainable Aviation Fuel: Awaiting US Treasury Guidelines and Subsidies

Tom Vilsack, the U.S. Agriculture Secretary, expressed his confidence on Wednesday that the Treasury Department would issue guidelines by the end of the year to simplify the process for corn-based ethanol, used in sustainable aviation fuel (SAF), to receive subsidies. 

This issue has caused a split within the Biden administration for several months, with strong lobbying from U.S. Farm Belt stakeholders who view SAF as a key growth opportunity for the ethanol industry. Environmental groups argue that using land to cultivate crops for fuel is not conducive to reducing global warming, while the ethanol industry insists on the need to utilize existing technology to rapidly cut CO2 emissions. 

It was previously reported in September that the Biden administration would likely postpone a decision until December, despite the guidance being anticipated in September. Vilsack, in a discussion with Reuters reporters, assured that the Treasury Department would provide some direction and guidance by year-end, although the actual rules and regulations might take a bit longer. When questioned about his confidence in ethanol becoming an SAF feedstock, Vilsack affirmed his belief. The ethanol industry is hoping to gain access to billions of dollars in subsidies as part of the Inflation Reduction Act (IRA), a key climate law signed by President Joe Biden last year. 

SAF producers seeking tax credits are required to prove, using an approved scientific model, that their fuel emits 50% less greenhouse gas over its lifecycle compared to petroleum fuel. Midwest ethanol producers have requested the administration to adopt the Department of Energy’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model, which would allow ethanol-based SAF to qualify. However, environmentalists favor standards that would prioritize inputs like used cooking oil and animal fat. Vilsack also mentioned that updates to the GREET model currently in progress at USDA mainly concern how the model calculates emissions from land tilling for crop cultivation.