According to sources familiar with the matter, the Biden administration is expected to recognize the ethanol industry's preferred methodology in guidance to companies seeking to claim tax credits for sustainable aviation fuel (SAF) by the end of this week. The administration has been divided over whether to recognize the Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model, which would enable ethanol-based SAF to qualify for tax credits under the Inflation Reduction Act, President Joe Biden's signature climate law.
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The announcement is a victory for the ethanol industry and the U.S. Corn Belt, a powerful constituency ahead of the 2024 presidential election, as SAF is seen as one of the only routes to grow ethanol demand amid rising sales of electric vehicles. However, the administration is also expected to update the GREET methodology by March 1, which may cause uncertainty for corn-based ethanol producers, as the administration is expected to ultimately tighten requirements around SAF feedstocks.
A fierce lobbying push is expected until the updates are announced, as ethanol groups have been at odds with environmentalists who want standards that elevate feedstocks like used cooking oil and animal fat. To claim tax credits under the IRA, SAF producers must demonstrate that their fuel generates 50% less greenhouse gas emissions over its lifecycle than petroleum fuel using an approved scientific model. The ethanol industry argues that the U.S. needs to use readily available technology like ethanol to quickly reduce carbon dioxide emissions. The administration's decision is viewed as "a pivotal moment for the future of sustainable aviation fuels" by Renewable Fuels Association President Geoff Cooper.
However, Nikita Pavlenko, fuels team lead at the International Council on Clean Transportation, points out that one of the central concerns of environmental groups about the use of the GREET model - that it would underestimate the emissions generated by tilling land for crops - appears to be unresolved. The lifecycle emissions calculated by GREET for any given fuel can vary widely depending on data sources and assumptions used in the model, and any future update on how producers should use the GREET model needs to take a stringent approach, Pavlenko said. White House adviser John Podesta said on Thursday the SAF guidance would be released very soon. "We think, to take advantage of the credit, that emissions have to be 50% below what oil-based aviation fuel looks like," Podesta told reporters on Thursday. The Treasury Department declined to comment for this story, while the White House did not respond to a request for comment.
