The 40B tax credit guidance and modified GREET model released today by U.S. Treasury begin to unlock the door for U.S. ethanol producers and farmers to participate in the emerging market for sustainable aviation fuels (SAF). However, more work must be done to fully open the SAF market to ethanol and properly recognize the climate benefits of modern agriculture and biofuels, according to the Renewable Fuels Association.
“Today’s guidance and modified GREET model help position ethanol-based SAF for takeoff, but more work is needed to fully clear the runway and get this opportunity off the ground,” said RFA President and CEO Geoff Cooper. “We are encouraged that, for the first time ever, this carbon scoring framework will recognize and credit certain climate-smart agricultural practices. We’re also pleased to see the integration of other carbon reduction strategies—like renewable process energy and carbon capture and sequestration—into the model. However, RFA believes less prescription on ag practices, more flexibility, and additional low-carbon technologies and practices should be added to the modeling framework to better reflect the innovation occurring throughout the supply chain.”
Cooper noted that today’s 40B package sets the stage for a more expansive and flexible modeling approach under the 45Z clean fuel production tax credit. RFA expects the Biden administration will soon request public comment on considerations and options for implementing the 45Z credit.
“We view today’s 40B announcement as the starting point—not the ending point—for additional modeling improvements, further integration of individual climate-smart agriculture practices, and emerging biorefinery technologies,” Cooper said. “45Z is where the rubber really meets the road. We look forward to working with USDA and other agencies across the administration to ensure 45Z is implemented in a way that truly swings the door wide open for farmers and ethanol producers to participate in the enormous decarbonization opportunity.”
The conversion of ethanol to jet fuel is one of the most promising forms of SAF, Cooper said. Low-carbon ethanol has key advantages as a feedstock for SAF, as it is cost-competitive with petroleum-based fuels, has established production and transportation infrastructure, and is by far the largest-volume biofuel produced in the United States, with output of nearly 16 billion gallons per year.
“We are especially grateful for the role that U.S. Agriculture Sec. Tom Vilsack and his team played in the effort,” Cooper concluded. “Sec. Vilsack has time and again demonstrated his commitment to serving rural communities, and understands the importance of lower-carbon, American-made renewable fuels.”
A History of Action
RFA has worked diligently with lawmakers and others over the past several years to ensure ethanol can participate in SAF opportunities. RFA’s efforts on the SAF tax credit began long before the Inflation Reduction Act was introduced, including correspondence with congressional tax-writing committees in August 2021 and a joint industry letter in April 2022. More recently:
- In February 2023, RFA filed extensive comments urging the allowance of GREET modeling for the sake of the SAF tax credits. In June and July, the organization welcomed the introduction of the Sustainable Aviation Fuels Accuracy Act in both houses of Congress.
- In August, at the RealClear Energy website, Cooper wrote about how farmers and ethanol producers can put “the S in SAF.” And in an August blog post, he pointed out how the SAF modeling debate isn’t really about GREET vs. ICAO, but about “current data vs. old data.” Click here for a chart RFA has developed to explain the key differences between the DOE GREET approach and the ICAO approach.
- In November, many RFA member companies signed on to a historic coalition letter that included major airlines, calling on the Biden administration to integrate the best available science and data regarding the carbon impacts of SAF into the tax credit program.
- RFA also endorsed the Farm to Fly Act in November, which would affirm a common definition of SAF for USDA purposes, as widely supported by industry and congressional leaders to enable U.S. crops to most effectively contribute to aviation renewable fuels via renewable fuels like ethanol. A Senate version was introduced in January.
- In January, RFA offered specific recommendations for ensuring that the best available science and data are used in determining eligibility for the SAF tax credit established in the Inflation Reduction Act.
- In February, a bipartisan group of 43 lawmakers in both houses of Congress sent a letter to the Interagency Working Group, asking it to meet the March 1 deadline for updates to the GREET model and ensure the updates are based on sound science, current data, and methodologies that properly recognize modern practices in agriculture and biofuel production.
- When the March 1 deadline passed, RFA called on the working group to move quickly, noting that it was important to get the modeling right. Later that month, RFA was part of a coalition of biofuel and farm advocates that called on the Treasury Department to swiftly resolve any questions standing in the way of efforts to scale up U.S. production of sustainable aviation fuel.
- Just last week—on April 24—RFA was part of another major coalition that called on agriculture committee leaders in Congress to boost the role of American farms in fueling low-carbon aviation by including meaningful SAF provisions, such as the Farm to Fly Act, into the farm bill.
- Finally, RFA is a founding member of the SAF Coalition, which launched Monday to accelerate the development and deployment of sustainable aviation fuel in the United States.
