[originally published in Progressive Farmer]
U.S. farmers and ethanol producers can be a key cog within the progress of the sustainable aviation gas business for the foreseeable future after the U.S. Division of Treasury introduced Friday it is going to use a modified model of a well-liked greenhouse gasoline (GHG) emissions mannequin to find out the way it allocates tax credit within the Inflation Discount Act.
Utilizing the Greenhouse Gases, Regulated Emissions and Vitality Use in Applied sciences, or GREET, mannequin will permit the Treasury to precisely decide ethanol’s carbon footprint.
As a result of the mannequin makes use of the most recent real-world information on corn ethanol, sustainable aviation gas (SAF) produced utilizing corn ethanol as a feedstock would qualify for the tax credit.
NEW GUIDELINES
“Underneath the steering issued at present, quite a few fuels will qualify for the credit score, together with legitimate biomass-based diesel, superior biofuels, cellulosic biofuel or cellulosic diesel which have been accredited by EPA beneath the Renewable Gasoline Commonplace,” the Treasury Division acknowledged in a information launch.
“Fuels that obtain a 50% or better discount in lifecycle greenhouse gasoline emissions beneath the newest Carbon Offsetting and Discount Scheme for Worldwide Aviation commonplace will proceed to qualify beneath at present’s steering.”
Together with that, the Treasury acknowledged EPA, DOT, USDA and DOE are asserting commitments to launch an up to date model of DOE’s GREET mannequin by March 1, 2024. Pending additional steering from the Treasury Division, “the up to date GREET mannequin will present one other methodology for SAF producers to find out the lifecycle GHG emissions charges of their manufacturing for the needs of qualifying for the SAF credit score for SAF offered or used throughout calendar years 2023 and 2024.”
The Treasury Division acknowledged the up to date mannequin will incorporate “new information and science, together with new modeling of key feedstocks and processes utilized in aviation gas.”
It is going to additionally combine different classes of “oblique emissions like crop manufacturing and livestock exercise, along with greatest out there science and modeling of oblique land use change emissions.”
The replace to GREET additionally will combine key greenhouse gasoline emission discount methods resembling carbon seize and storage, renewable pure gasoline, renewable electrical energy and climate-smart agriculture practices.
The tax credit score incentivizes the manufacturing of SAF that achieves a lifecycle greenhouse gasoline emissions discount of at the very least 50% as in contrast with petroleum-based jet gas.
SAF producers are eligible for a tax credit score of $1.25 to $1.75 per gallon. SAF that decreases GHG emissions by 50% is eligible for the $1.25 credit score per gallon quantity, and SAF that decreases GHG emissions by greater than 50% is eligible for a further $0.01 per gallon for every share level the discount exceeds 50%, as much as $0.50 per gallon.
AG, BIOFUELS REACTION
It was an early Christmas current for the agriculture and biofuels teams that had lobbied for the usage of the GREET mannequin. Friday’s announcement is a key second for home biofuels manufacturing to develop the SAF business.
“Provided that GREET was created by the U.S. authorities and is broadly revered for its potential to measure reductions in greenhouse gasoline emissions from the farm to the aircraft, we’re inspired that Treasury will undertake some model of this mannequin,” stated Harold Wolle, Minnesota farmer and president of the Nationwide Corn Growers Affiliation.
“On the finish of the day, we’re keen to assist the aviation sector decrease its carbon footprint and we sit up for working with the concerned companies over the approaching months to make sure the ultimate mannequin helps us obtain that aim.”
GREET was developed by the U.S. Division of Vitality to measure greenhouse emissions from the sector to the automobile or aircraft.
Brian Jennings, CEO of the American Coalition for Ethanol, stated the Biden administration’s determination could possibly be a pivotal second for the ethanol business.
“Treasury’s determination will allow corn ethanol to emerge as a big SAF feedstock within the years to come back and fulfill President Biden’s pledge that farmers can be offering 95% of SAF within the subsequent 20 years,” he stated.
“Nobody within the Biden administration has a stronger grasp on the necessity for lifecycle modeling to replicate the perfect out there science than U.S. Secretary of Agriculture Vilsack and we applaud his management and efforts by the division to assist fortify the GREET mannequin to fulfill any questions on whether or not it’s a related methodology to the CORSIA mannequin.”
Jennings stated permitting the usage of GREET for the 40B SAF credit score is “in line with the statutory requirement” for the Treasury to make use of GREET for the 45V clear hydrogen credit score and 45Z clear gas manufacturing credit score.
DECISION SIGNIFICANCE
Geoff Cooper, president and CEO of the Renewable Fuels Affiliation, stated it was troublesome to overstate the importance of the choice.
“This can be a pivotal second for the way forward for sustainable aviation fuels,” he stated.
“Whereas there are vital carbon modeling updates and particulars that also have to be labored out, we’re cautiously optimistic that at present’s steering may open the door to an infinite alternative for America’s farmers, ethanol producers and airways. The Biden administration is recognizing that one of the simplest ways to fulfill formidable SAF targets is to maximise market flexibility, make use of current low-carbon gas belongings, and stimulate innovation and competitors throughout all the provide chain.”
Till different SAF applied sciences grow to be out there, ethanol is among the few available choices.
Michael McAdams, president of the Superior Biofuels Affiliation, stated the steering supplies flexibility for biofuels producers’ involvement in SAF.
“Recognizing {that a} one-size-fits-all strategy is impractical, the Biden administration’s acknowledgment of this actuality is essential for reaching vital carbon reductions in air journey,” McAdams stated.
“The ABFA has repeatedly fought to increase SAF tax credit and to extend the Renewable Gasoline Commonplace. Because the identify suggests, SAF is probably the most viable sustainable aviation gas choice to succeed in our shared aim of net-zero emissions by 2050 and demonstrates why we’d like an all-of-the-above local weather technique.”
Progress Vitality CEO Emily Skor stated she was cautiously optimistic concerning the Treasury announcement.
“In an vital first step, the Biden administration has acknowledged the deserves of utilizing the GREET mannequin in its steering for eligibility within the 40B sustainable aviation gas tax credit score,” she stated in an announcement.
“America’s biofuel producers and their farm companions proceed to innovate with myriad applied sciences which are additional lowering the carbon depth of low-carbon bioethanol, and we’re prepared to guide the aviation sector right into a lower-carbon future. This steering indicators our potential potential to take part within the SAF market.”
