Thanks for the chance to touch upon the Inside Income Service’s (IRS) interpretation of provisions of the Inflation Discount Act (IRA) that can drive reductions in greenhouse gasoline (GHG) emissions and develop American jobs. Development Power is the nation’s largest affiliation of biofuel producers, representing 96 U.S. vegetation that every yr produce 9.6 billion gallons of low-carbon, renewable gas; 113 companies related to the manufacturing course of; and tens of hundreds of biofuel supporters across the nation.
Our members are dedicated to creating a sturdy sustainable aviation gas (SAF) market in the USA, in line with nationwide local weather targets and commitments. Plenty of our members have already made substantial investments in SAF manufacturing, and the IRA’s Part 40B and 45Z tax credit have the potential to significantly speed up this development.
Scaling up SAF manufacturing will likely be essential to the decarbonization and future financial competitiveness of the U.S. aviation sector. The SAF Grand Problem pledges to succeed in 3 billion gallons of SAF manufacturing per yr by 2030 and 35 billion gallons per yr by 2050. To satisfy these targets, will probably be essential to harness the U.S. ethanol business, which at 17.4 billion gallons per yr accounts for over 80% of biofuels manufacturing capability within the U.S. Ethanol is likely one of the few readily-available feedstocks for SAF manufacturing that may be utilized within the aviation sector if the correct financial circumstances are in place and if the method for certifying SAF for tax credit underneath the IRA is cheap and workable for ethanol-to-jet (ETJ) SAF.
The core requirement for SAF to be eligible for 40B and 45Z tax credit is that it achieves the required 50% or higher discount in lifecycle greenhouse gasoline (“GHG”) emissions as in comparison with petroleum-based jet gas.1 SAF should even be licensed as assembly the necessities in Part 40B (and corresponding Part 45Z) as a way to be eligible for the tax credit.2 In each the calculation of lifecycle GHG emissions and the certification of SAF, the IRA gives for flexibility — a producer could apply the
methodologies and necessities within the Carbon Offsetting and Discount Scheme for Worldwide Aviation (CORSIA) or “any comparable methodology which satisfies the factors” set out within the RFS underneath the Clear Air Act.3 The Greenhouse Gases, Regulated Emissions, and Power Use in Applied sciences (GREET) mannequin, for instance, is one such “comparable methodology” for calculating lifecycle GHG emissions that satisfies the factors set out within the RFS, as elaborated in our prior letters connected right here for ease of reference.
Equally, the 40B and 45Z SAF certification provision permits for demonstrating compliance both with (1) sure CORSIA eligibility necessities or (2) if utilizing another lifecycle emissions methodology that satisfies the RFS standards (corresponding to GREET), compliance with “necessities much like” these set out in CORSIA.
