[originally published in RealClear Energy]
The U.S. Treasury’s current replace to the mannequin for Sustainable Aviation Gasoline (SAF) tax credit marks a major step in direction of increasing low-carbon jet gasoline. With clear steering for aviation gasoline producers in place, our nation is on a flightpath towards decrease carbon emissions.
In 2022, Congress set the stage for various, non-petroleum aviation fuels with the passage of the Inflation Discount Act (IRA). The landmark laws offered a tax credit score of $1.25 per gallon for all SAF that reduces greenhouse fuel (GHG) emissions by at the very least 50% in comparison with conventional fuels, with an extra one cent per gallon for every share level over 50%, as much as $1.75 – aligned with earlier superior biofuel requirements.
Till lately, nevertheless, the shortage of detailed laws concerning eligibility for the tax credit created uncertainty available in the market for SAF producers. The Treasury Division’s remaining rule of the “40B Greenhouse Gases, Regulated Emissions and Power Use in Transportation (GREET) Mannequin” has offered much-needed readability on which fuels qualify, and essential flexibility to allow totally different expertise approaches to deal with one of many largest sources of greenhouse fuel emissions on the planet.
One firm impacted by this replace is World Power, who focuses on low-carbon vitality and is a world chief within the manufacturing of SAF. Their CEO, Gene Gebolys, has highlighted that “The making of the gasoline wasn’t the issue; the making of the market was.” With clear tips on which fuels qualify, corporations like World Power can confidently and economically deliver their confirmed gasoline applied sciences to a broader market. They’ve already powered flights efficiently, together with the world’s first transatlantic flight powered 100% by SAF.
Aviation alone accounted for 2% of all world GHG emissions in 2022. Attaining significant carbon emissions discount will necessitate a major shift within the sorts of fuels airways use.
Recognizing this, President Biden set the SAF Grand Problem, aiming to cut back aviation emissions 20% by 2030 via the manufacturing of three billion gallons of SAF domestically every year. Nonetheless, as of 2023, the U.S. produced solely 24.5 million gallons of SAF, nicely wanting the goal. The 40B credit score has been designed to help producers that may assist to fill this hole.
To help the complete SAF value-chain and additional spur innovation, regulators have launched a pilot program that rewards farmers for deploying climate-smart agriculture practices for SAF feedstocks, reminiscent of no-till farming, cowl crops, and environment friendly fertilizer use. This method ensures emissions reductions initially of the SAF provide chain and can enhance the adoption of climate-smart agricultural practices.
Gevo, a number one SAF producer whose gasoline has powered greater than 35 airways throughout 4 continents, independently rewards farmers via its farm-to-flight program and helps the choice to incentivize farmers additional. Gevo’s method of measuring and rewarding farmers straight aligns with this purpose, as their CEO and Director Dr. Pat Gruber defined to me lately, “We try to trigger economically pushed enchancment at a area stage. So, we’re huge time proponents of simply measure it and pay farmers for what they do.”
Whereas the 40B credit score is a promising begin, it expires on the finish of this 12 months. The upcoming 45Z credit score, which shall be in impact from 2025 – 2027 and is ready to be introduced later this 12 months, have to be equally versatile and crafted in partnership with trade leaders. Studying from 40B and enhancing the usability of the tax credit is essential for accelerating investments in SAF infrastructure and assembly manufacturing objectives.
As Gevo’s VP of Authorities Relations Lindsay Fitzgerald emphasised to me, “[40B] units the bar for steady enchancment. And that’s a change and one thing we haven’t seen in coverage previously.”
Whereas there are alternatives for enchancment between 40B and when 45Z is launched, the Treasury Division’s remaining 40B mannequin is a promising first step. If we’re to fight the local weather disaster successfully, we’d like an all-of-the-above resolution.
Dr. Gruber put the chance in correct perspective: “That is the very first time in my profession the place I can say that there’s an opportunity that we may pull this entire huge system off and do it on a big scale.” With clear steering and continued help, our nation can chart a greener aviation future.
Michael McAdams is the president of the Superior Biofuels Affiliation.
