[originally published in Progressive Farmer]

U.S. farmers and ethanol producers will be a key cog in the growth of the sustainable aviation fuel industry for the foreseeable future after the U.S. Department of Treasury announced Friday it will use a modified version of a popular greenhouse gas (GHG) emissions model to determine how it allocates tax credits in the Inflation Reduction Act.

Using the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies, or GREET, model will allow the Treasury to accurately determine ethanol’s carbon footprint.

Because the model uses the latest real-world data on corn ethanol, sustainable aviation fuel (SAF) produced using corn ethanol as a feedstock would qualify for the tax credits.

NEW GUIDELINES

“Under the guidance issued today, numerous fuels will qualify for the credit, including valid biomass-based diesel, advanced biofuels, cellulosic biofuel or cellulosic diesel that have been approved by EPA under the Renewable Fuel Standard,” the Treasury Department stated in a news release.

“Fuels that achieve a 50% or greater reduction in lifecycle greenhouse gas emissions under the most recent Carbon Offsetting and Reduction Scheme for International Aviation standard will continue to qualify under today’s guidance.”

Along with that, the Treasury stated EPA, DOT, USDA and DOE are announcing commitments to release an updated version of DOE’s GREET model by March 1, 2024. Pending further guidance from the Treasury Department, “the updated GREET model will provide another methodology for SAF producers to determine the lifecycle GHG emissions rates of their production for the purposes of qualifying for the SAF credit for SAF sold or used during calendar years 2023 and 2024.”

The Treasury Department stated the updated model will incorporate “new data and science, including new modeling of key feedstocks and processes used in aviation fuel.”

It will also integrate other categories of “indirect emissions like crop production and livestock activity, in addition to best available science and modeling of indirect land use change emissions.”

The update to GREET also will integrate key greenhouse gas emission reduction strategies such as carbon capture and storage, renewable natural gas, renewable electricity and climate-smart agriculture practices.

The tax credit incentivizes the production of SAF that achieves a lifecycle greenhouse gas emissions reduction of at least 50% as compared with petroleum-based jet fuel.

SAF producers are eligible for a tax credit of $1.25 to $1.75 per gallon. SAF that decreases GHG emissions by 50% is eligible for the $1.25 credit per gallon amount, and SAF that decreases GHG emissions by more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.

AG, BIOFUELS REACTION

It was an early Christmas present for the agriculture and biofuels groups that had lobbied for the use of the GREET model. Friday’s announcement is a key moment for domestic biofuels production to develop the SAF industry.

“Given that GREET was created by the U.S. government and is widely respected for its ability to measure reductions in greenhouse gas emissions from the farm to the plane, we are encouraged that Treasury will adopt some version of this model,” said Harold Wolle, Minnesota farmer and president of the National Corn Growers Association.

“At the end of the day, we are eager to help the aviation sector lower its carbon footprint and we look forward to working with the involved agencies over the coming months to ensure the final model helps us achieve that goal.”

GREET was developed by the U.S. Department of Energy to measure greenhouse emissions from the field to the car or plane.

Brian Jennings, CEO of the American Coalition for Ethanol, said the Biden administration’s decision could be a pivotal moment for the ethanol industry.

“Treasury’s decision will enable corn ethanol to emerge as a significant SAF feedstock in the years to come and fulfill President Biden’s pledge that farmers would be providing 95% of SAF in the next 20 years,” he said.

“No one in the Biden administration has a stronger grasp on the need for lifecycle modeling to reflect the best available science than U.S. Secretary of Agriculture Vilsack and we applaud his leadership and efforts by the department to help fortify the GREET model to satisfy any questions about whether it is a similar methodology to the CORSIA model.”

Jennings said allowing the use of GREET for the 40B SAF credit is “consistent with the statutory requirement” for the Treasury to use GREET for the 45V clean hydrogen credit and 45Z clean fuel production credit.

DECISION SIGNIFICANCE

Geoff Cooper, president and CEO of the Renewable Fuels Association, said it was difficult to overstate the significance of the decision.

“This is a pivotal moment for the future of sustainable aviation fuels,” he said.

“While there are important carbon modeling updates and details that still need to be worked out, we are cautiously optimistic that today’s guidance could open the door to an enormous opportunity for America’s farmers, ethanol producers and airlines. The Biden administration is recognizing that the best way to meet ambitious SAF targets is to maximize marketplace flexibility, make use of existing low-carbon fuel assets, and stimulate innovation and competition across the entire supply chain.”

Until other SAF technologies become available, ethanol is one of the few readily available options.

Michael McAdams, president of the Advanced Biofuels Association, said the guidance provides flexibility for biofuels producers’ involvement in SAF.

“Recognizing that a one-size-fits-all approach is impractical, the Biden administration’s acknowledgment of this reality is crucial for achieving significant carbon reductions in air travel,” McAdams said.

“The ABFA has continuously fought to extend SAF tax credits and to increase the Renewable Fuel Standard. As the name suggests, SAF is the most viable sustainable aviation fuel option to reach our shared goal of net-zero emissions by 2050 and demonstrates why we need an all-of-the-above climate strategy.”

Growth Energy CEO Emily Skor said she was cautiously optimistic about the Treasury announcement.

“In an important first step, the Biden administration has recognized the merits of using the GREET model in its guidance for eligibility in the 40B sustainable aviation fuel tax credit,” she said in a statement.

“America’s biofuel producers and their farm partners continue to innovate with myriad technologies that are further reducing the carbon intensity of low-carbon bioethanol, and we are ready to lead the aviation sector into a lower-carbon future. This guidance signals our potential ability to participate in the SAF market.”