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U.S. Treasury Department issues new guidance for SAF tax incentives, boosting high-emitting crop-based biofuels

The U.S. Department of Treasury has released final tax credit guidance for sustainable aviation fuel (SAF) production. The new guidance allows the use of the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model favored by the ethanol industry to determine the greenhouse gas emissions (GHG) from aviation fuel production and use.

The Inflation Reduction Act (IRA) created the SAF tax credit to reduce aviation emissions by subsidizing fuels that achieve at least a 50% reduction in emissions compared with conventional petroleum-based jet fuel. This tax credit is intended to help the aviation industry meet its decarbonization goals.

The original IRA language for the tax credit refers to the criteria used globally by the Carbon Offsetting and Reduction scheme for International Aviation (CORSIA), under which neither corn ethanol nor biofuels from vegetable oil would qualify as SAF. Allowance of the GREET model version announced to determine fuel eligibility, however, will allow corn ethanol and other food crop-based fuels to qualify for the SAF tax credit because it fails to adequately account for the opportunity cost of dedicating prime farmland to energy, rather than food, production.

Dan Lashof, Director, United States, World Resources Institute, said, Powering planes with crop-based biofuels is anything but sustainable. The U.S. missed a major opportunity to focus incentives on climate-friendly fuel to help the aviation industry decarbonize.

“At a time of increasing demands on limited global land, we cannot afford to use food to fuel airplanes. Research has shown that crop-based biofuels have lifecycle GHG factors that are as bad, or worse, than fossil fuels. Tax credits for corn ethanol or vegetable oil to make jet fuel is not the solution for decarbonizing aviation, and any policies that subsidize use of such fuels benefits wealthier air travelers at the expense of average consumers who will pay more for food.

“WRI analysis shows that using corn ethanol to meet the anticipated demand for aviation fuel would require an unviable amount of cropland, and using vegetable oil, such as soy biodiesel, would cause devastating deforestation. The Biden administration should use the best available science, which shows that crop-based biofuels do not meet the 50% emissions reduction threshold required to qualify for the SAF tax credit under the IRA. By bowing to pressure from the ethanol industry, the administration has put the U.S. aviation industry out of step with its international competitors and made its own climate protection goals harder to achieve.”


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