U.S. Airlines Back Ethanol Producers On SAF Credit

U.S. airlines have backed the use of a carbon life-cycle assessment model that would make it easier for sustainable aviation fuel (SAF) made from corn ethanol to qualify for a government subsidy.

Use of the model is opposed by environmental groups that fear it could incentivize the production of fuels with uncertain emissions benefits.

A Nov. 1 letter to U.S. Treasury Secretary Janet Yellen, signed by fuel producers and seven major airlines, as well as Boeing and GE Aerospace, urges the Biden administration to immediately recognize the U.S. Energy Department’s Argonne GREET (Greenhouse Gases, Regulated Emissions and Energy Use in Technologies) model as an acceptable life-cycle assessment (LCA) methodology under the Inflation Reduction Act (IRA).

The Act established a blenders’ tax credit for SAF, the value of which is based on its calculated life-cycle reduction in greenhouse gas (GHG) emissions compared to fossil jet fuel. The credit ranges from $1.25 per gal. for a minimum 50% reduction to $1.75 for 100%.

The IRA cites the International Civil Aviation Organization’s (ICAO) CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) model as the method for determining SAF credit eligibility and valuation but allows for the use of “any similar methodology.”

U.S. ethanol producers have been lobbying the Biden administration to allow use of the GREET model while environmental groups have argued the methodology for determining credit eligibility should be restricted to the CORSIA model developed for aviation use.

At stake is the ability of the U.S. ethanol production industry to tap the need for SAF at a time when electrification of vehicles is reducing demand for the biofuel. At issue is how CORSIA penalizes ethanol for emissions from indirect land-use changes more severely than does GREET.

“The largest differences between the methodologies come from how they estimate the indirect emissions from ... land-use changes triggered when more acres are put into biofuel production,” says a September briefing by the International Council on Clean Transportation (ICCT).

“Regulators calculate these indirect emissions as a way to assess all the unintended risks associated with biofuel policies and increased biofuel demand,” ICCT says. While CORSIA and GREET produce similar assessments of direct emissions, they “differ widely in their estimates of indirect emissions,” it says.

In their letter to Yellen, ethanol supporters cite three reasons for allowing use of the GREET model. First, GREET “incorporates the latest biorefining and production efficiencies and is updated regularly. Accuracy, transparency, and predictability are vital to securing private capital in a policy-driven market.”

Second, the letter says, “unlike the ICAO model, Argonne GREET allows users to account for climate-smart and regenerative feed stock production practices.” Finally, “tying a U.S. SAF credit to only one international model—in an inherently uncertain technical field—increases investment risk.”

The IRA was enacted in August 2022, but the Treasury Department and Internal Revenue Services have yet to decide the details of how the SAF blenders tax credit will be applied. The differences between CORSIA and GREET assessments of the emission reductions of ethanol are at the heart of the delay.

Tapping into existing corn ethanol production capacity would give the U.S. a better chance of meeting the Biden administration’s SAF Grand Challenge goal of producing 3 billion gal. per year by 2030. And improving ethanol’s GHG LCA score would help unlock the investment required for SAF production.

“Modeling uncertainty today is a multiyear development problem due to the buildout schedules of SAF production facilities,” the letter says. “To this end, we underscore the urgency for providing clarity on this issue as soon as possible.”

Signatories to the letter include Alaska Airlines, American Airlines, Boeing, Delta Air Lines, GE Aerospace, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, and United Airlines.