Growth Energy Letter on the Certification Criteria for Sustainable Aviation Fuel under Sections 40B and 45Z

Thank you for the opportunity to comment on the Internal Revenue Service’s (IRS) interpretation of provisions of the Inflation Reduction Act (IRA) that will drive reductions in greenhouse gas (GHG) emissions and grow American jobs. Growth Energy is the nation’s largest association of biofuel producers, representing 96 U.S. plants that each year produce 9.6 billion gallons of low-carbon, renewable fuel; 113 businesses associated with the production process; and tens of thousands of biofuel supporters around the country.

Our members are committed to developing a robust sustainable aviation fuel (SAF) market in the United States, consistent with national climate goals and commitments. A number of our members have already made substantial investments in SAF production, and the IRA’s Section 40B and 45Z tax credits have the potential to greatly accelerate this trend.

Scaling up SAF production will be critical to the decarbonization and future economic competitiveness of the U.S. aviation sector. The SAF Grand Challenge pledges to reach 3 billion gallons of SAF production per year by 2030 and 35 billion gallons per year by 2050. To meet these goals, it will be necessary to harness the U.S. ethanol industry, which at 17.4 billion gallons per year accounts for over 80% of biofuels production capacity in the U.S. Ethanol is one of the few readily-available feedstocks for SAF production that can be utilized in the aviation sector if the proper economic conditions are in place and if the process for certifying SAF for tax credits under the IRA is reasonable and workable for ethanol-to-jet (ETJ) SAF.

The core requirement for SAF to be eligible for 40B and 45Z tax credits is that it achieves the required 50% or greater reduction in lifecycle greenhouse gas (“GHG”) emissions as compared to petroleum-based jet fuel.1 SAF must also be certified as meeting the requirements in Section 40B (and corresponding Section 45Z) in order to be eligible for the tax credits.2 In both the calculation of lifecycle GHG emissions and the certification of SAF, the IRA provides for flexibility — a producer may apply the
methodologies and requirements in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) or “any similar methodology which satisfies the criteria” set out in the RFS under the Clean Air Act.3 The Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model, for example, is one such “similar methodology” for calculating lifecycle GHG emissions that satisfies the criteria set out in the RFS, as elaborated in our prior letters attached here for ease of reference.

Similarly, the 40B and 45Z SAF certification provision allows for demonstrating compliance either with (1) certain CORSIA eligibility requirements or (2) if using an alternative lifecycle emissions methodology that satisfies the RFS criteria (such as GREET), compliance with “requirements similar to” those set out in CORSIA.