WASHINGTON, D.C.–Today the U.S. Treasury Department issued guidance on eligibility for the Sustainable Aviation Fuel (SAF) tax credit enacted in Section 40B of the Inflation Reduction Act (IRA). Growth Energy CEO Emily Skor issued the following statement in response:
“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 (SAF) tax credit. 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.
“New investments in SAF are highly dependent on the pending GREET modeling updates, however, and the industry needs more clarity around the proposed changes before we have certainty around market access. Today, under this guidance, SAF produced from other biofuels including Brazilian cane bioethanol qualifies for the 40B tax credit, but the path for American-made corn-based bioethanol remains unclear. U.S. tax policy shouldn’t advantage foreign firms over domestic ones.
“Any GREET update must follow sound science and account for the proven environmental benefits of American-made bioethanol. The Department of Energy’s Argonne-GREET model —widely accepted as the gold standard carbon model by the nation’s scientists, academics, and researchers—already reflects the latest science showing bioethanol’s limited impact on land use and its significant reduction in greenhouse gas (GHG) emissions. The Biden administration should hold fast to this widely accepted science and ignore those who seek to limit SAF opportunities by pushing an inaccurate and outdated narrative about bioethanol.
“We will work with the Biden administration to ensure that these GREET updates reflect the most up to date science and environmental benefits of bioethanol as we seek to meet the ambitious goals of the president’s SAF Grand Challenge.”
Background
Section 40B of the Inflation Reduction Act (IRA) provided for two years of a sustainable aviation fuel (SAF) tax credit. In 2023 and 2024 SAF will qualify for a standalone blenders credit (40B) if the fuel reduces lifecycle greenhouse gas emissions by at least 50 percent. The value of this credit is determined on a sliding scale, equal to $1.25 plus an additional $0.01 for each percentage point by which the lifecycle emissions reduction of such fuel exceeds 50 percent.
Under the current version of the Department of Energy Argonne National Lab’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model for lifecycle analysis, corn-based bioethanol achieves carbon emissions reductions sufficient to qualify for Section 40B credits. Growth Energy has repeatedly engaged with various federal agencies—including the U.S. Department of the Treasury and the Internal Revenue Service—urging officials there to fully adopt the model.
GREET presents the most accurate picture of the environmental benefits of corn-based bioethanol because it accounts for the differences in carbon intensity that biorefineries can achieve when deploying climate-smart agriculture techniques and carbon capture, usage, and sequestration technology. Growth Energy and the American biofuels industry are not alone in their support for GREET—a number of major airlines and other large companies in the aviation sector have similarly voiced support for the model to federal officials.