- Congress must oppose efforts to repeal tax credits like 45Z (clean fuel production credit), 45Q (carbon capture tax credit), and 40B (sustainable aviation fuel tax credit).
- Officials throughout the federal government must ensure that tax incentive modeling accurately reflects the low-carbon benefits of bioethanol and uses the most up to date science through the use of the Department of Energy Argonne National Lab’s GREET model.
What Role Do Tax Incentives Play in Lowering Carbon Emissions?
Biofuel producers and their products lower carbon emissions every day, but tax incentives play a role in spurring investments in technologies that further lower their carbon intensity (CI) scores. The biggest and most promising of these technologies is carbon capture, utilization, and storage (CCUS), in which biogenic CO2 emitted during the ethanol production process is either sequestered safely underground or captured and sold for food and beverage and healthcare applications. CCUS and other technologies like it can help biofuel producers lower their emissions, which lowers their CI scores, and in turn helps them qualify for bigger tax incentives.
These incentives don’t just lower emissions, but also provide the certainty that the U.S. biofuels industry needs in order to compete in global next-generation fuel markets, particularly when it comes to sustainable aviation fuel (SAF). In order to unleash innovation and job opportunities through rural America, while supporting the strength and longevity of Midwest communities and the liquid fuels sector, regulators must pursue a technology-neutral approach to these tax incentives, and administer them using the U.S. Department of Energy Argonne GREET model.
What Is the GREET Model?
The U.S. Department of Energy’s Argonne Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model is the gold standard for measuring the emissions-reducing power of farm-based feedstocks and biofuels. It incorporates up-to-date science that more accurately scores carbon intensity for corn ethanol and other renewable fuels.
If federal regulators use a different model to administer these tax credits, it is likely that national goals such as the Biden Administration’s SAF Grand Challenge for decarbonization of the airline fleet will not be met. Additionally, farmers, rural communities, and U.S. biofuel producers will not be able to participate in global SAF markets and miss out on opportunities in other hard to decarbonize sectors.
What Impact Would Growth Energy’s Policy Priorities Have on Consumers, the Economy, or the Environment?
- Tax incentives awarded using the GREET model have the potential to spur even more new investments in climate-smart farming practices, carbon capture, utilization, and storage (CCUS), renewable energy, and other proven emissions-reducing technologies.
- Specifically, if the GREET model is used in the application of the Section 45Z clean fuel production tax credit in the Inflation Reduction Act (IRA), this one tax credit alone would add $21.2 billion to the U.S. economy, generate nearly $13.4 billion in household income, support more than 192,000 jobs across all sectors of the national economy, and provide farmers with a 10 percent premium price on low carbon corn used at an ethanol plant.