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Crop-based biofuels eligible for aviation fuel tax credits

The market for sustainable aviation fuels is set to skyrocket, according to a report.

December 28, 2023

3 Min Read
A commercial airplane flying low with plants in the foreground
REDUCED GHG: Emission levels from the production, dissemination, transportation and combustion of sustainable aviation fuels are about 75% lower than those from fossil jet fuels, according to a report from Exactitude Consultancy. Raul_Mellado/Getty Images

by Jon Adamy

Agriculture’s role in the future of sustainable aviation fuels just got a whole lot brighter.

The U.S. Department of Treasury announced it will use a modified version of the Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model for aviation fuel tax credits. The move will allow crop-based feedstocks — including ethanol — to be used for SAF production.

The decision has been eagerly anticipated since the Inflation Reduction Act allocated tax credits for biofuels that can demonstrate that they cut greenhouse gas emissions by 50% or more.

“Given that GREET was created by the U.S. government and is widely respected for its ability to measure reductions in greenhouse gas emissions from the farm to the plane, we are encouraged that Treasury will adopt some version of this model,” said Harold Wolle, National Corn Growers Association (NCGA) president.

Emission levels from the production, dissemination, transportation and combustion of SAFs are about 75% lower than those from fossil jet fuels, according to a report from Exactitude Consultancy.

As the report noted, the U.S. is one of the world’s top producers of SAF, which can be introduced with no modifications to the aircraft or infrastructure, making it a “drop-in fuel.”

The American Farm Bureau Federation, NCGA, American Soybean Association (ASA) and multiple biofuels industry groups have been vocal supporters of using the GREET model.

AFBF President Zippy Duvall said the decision is good news for America’s families and farmers.

“It recognizes agriculture’s role in climate-smart production, while addressing the public’s growing demand for sustainable energy sources,” Duvall said.

According to ASA, the Treasury Department has determined SAFs that qualify as biomass-based diesel or advanced biofuel under the RFS will be considered as having a 50% greenhouse gas reduction for the purposes of this credit.

“This action is positive for soy-based SAF, which will be eligible for the SAF credit at the $1.25-per-gallon rate,” ASA wrote in a statement.

Corn-based ethanol also achieves carbon emissions reductions sufficient to qualify for the tax credits, according to biofuels industry group Growth Energy. It noted that multiple major airlines and other large companies in the aviation sector have voiced support for the GREET model to federal officials.

Growth Energy called the decision to adopt GREET a “good first step” that signals American biofuels producers’ 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,” Growth Energy CEO Emily Skor wrote in a statement. 

“Today, under this guidance, SAF produced from other biofuels — including Brazilian cane bioethanol — qualifies for the $40 billion 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.”

The market for SAF is set to skyrocket, according to the Exactitude Consultancy report. While the global SAF markets were valued at more than $84 million in 2022, the report projects it to reach more than $9.7 billion by 2029 — a compound annual growth rate of 60.8%.

Adamy writes for Michigan Farm Bureau.

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