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Biden administration announces new sustainable aviation fuel standards

Revised modeling and pilot program offer producers new tax incentives.

Joshua Baethge, Policy editor

May 1, 2024

4 Min Read
Shadow of plane on field
Getty Images/Scharfsinn86

On Tuesday, the U.S. Treasury Department and the Internal Revenue Service issued long-awaited new guidelines for tax credits for sustainable aviation fuel. The rules are intended to spur production of SAF that reduces greenhouse gas emissions by at least 50% compared to petroleum-based jet fuel.

Agriculture Secretary Tom Vilsack called the announcement an “important steppingstone” that acknowledges the role farmers can play in lowering greenhouse gas emissions.

“This is a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops produced using climate smart agricultural practices,” Vilsack says. “USDA will continue to work with our federal agency partners to expand opportunities in the future for climate smart agriculture in producing sustainable aviation fuel.”

The guidelines include an updated version of the GREET model, which takes into account multiple factors to determine a fuel’s environmental impact over the course of its lifespan from farm to plane. The new 40B GREET model includes more emphasis on certain emission-reduction strategies like carbon capture and storage, renewable natural gas and renewable energy.

Using that model, sustainable aviation fuel producers are eligible for a $1.25 per gallon tax credit if they achieve a 50% reduction in greenhouse gas emissions. SAF that reduces greenhouse gas emissions by more than 50% is eligible for a $0.01 per gallon tax credit for each additional percentage up to $0.50 per gallon.

Related:New sustainable aviation fuel rules not ready to fly

USDA also announced a pilot program to encourage farmers to “bundle” climate smart agriculture practices for SAF feedstock. Starting in 2025, farmers may earn a Clean Fuel Production Credit, known as 45Z, by following certain guidelines. Corn based ethanol producers can earn a tax credit if they incorporate multiple practices like no-till farming, cover crops and enhanced efficiency fertilizer. Soybean SAF producers can earn the tax break if they practice no-till farming and cover cropping.

According to American Soybean Association President Josh Gackle, this requirement is a problem for many soybean producers. While the ASA supports climate smart agriculture practices, the pilot program could exclude producers in certain parts of the country. That includes Gackle himself, who grows beans in Kulm, North Dakota.

“For growers like me here in North Dakota, short growing seasons and unpredictable fall weather make the cover crop requirement alone next to impossible,” Gackle says. “Growers in the Northern Plains do so when possible. However, employing both no till and cover cropping is contrary to what Mother Nature will allow no matter what the guidance specifies.”

Per a Treasury Department release, federal agencies are still working on additional guidelines and verification processes to determine how the pilot program tax incentives will be determined. USDA officials have also indicated they hope to expand the number of climate smart agriculture practices eligible for the 45Z credit. That will likely include another GREET model specific for that tax incentive.

Renewable Fuels Association President Geoff Cooper called the news a starting point for additional SAF modeling improvement. He says the RFA is encouraged that, for the first time, the new carbon scoring framework will recognize and credit certain climate smart agricultural practices. He was also pleased to see the integration of carbon reduction strategies like renewable process energy and carbon capture and sequestration incorporated into the model.

Still, he believes less prescription on ag practices, more flexibility, and additional low-carbon technologies and practices should be added to the modeling framework to better reflect the innovation occurring throughout the supply chain.

American Coalition for Ethanol CEO Brian Jennings noted this is the first time a federal regulatory body has formally acknowledged the role climate smart agriculture practices play in reducing corn ethanol’s greenhouse gas emissions. He praised USDA and Secretary Vilsack for advocating ethanol as a SAF solution. Still, he hopes future revisions to the rule will not require producers to bundle multiple climate smart agriculture practices.

“We are very encouraged the 40B GREET determination of indirect effects, including the land use change (LUC) penalty for ethanol-to-jet, was driven by science rather than arbitrarily inflated estimates which do not reflect real-world observations of land use and conversion,” Jennings says. “While today’s announcement is a step in the right direction, corn farmers and ethanol producers will face headwinds to produce qualifying corn ethanol feedstock for SAF given the all or none requirement to bundle CSA practices."

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Renewable Fuels

About the Author(s)

Joshua Baethge

Policy editor, Farm Progress

Joshua Baethge covers a wide range of government issues affecting agriculture. Before joining Farm Progress, he spent 10 years as a news and feature reporter in Texas. During that time, he covered multiple state and local government entities, while also writing about real estate, nightlife, culture and whatever else was the news of the day.

Baethge earned his bachelor’s degree at the University of North Texas. In his free time, he enjoys going to concerts, discovering new restaurants, finding excuses to be outside and traveling as much as possible. He is based in the Dallas area where he lives with his wife and two kids.

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