The U.S. Treasury Department today released guidance regarding the implementation of the Inflation Reduction Act’s sustainable aviation fuel (SAF) tax credit. The guidance clarifies that a soon-to-be-updated version of the Department of Energy’s GREET model will be among the methodologies used to determine eligibility for the tax credit. The administration has committed to finishing the GREET model updates by March 1, 2024.
In response to the guidance, Renewable Fuels Association President and CEO Geoff Cooper provided the following statement:
“While there are important carbon modeling updates and details that still need to be worked out, we are cautiously optimistic that today’s guidance could open the door to an enormous opportunity for America’s farmers, ethanol producers and airlines. The Biden administration is recognizing that the best way to meet ambitious SAF targets is to maximize marketplace flexibility, make use of existing low-carbon fuel assets, and stimulate innovation and competition across the entire supply chain.
“RFA applauds the Treasury Department for ensuring the best available science and data on SAF will be recognized. By specifying that the GREET model will be an acceptable methodology for determining eligibility, Treasury has strengthened the credibility, transparency, and scientific robustness of the SAF tax credit program. We also thank Agriculture Secretary Tom Vilsack and his team at USDA for their continuing efforts to ensure climate-smart farming practices, carbon capture and sequestration, and other technology advances will be recognized in the final SAF tax credit program.
“Grain-based ethanol is, hands down, the most abundant and most cost-competitive source for large-scale SAF production. With nearly 200 ethanol biorefineries spread across the country, a well-established transportation and storage network, and the capacity to produce almost 18 billion gallons of low-carbon renewable fuel, the puzzle pieces are already in place to ramp up ethanol-to-jet fuel production. Today’s guidance is a step in the right direction and gives us hope that the U.S. ethanol industry will be able to participate in this remarkable opportunity to decarbonize the aviation sector.”
Cooper said RFA will remain actively engaged with the Biden administration as the next steps are taken to finalize the GREET model revisions, develop additional SAF pathways, and iron out other implementation details.
Background:
Over the past several years, RFA has been working diligently to ensure ethanol is able to participate in future SAF opportunities.
- Last month, many RFA member companies signed on to a historic coalition letter that included major airlines, calling on the Biden administration to integrate the best available science and data regarding the carbon impacts of SAF into the tax credit program.
- RFA’s efforts on the SAF tax credit began long before the IRA was introduced, including this correspondence with Congressional tax-writing committees in August 2021, as well as this joint letter in April 2022.
- In February, RFA filed extensive comments urging the allowance of GREET modeling for the sake of the SAF tax credits. In June and July, the organization welcomed the introduction of the Sustainable Aviation Fuels Accuracy Act in both houses of Congress.
- In August, at the RealClear Energy website, Cooper wrote about how farmers and ethanol producers can put “the S in SAF.” And in an August 22 blog post, he pointed out how the SAF modeling debate isn’t really about GREET vs. ICAO, but about “current data vs. old data.” Click here for a chart RFA has developed to explain the key differences between the DOE GREET approach and the ICAO approach.
- RFA also endorsed the Farm to Fly Act last month, which would affirm a common definition of SAF for USDA purposes, as widely supported by industry and congressional leaders to enable U.S. crops to most effectively contribute to aviation renewable fuels via renewable fuels like ethanol.
