by Chris Clayton (DTN Progressive Farmer) Airlines and businesses tied to the bioeconomy are stressing how critical the right policies will be to help fully develop a market for sustainable aviation fuels (SAF) that can help create a new market for farmers.
Sustainable aviation fuels were a major focus Monday at the Agri-Pulse Ag & Food Policy Summit. Leaders highlighted the importance of measuring carbon, but also ensuring that the same model used to give SAF producers tax credits also are used for the Renewable Fuel Standard.
"The beauty of where agriculture sits is they hold the keys. You are the above-ground oil wells," said Tim Obitts, CEO of Alder Renewables, which is focused on converting cellulosic residue and woody biomass into jet fuel.
The Biden administration is pushing to see 3 billion gallons of SAF by 2030, which is about 10% of the total aviation fuel market. Aviation groups have committed to getting the industry to "net-zero" carbon emissions by 2050.
The ethanol industry is primed for an alcohol-to-jet conversion, but that will require both tax credits and changes to how EPA scores out corn-based ethanol in the Renewable Fuel Standard (RFS).
BEYOND TAX CREDITS
While the SAF tax credits can spur some initial industry investment, SAF advocates said a longer-term need will be to change the way the GREET model is used at the Environmental Protection Agency to generate biofuel renewable identification numbers (RIN) credits at EPA under the RFS. "Tax credits that expire in 2027 cannot serve as an investment signal for building a new industry, which is what we need for alcohol-to-jet," said Alex Menotti, vice president of government affairs, policy and sustainability for Lanza Jet.
Lanza Jet opened a 10-million-gallon, alcohol-to-jet-fuel facility in Georgia earlier this year. To get RIN credits, Lanza Jet began importing ethanol from Brazilian sugarcane.
...
Amelia DeLuca, chief sustainability officer at Delta Air Lines, told DTN in an interview that she is spending a lot of time in state capitals. States such as Illinois and Minnesota have their own SAF tax credits for fuels produced or used in the state. Last week, DeLuca was in Michigan where she and a farmer testified to the state senate there, advocating for similar incentives. She's also been paying attention to California and New York.
...
Beyond domestic policy, Obitts warned the U.S. and Europe also are going to increasingly clash over SAF because the EU wants to prohibit using plant-based sugar or corn to produce jet fuels.
CARBON SEQUESTRATION
Carbon capture and sequestration is the biggest lever to pull when it comes to scoring the carbon intensity of using biofuels for jet fuel.
The Midwest has focused heavily on policies to either restrict or incentivize carbon pipelines and sequestration. The U.S. House of Representatives will take up a bill this week that would make it harder for states to block such pipelines.
...
Missouri farmer Alan Weber is also a founding partner of MARC-IV, a consulting company focused on developing industrial uses from agricultural feedstocks and waste. Weber said he sees increasing opportunities for farmers to grow crops such as camelina, pennycress and winter canola to produce SAF feedstocks. Farmers would diversify their crop rotations and plant more winter cash crops as a result.
Weber, however, pointed to some challenges with some of these winter crops. They may serve a similar purpose as cover crops, but they don't qualify under USDA conservation programs.
"Those programs could be a boost to helping farmers grow these crops for the first time."
Another hurdle is crop insurance. Harvesting a winter crop such as pennycress in the Midwest would work well for following up with soybeans in spring. "It gives you the opportunity for a full-season soybean crop," Weber said.
Still, USDA's Risk Management Agency views a winter cash crop differently than a cover crop. That ends up affecting the level of crop insurance that could be available to the farmer.
...
DTN Lead Analyst Todd Hultman wasn't at the Agri-Pulse event, but he's been increasingly watching the evolution of SAF policy, which could be critical for farmers going forward as export markets erode.
"Largely due to the aggressive expansion of Brazilian cropland and chronic loss of U.S. export share over the past few decades, farmers are currently facing cash corn prices already trading nearly a dollar a bushel below USDA's estimated cost of production," Hultman noted.
On top of that, farmers face the prospects for potentially the highest 2024-25 ending corn surplus since 1987, if USDA's early projections prove correct.
Hultman added, "An expansion of the domestic biofuels industry is the best hope the American farmer has of restoring demand and profitability to U.S. corn and soybean markets as Brazil has the ability keep expanding its cropland base for decades to come."
The 2021 Sustainable Aviation Fuel (SAF) Grand Challenge has set a goal of 3 billion gallons of SAF by 2030 and 35 billion gallons by 2035. There is not enough corn or soybean surplus to provide a big share of these goals, but keep in mind, 1 billion gallons of SAF can be produced from nearly 600 million bushels of corn, Hultman said.
"Even a small share of this new endeavor would go a long way to easing the current surpluses in corn and soybeans and help restore profitability to U.S. agriculture," Hultman said. "If the SAF requirements are favorable for corn and soybean fuels, we could start to see a positive impact on corn and soybean supplies in two, maybe three years." READ MORE
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