Biden Administration to Release Low-Carbon Aviation Fuel Tax Credit Model on Tuesday - Sources

by Jarrett Renshaw and Stephanie Kelly (Reuters) The Biden administration is expected to release a climate model for its sustainable aviation fuel (SAF) subsidy program on Tuesday, two sources familiar with the matter said.

The rule will dictate how ethanol producers can use climate-smart agriculture to qualify for tax credits in the production of SAF. The ethanol industry views SAF as a way to build demand for its products going forward, as gasoline consumption is expected to decline.

In early April, Reuters reported the model was expected to be more restrictive than what the corn-based ethanol industry had expected, according to anonymous sources. READ MORE

Excerpt from American Ag Network/NAFB News Service and Berns Bureau Washington: The model known as GREET will determine what the future of the ethanol industry looks like. Will it be limited to a possibly declining motor fuel market or will it as much as triple with aviation use? Renewable Fuels Association head Geoff Cooper is anxiously awaiting an answer from EPA and the energy and agriculture departments.

Cooper says, “The last thing we’ve heard from USDA on that is now they’re saying, hopefully, we see this modified GREET model by the end of the month. So, we went from March first to maybe, the beginning of April, and now we’re hearing, it’s more likely the end of April.”

Cooper says timing is key for investment in a possible 36 billion-gallon aviation fuel market by 2050. He says, “That’s another issue where things are frozen up right now. And nobody is moving in the marketplace until there’s some clarity and certainty around how that’s all going to play out.”

As for early reports relayed by Iowa Senator Chuck Grassley, the government may impose tough-to-screen growing conditions on feedstock corn and soybeans, Cooper says, “We don’t know…I don’t think we really have the details yet from USDA or from the administration on how they’re going to handle tracking of feedstocks and monitoring of farming practices and things like that. Those are some of the important details that we’re waiting on.” READ MORE

Excerpt from Brownfield Ag News: “It’s the Treasury Department issuing this. It’s not the EPA.” He (Agriculture Secretary Tom Vilsack) says the model is expected to serve as a placeholder in the 40B tax credit which applies to a small amount of the fuel in production this year.

“There’s a 45Z credit, which is a pretty good credit, it provides quite the financial incentive to produce this fuel,” he says. “To qualify for that, I’m confident there will be climate-smart agricultural opportunities.”

He says USDA will be a significant driver of additional developments for the aviation fuel market and make sure climate agriculture opportunities are included.

Vilsack and House Ag Committee Member Elissa Slotkin hosted a fireside chat with Michigan farmers Friday. READ MORE