How to Increase Your Potential SAF Tax Credits Now

March 05, 2024

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by Cheyenne Kramer (AgWeb) With sustainable aviation fuel (SAF) tax credits beginning in 2025, the practices farmers use during the 2024 growing season will have a direct impact on their ability to take advantage of these incentives.

Mitchell Hora of Continuum Ag recently joined the Top Producer podcast to share the best ways to begin preparing now.

“If you're selling to a biofuel plant, the company will be asking you for management information, and they might be just directly asking you for your carbon intensity score,” Hora says.

A grower’s carbon intensity (CI) score is calculated based on a tool from the U.S. Department of Energy called the Greenhouse Gases, Regulated Emissions and Energy Use in Transportation (GREET) model. The score can vary from field to field and year to year.

According to Hora, the GREET model tells growers what their crop’s carbon footprint is. And for the corn and soybeans that will be planted this spring, the footprint is already being made.

“To maximize this opportunity in the calendar year 2025, we need to optimize the carbon intensity of the corn that we're going to grow, and the soybeans we’re going to grow in 2024,” he says. “The practices that we did this fall, like tillage, manure, fertilizer and cover crops directly impact the carbon intensity of this 2024 crop.”

The upcoming tax credits are dependent on the crop’s CI score, and the maximum credit would be $1 per gallon for ethanol and biodiesel and $1.75 per gallon for SAF. However, Hora doesn’t advise expecting to receive that value.

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Hora lists a few of the ways producers can lower their scores, such as:
•   Using a cover crop ahead of corn
•   Supplementing or replacing synthetic fertilizer with manure
•   Reducing tillage by implementing strip till or no till practices
•   Decreasing diesel fuel usage and energy inputs
•   Improving yield to spread carbon input across more bushels

He also encourages consulting with your agronomist to find the steps you need to take next.

“We cannot just sit back and wait,” Hora says. “There 6 billion bushels of corn that goes into ethanol every year in this country, and right now all 6 billion bushels have a default CI score. We need to keep having the conversation of getting more farmers aware and getting more farmers to get their CI score.”

To hear more about SAF tax credits, listen to this episode of the Top Producer podcast. READ MORE; includes AUDIO

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US ethanol sector pins hopes on dominating SAF feedstocks (Fastmarkets)

Excerpt from Fastmarkets:

“We are creating a new industry and now is the time,” Lee Blank of Summit Carbon Solutions told delegates at the National Ethanol Conference in San Diego during a panel discussion, with any expansion into the potentially huge aviation fuel sector likely to spell significant changes for everything from corn to ethanol and to DDGS.

“The sustainable aviation fuel (SAF) market really is going to drive this area over the next few decades and we have to be aggressive if we’re going to get it,” he continued, echoing a range of presenters that laid out the opportunities – and challenges – that the sector faces.

While typical campaigns, including the year-round rollout of a 15% ethanol blend known as E15 and potential expansion into the marine fuels space, were still evident during the conference – the discussion was dominated by SAF.

Expansion to 3 billion gallons by 2030, 36 billion gallons by 2050

Jimmy Samartzis, the CEO of SAF producer start-up LanzaJet, told delegates that current SAF output in 2023 reached 13 million gallons – amounting to 0.06% of total demand.

The target would require expansion to 3 billion gallons by 2030, potentially followed by a ten-fold increase to 36 billion gallons over the twenty years following.

Samartzis – who leads a company that just started up its Freedom Pines SAF facility earlier this year – argued that only ethanol carried the sort of promise that would be required to make that expansion feasible.

Corn-based ethanol offered versatility and flexibility and almost unlimited feedstocks at a cost-effective price.

Moreover, while electrification will continue to penetrate the car fleet, “aviation has no other option,” Samartzis said, with only limited scope for technological advances to lower emissions.

That means up to 65% of emissions reductions will have to come from the fuel – a figure echoed by Marykate O’Brien, senior sustainable fuels consultant at Southwest Airlines.

Airlines could address some emissions by switching all airside ground transportation to electric vehicles or alternate powertrains, or upgrading aircraft and engines to more fuel-efficient models, but the bulk of emissions reductions would have to be achieved through the fuel.

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However, against alternative SAF processes, alcohol-to-jet approaches would land substantially under rival vegetable oil, used cooking oil or animal fat-based HEFA production, and far below the expected cost of power-to-liquid efuels such as hydrogen, according to Gevo’s Dr. Paul Bloom.

The initiatives were fully endorsed by the government, with the current Secretary of Agriculture, Tom Vilsack, lending his views to the adoption of corn in delivering huge SAF mandates, while also using it to shore up the wider US farming sector.

Noting that, since 1980, 165 million acres of worked farmland has been lost, Vilsack argued that expansion into SAF could represent a “new opportunity for rural America,” during his speech to the conference.

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Obstacles in using corn as a feedstock for SAF

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Under both of the main GHG emissions models that define the eligibility of a feedstock for critical tax credits, US corn only qualifies under the US-defined GREET model – and only then when carbon capture and storage (CCS) is factored in as well.

Under the rival CORSIA compliance scheme, corn-based ethanol does not qualify as a feedstock for aviation, falling well short of the minimum required savings once calculations of indirect land use change are factored in.

Cooper argued that the science behind CORSIA’s assumptions was flawed and called for a review, while panels during the conference discussed other ways to lower the carbon footprint of corn through the use of less emissions-intensive farming practices or fertilizers.

Currently, despite the goodwill and best-laid plans, US corn as a feedstock to SAF production looks to be an unattractive option and is likely to slow investment in production capacity unless the pathway for corn is improved.

That effect could be doubled by the European Union’s prevailing policy of banning crop-based feedstocks in future biofuel feedstocks, although that legislation is being challenged in court by European ethanol producers. READ MORE