Protecting the Future of Low-Carbon Aviation

Agriculture (USDA)Aviation Fuel/Sustainable Aviation Fuel (SAF)Business News/Analysis Energy (DOE)Environmental Protection Agency Federal Agency/Executive Branch Federal Regulation Feedstocks Field/Orchard/Plantation Crops/Residues Internal Revenue Service Opinions Policy Sustainability Treasury Department White House

August 08, 2023

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by Emily Skor (Growth Energy/Ethanol Producer Magazine) Launched in 2021, the Biden administration’s Sustainable Aviation Fuel Grand Challenge aims to produce enough low-carbon jet fuel to slash aviation emissions in half by 2050. Thanks to new incentives created by the Inflation Reduction Act, that goal appears much more attainable than it did two years ago, but getting there will require the Internal Revenue Service to take a page from the Department of Energy when it comes to following the best available science on climate modeling.

Currently, farm-based feedstocks – including bioethanol and corn oil, among others – are the only viable sources of clean, renewable energy available in large enough volumes to meet projected demand for sustainable aviation fuel (SAF). In fact, the U.S. ethanol industry accounts for over 80 percent of biofuel production capacity in the U.S. at 17.4 billion gallons per year. Just last week, President Biden acknowledged as much, saying, “Mark my words: the next 20 years, farmers are going to be providing 95 percent of all the sustainable airline fuel.

Unfortunately, a handful of groups have been encouraging the U.S. Treasury to decide who can earn credit for making SAF based on an emissions model used in Europe. Their misguided campaign re-emerged this week, with the anti-agriculture crowd falsely telling Reuters that renewable fuels will promote “clearing land to grow crops,” despite decades of data showing U.S. cropland is on the decline as farmers increase the productivity of each acre.

Not only does Europe’s preferred model ignore data about U.S. agriculture and biofuel production—it also effectively blocks American farmers from participating in a major new market for green energy. This means that this effort to decarbonize aviation would be hugely dependent on foreign feedstocks. One of the best things about biofuels is that they increase America’s energy independence and reduce our reliance on foreign resources. Choosing this European model would effectively do the opposite.

There is a better way. The DOE and Argonne National Laboratory have invested decades into building the world’s best lifecycle analysis (LCA) model for transportation emissions. It’s called the Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model.

GREET was created by researchers with real-world expertise examining both the domestic agricultural supply chain and the latest hard data from the U.S. Department of Agriculture and the U.S. Environmental Protection Agency. The gold standard for lifecycle modeling, it harnesses the latest data on everything, including yield, fertilizer, and agriculture inputs.

In fact, several provisions of the IRA specifically require the use of GREET to calculate the benefits of other transportation fuels, such as hydrogen and non-aviation low carbon fuels. Unfortunately, the legislation didn’t offer the same clear guidance on SAF – an omission that could keep U.S. SAF production grounded for good.

Leaders at the U.S. Treasury could easily avoid that outcome by relying on the GREET model, which would incentivize further emissions reductions and advance the IRA’s climate goals.

As Growth Energy noted in our letter to the IRS this July, “When implementing the Section 40B and 45Z SAF tax credits, IRS must ensure LCA methodologies used for calculation of credits reflect the best available science so as to incentivize increased production of low carbon-intensity SAF in order to further Congress’ core objective of accelerating the reduction of GHG emissions from the U.S transportation system. Implementing the statute in this matter is critical to the decarbonization and continued economic competitiveness of the U.S. aviation sector."

Lawmakers agree, and a bipartisan coalition of 16 senators recently warned Treasury Secretary Janet Yellen that, “[f]ailure to provide businesses with the certainty and reliability of a science-based, United States government-developed model to determine eligibility for IRA tax credits could have dire consequences.” House champions, led by Representatives Mark Pocan (R-Wisc.), Ashley Hinson (R-Iowa), and Angie Craig (D-Minn.) issued a similar letter on July 28.

In short, experts agree it would be climate malpractice to anchor our SAF ambitions to outdated, foreign models that disregard U.S. innovations in biofuel production and climate-smart agriculture and tie U.S.-based carbon incentives to inaccurate foreign carbon models. The biofuels industry is already lowering carbon emissions, reducing our reliance on foreign oil, saving drivers money at the pump, and creating new American jobs. And by following the best available science, bioethanol can clear the way for America’s bioeconomy to deliver even greater progress toward low carbon aviation. READ MORE

NATSO, SIGMA URGE IRS TO ADOPT STRINGENT LIFECYCLE GREENHOUSE GAS MODELING REQUIREMENTS FOR SUSTAINABLE AVIATION FUEL (NATSO, SIGMA/PR Newswire)

US airlines ally with farmers to seek subsidies for corn as jet fuel (Financial Times)

Airlines Push Jet Fuel Subsidies to Help Corn Growers (AgWeb)

Environmentalists and airlines square off over standards for sustainable fuel (Travel Weekly)

NATSO, SIGMA URGE ENERGY DEPARTMENT TO ADOPT MARKET-ORIENTED, TECHNOLOGY NEUTRAL APPROACH TO TRANSPORTATION DECARBONIZATION (NATSO)

Excerpt from Financial Times: Their lobbying campaign is centred on tax credits for aviation fuel established in the Inflation Reduction Act, the landmark climate law signed by President Joe Biden a year ago. The credits are worth $1.25 a gallon for fuels that reduce emissions by at least 50 per cent compared with jet fuel, and up to $1.75 per gallon for further reductions.

Carriers such as United Airlines and Alaska Airlines have joined farm groups, US biofuel refinery owners such as Archer Daniels Midland and Green Plains, and international oil companies including BP and Shell, to push federal tax officials to embrace an analysis of greenhouse gas emissions that would make ethanol eligible for more generous tax credits.

...

Tom Michels, United Airlines’ director for government affairs, said the aviation industry wants to create incentives to make more sustainable fuel. He said using biofuels that are currently on the market will reduce emissions more quickly than holding out for advanced fuels that are not available at industrial scale. “The fuels that are available to us today will not be as good as the fuels available to us in 20 years,” Michels said. “That doesn’t mean we should wait 20 years for the perfect fuel. My question would be, are these fuels better than oil?” READ MORE

Excerpt from AgWeb: The ethanol industry is asking the administration to use a methodology to calculate emissions developed by the Department of Energy called GREET that shows ethanol has a lighter carbon footprint as a SAF than when compared to the methodology proscribed by IRA. The method outlined in the IRA was developed by the International Civil Aviation Organization.

Environmentalists, on the other hand, advocate for the Corsia standard, which penalizes fuels more for changes in land use linked to crop planting. Critics argue that supporting ethanol could hinder investments in advanced, less carbon-intensive alternatives to SAF. They say ethanol would increase reliance on older, less efficient fuels.

Wiesemeyer says the White House is divided in which model—GREET or Corsia—to use.

“If tax credits are extended to ethanol, despite its lower emissions reduction compared to alternatives, it could significantly expand the supply of sustainable aviation fuel, making it more accessible and affordable for airlines. This move could help airlines meet emissions targets while avoiding higher costs that come with investing in newer, more expensive sustainable fuels,” says Wiesemeyer (Jim Wiesemeyer, ProFarmer policy analyst). READ MORE

Excerpt from NATSO: Policies to Scale Sustainable Aviation Fuel Should Consider Ramifications on Existing, Low-Carbon Fuel Options -- NATSO, representing travel centers and truck stops, and SIGMA: America's Leading Fuel Marketers, urged the U.S. Department of Energy (DOE) to adopt a market-oriented, technology-neutral approach to transportation decarbonization. Any policies to scale production of sustainable aviation fuel (SAF) should carefully consider the economy-wide ramifications of prioritizing nascent fuel technologies above longstanding lower carbon fuel options, such as biodiesel and renewable diesel.

Fuel retailers and marketers appreciate that the Biden Administration is prioritizing alternative fueling strategies to reduce carbon emissions from transportation. But the Administration's approach to increasing SAF production ignores harmful side effects to the existing refueling landscape. NATSO and SIGMA responding to a request for information urged DOE to harness the decarbonization benefits of renewable diesel and biodiesel, rather than pursue policies that will destroy demand for over-the-road biofuels that have been reducing ground emissions for decades.

"The Biden Administration should not surrender the market's ability to deliver dramatic near-term emissions savings by imposing a top-down, hurried transition to one technology," NATSO and SIGMA wrote in their comments to the Energy Department. "The Administration should harness the near-term decarbonization potential of low-carbon options like biodiesel and renewable diesel, in addition to incentivizing more aspirational longer-term technologies."

Preferential treatment for SAF for reducing transportation carbon emissions will unravel decades of existing carbon reductions in over-the-road transportation while increasing fuel prices for commercial fleets.

SAF is more energy intensive to produce and saves less carbon emissions than renewable diesel, according to a research study conducted by LMC International, titled "Comparative Economic Analysis of Renewable Jet Fuel and Renewable Diesel." Because these fuels compete for the same feedstock, prioritizing SAF will undercut and eventually eliminate America's biodiesel and renewable diesel market as disproportionate pressure is placed on feedstock.

The trucking industry delivers more than 80 percent of America's goods and relies on biofuels, including renewable diesel and biodiesel, to dramatically reduce carbon emissions. Biofuels represent the best opportunity for reducing carbon emissions from the nation's existing commercial fleet of trucks for the foreseeable future.

Biodiesel and renewable diesel eliminated 15 million metric tons of CO2 in California alone in 2020, the equivalent of taking more than 3 million passenger cars off the roads. Compared with petroleum-based diesel, renewable diesel and biodiesel reduce greenhouse gas emissions by up to 80 percent. The California Air Resources Board recently underscored their important role in reducing carbon emissions, announcing that renewable diesel and biodiesel constitute more than half of the diesel supply in California.

By implementing strategies that promote parity between over-the-road and aviation renewable fuels that compete for the same feedstock, the Administration has an opportunity to lower the cost of fuel for trucking fleets and commercial drivers and ensure fuel market stability while advancing its goal of reducing transportation's carbon footprint. One such strategy is for the Department of Treasury to subject SAF to more stringent lifecycle greenhouse gas emissions modeling requirements under the tax credits enacted under the Inflation Reduction Act (IRA).

NATSO, SIGMA Comments to the Department of Energy

Setting the Record Straight on the Critical Role of Advanced Renewable Liquid Fuels in Reducing Over-The-Road Transportation Emissions.

About NATSO and SIGMA
NATSO is the trade association of America's travel plaza and truckstop industry. Founded in 1960, NATSO represents the industry on legislative and regulatory matters; serves as the official source of information on the diverse travel plaza and truckstop industry; provides education to its members; conducts an annual convention and trade show; and supports efforts to generally improve the business climate in which its members operate. For more information, visit NATSO.com. Contact: Tiffany Wlazlowski Neuman, Vice President, Public Affairs.

SIGMA: America's Leading Fuel Marketers represents a diverse membership of approximately 260 independent chain retailers and marketers of motor fuel. While 67 percent are involved in gasoline retailing, 83 percent are involved in wholesaling, 56 percent transport product, 39 percent have bulk plant operations, and 20 percent operate terminals. Member retail outlets come in many forms including truck stops, traditional "gas stations," convenience stores with gas pumps, cardlocks, and unattended public fueling locations. READ MORE

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Yields White House Treasury Department Transportation Fuels Policy tax credits Sustainability Regulations-Federal modeling life cycle analysis (LCA) land use policy land use change land use Jetfuel (Sustainable Aviation Fuel (SAF)) IRS (Internal Revenue Service) GREET Greenhouse Gases Regulated Emissions and Energy Use in Transportation Model fertilizer ethanol/bioethanol EPA (Environmental Protection Agency) environmental policy energy independence Department of Energy (DOE) Department of Agriculture (USDA) CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) corn/maize corn oil/distillers corn oil (DCO) corn ethanol climate smart/conservation agriculture Carbon Intensity (CI)/Carbon Footprint Aviation Fuel/Sustainable Aviation Fuel (SAF) aviation fuel (SAF) tax credit alcohol-to-jet (ATJ)/ethanol-to-jet (ETJ) 45Z Clean Fuel Production Tax Credit

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