RFA to Treasury: Success of SAF Tax Credit Depends on Fair, Science-Based Lifecycle Analysis

(Renewable Fuels Association) The use of science-based, consistent and transparent lifecycle analysis methods will be crucially important in implementing the sustainable aviation fuel (SAF) tax credit under the Inflation Reduction Act, the Renewable Fuels Association said in comments submitted Friday to the Department of Treasury. RFA’s comments were in response to a request for comments from the Treasury on considerations for implementation of the SAF credit.

“SAF production presents a major new market opportunity for ethanol producers, as the lifecycle carbon footprint of ethanol continues to shrink and the economics of ethanol-to-jet fuel processes continue to improve,” wrote RFA President and CEO Geoff Cooper. “The ethanol industry sees tremendous promise and potential in the emerging market for sustainable aviation fuels. The ethanol industry has the scale and capacity to deliver the volume of feedstock to meet SAF volume targets for the decades to come.”

However, Cooper pointed out that fair and consistent lifecycle analysis (LCA) modeling must be used for all potential SAF feedstocks and production pathways. “Rules which effectively pick one technology or feedstock over another or use incomplete or outdated science could serve as a barrier to entry and keep production volumes from reaching targets,” he wrote. Cooper noted that RFA member companies have unanimously committed to achieve net-zero carbon emissions by 2050 or sooner.

RFA continues to believe the most appropriate lifecycle analysis methodology for the determination of SAF emissions is the GREET model, developed and updated regularly by the Department of Energy’s Argonne National Laboratory. Cooper stressed that GREET—an acronym for Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation—is widely considered to be the leading and most sophisticated model, and it is more robust and current than the methodology used by the International Civil Aviation Organization.

“The ethanol industry looks forward to playing a central role in the carbon reductions achieved through the use of SAF,” Cooper said. “However, Treasury/IRS should be cognizant of the potential barriers to entry and disincentives for investment that faulty or incomplete LCA modeling can create. With the right policy signals and support – including technology-neutral LCA, particularly Argonne GREET, ethanol-to-jet technologies can quickly scale up to meet the future SAF needs of the aviation sector.”

Excerpt from Growth Energy: In a comment letter submitted today to the Internal Revenue Service (IRS), Growth Energy—the nation’s leading biofuels trade association—urged the agency to rely on the most accurate and up-to-date lifecycle analysis (LCA) approaches in order to make the most of the 40B and 45Z tax credits in the Inflation Reduction Act (IRA), and to help the U.S. become the global leader in the production of sustainable aviation fuel (SAF).

Growth Energy sent the letter in response to the IRS’s call for public comment on its implementation of the IRA’s 40B Sustainable Aviation Fuel Tax Credit and the 45Z Clean Fuel Production Tax Credit. This is the third time Growth Energy has submitted comments to the IRS on these incentives, and the third time it has reiterated to the agency how important it is that the most thorough, accurate science be used to determine which producers are eligible for the tax credits and how much they can claim.

“Specifically, the IRS must allow ethanol-to-jet fuel producers to use the U.S. Department of Energy’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model in determining the fuel’s lifecycle GHG emissions,” the letter said. “Further, the IRS’s implementation of the 40B and 45Z tax credits must rely on accurate and complete GHG lifecycle emissions accounting to determine credit eligibility.”

Many Growth Energy member companies have already made substantial investments in SAF production, and in its letter the association noted that it views “U.S. leadership in the global SAF market to be vital to the decarbonization and future economic competitiveness of the U.S. aviation sector.”

Relying on the GREET model and the most comprehensive LCA accounting methods would “incentivize further GHG emissions reductions and further the IRA’s goals,” Growth Energy CEO Emily Skor wrote to Treasury in November 2022. “Any other approach, such as GHG emissions values that do not account for the array of potential GHG-reduction strategies, would fail to incentivize further reductions and accordingly frustrate the purpose of these tax credits.”

Read Growth Energy’s most recent letter here, and its letters from November and December of last year here and here, respectively. A study titled “GHG Analysis of Dry Mill for Corn Ethanol Production under IRA” commissioned by Growth Energy can also be found here. READ MORE