The Sustainable Aviation Fuel Road Ahead

by Byron Dorgan (Bipartisan Policy Center/RealClear Energy) Farmers must play a major role! -- The Inflation Reduction Act (IRA) – signed into law one year ago – created aggressive goals to reduce carbon emissions. One of those goals included furthering the growth of a homegrown sustainable aviation fuels (SAF) industry. The challenge that President Biden launched two years ago calls for supplying 3 billion gallons of SAF annually by 2030 and meeting 100% of aviation fuel demand with SAF by 2050.

That is a major but achievable challenge. In 2022, producers started by supplying nearly 16 million gallons of SAF to the U.S. market. That’s progress, but only a small start. Reaching 3 billion gallons of SAF will require consistently doubling production every single year. And we can’t meet that challenge without leveraging the know-how of American farmers to sustainably supply renewable raw materials for producing that fuel.

That is a goal President Biden recently touted by saying that “in the next 20 years, U.S. farmers will be providing 95% of all sustainable aviation fuel (SAF) to the market.”

The roadmap developed by USDA, EPA, and the Departments of Energy and Transportation recognizes that policy must support use of existing agricultural feedstocks for SAF. Building new production facilities and necessary supply chains will require significant, ongoing capital investment. The new tax credits in the IRA must back farmers, producers, and other partners willing to make those investments.

The tax credits are there to incentivize the production of low-carbon renewable fuels for the aviation industry and other carbon reduction efforts by jumpstarting investment in new, innovative facilities that will create reduced carbon fuels as well as jobs and economic opportunities in rural America.

Congress intended that first-movers in the industry – those from the renewable fuels industry who are already making investments in low-carbon fuels – would be eligible for the credits. Congress also made efforts to ensure that development of the SAF industry wouldn’t simply shift investments and raw materials away from the rapidly growing biodiesel and renewable diesel industry. Those clean fuels are needed to continue decarbonizing heavy-duty road transport and other sectors that need drop-in fuel solutions for the foreseeable future just as much as aviation.

For eligibility to the new tax credits, there is a threshold requirement that all clean fuels – transportation and aviation – reduce emissions by at least 50% compared to the petroleum fuels they displace. How do they measure those standards? As the Biden Administration creates standards for the use of these new tax credits, they need to use the latest and best models of carbon reduction estimates from vehicles and fuels.

The newest and best model for evaluating and measuring lifecycle emissions of carbon reductions is Argonne National Laboratory’s Greenhouse Gases, Regulated Emission and Energy use in Technologies (GREET) model.

For transportation fuels, the law designates the GREET model. For SAF, the law authorizes a separate International Civil Aviation Organization (ICAO) Carbon Offsetting and Reduction Scheme for international Aviation (CORSIA) model or a “similar” model. While confusing, based on the language of the law it’s clear Congress considered the GREET model to be the alternative for SAF.

The GREET model is the best available science for assessing carbon emissions from fuels. I served on the Argonne National Lab’s governing board, so I describe their capability with confidence. The researchers at Argonne regularly update the model, replacing theoretical assumptions with real-world data gathered from fuel producers and agricultural partners. The model incorporates the continued improvements in crop yields that result from farmers’ sustainability efforts. GREET is also open to input on potential production efficiencies that improve the carbon profile of biofuels. For example, renewable diesel producers can recycle coproducts into renewable hydrogen, which is then put back into the process. These types of innovations simply aren’t captured by other models.

The CORSIA model is actually based on GREET but utilizes data that is a decade old. The scheme was developed as part of a UN-backed agreement to offset global emissions. So it does not consider more recent academic study or industry data. Any update to the modeling would have to be negotiated with all countries that belong to ICAO.

While the U.S. Treasury and Internal Revenue Service work to finalize guidance to the industry on claiming these new tax incentives, they need to rely on the GREET model, because it is more accurate and up to date. Treasury should take note that renewable diesel facilities are providing the initial gallons of SAF to the market. Requiring these producers to use one model for their transportation fuel and another for SAF will generate unintended consequences, including undermining the first positive steps toward meeting the SAF grand challenge.

To enable America’s farmers to invest and produce our biofuels, the administration must allow SAF producers to rely on the most-up-to-date and science-based model for measuring carbon emissions. Failure to do that would upend the major progress we have begun to make with low-carbon biofuels. READ MORE