The Treasury Department will soon unveil a new sustainable aviation fuel (SAF) tax credit called for in the climate law (Inflation Reduction Act) last summer. It will give up to $1.75 to producers for each gallon of sustainable fuel, based on the amount of carbon reductions in the product versus conventional jet fuel. The credit could provide a major boon to biofuel products made of wastes and oils, but producers are also eyeing a big new market for corn-based ethanol.
Last year, U.S. production reached 15.8 million gallons — less than 0.1% of total fuel consumed by U.S. airlines. Finland-based Neste is set to produce 500 million gallons of waste-based SAF annually by the end of 2023. Last year, biofuels producer Gevo, which broke ground at its plant in Lake Preston, S.D., signed a deal with Delta Airlines to provide 400 gallons of SAF by 2030. Gevo is aiming to produce 1 billion gallons annually of biofuel by 2030. In comparison, the Biden administration has a goal for the U.S. to produce 3 billion gallons of SAF annually by next decade.
One issue is whether corn-based ethanol should qualify for the tax credit. Many environmentalists argue that only waste products such as corn leaves and stalks — not ethanol — should qualify to limit environmental degradation, increase farm efficiency and preserve global food supply.
A Government Accountability Office report last month faults the Biden administration for not establishing “performance measures to monitor, evaluate, and report the results” of all federal tax and grant programs that could help deliver on the 3-billion-gallon-a-year White House target. The departments of Energy, Transportation and Agriculture agreed with recommendations from GAO for greater coordination among agencies.