Biden poised to deliver win for ethanol makers on SAF credits
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[December 15, 2023]
By Stephanie Kelly, Jarrett Renshaw and Leah Douglas
NEW YORK (Reuters) - The Biden administration is expected this week to
recognize a soon-to-be-updated methodology favored by the ethanol
industry in guidance to companies looking to claim tax credits for
sustainable aviation fuel (SAF), three people familiar with the matter
told Reuters.
For months the administration has been divided over whether to recognize
the Department of Energy's Greenhouse Gases, Regulated Emissions and
Energy Use in Technologies (GREET) model.
As it stands, that model would enable ethanol-based SAF to qualify for
tax credits under the Inflation Reduction Act, President Joe Biden's
signature climate law.
The news, which was first reported by Reuters, is a win for the ethanol
industry and the U.S. Corn Belt, a powerful constituency ahead of the
2024 presidential election.
The group sees SAF as one of the only routes to grow ethanol demand amid
rising sales of electric vehicles. Biden, a Democrat, is seeking
re-election and will depend on votes from closely contested Midwestern
states that are the heaviest corn producers.
The administration, however, is also expected to announce it will update
the GREET methodology by March 1, the sources said.
That leaves some uncertainty for corn-based ethanol producers, as the
administration is expected to ultimately tighten requirements around SAF
feedstocks.
Until the updates are announced, a fierce lobbying push is expected.
Ethanol groups have been at odds with environmentalists who want
standards that elevate feedstocks like used cooking oil and animal fat.
The Treasury Department declined to comment for this story, while the
White House did not respond to a request for comment.
SAF producers seeking tax credits under the IRA must demonstrate, with
an approved scientific model, that their fuel generates 50% less
greenhouse gas emissions over its lifecycle than petroleum fuel.
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U.S. President Joe Biden delivers remarks via video to the U.S. Fire
Administrator's "Summit on Fire Prevention & Control," from the
Eisenhower Executive Office Building's South Court Auditorium at the
White House in Washington, U.S., October 10, 2023. REUTERS/Jonathan
Ernst/File photo
The ethanol industry argues the U.S. needs to use ready technology
like ethanol to quickly reduce carbon dioxide emissions. Renewable
Fuels Association President Geoff Cooper called the administration's
decision "a pivotal moment for the future of sustainable aviation
fuels" earlier this week.
One of environmental groups' central concerns about the use of the
GREET model - that it would underestimate the emissions generated by
tilling land for crops - appears to be unresolved, said Nikita
Pavlenko, fuels team lead at the International Council on Clean
Transportation.
The lifecycle emissions calculated by GREET for any given fuel can
vary widely depending on what data sources and assumptions are
plugged into the model, and any future update on how producers
should use the GREET model needs to take a stringent approach, he
said.
"Some of the values (for land-use change) favored by industry
haven't gone through the regulatory process, and don't line up with
the academic consensus," he said.
White House adviser John Podesta said on Thursday the SAF guidance
would be released very soon.
"We think, in order to take advantage of the credit, that emissions
have to be 50% below what oil-based aviation fuel looks like,"
Podesta told reporters on Thursday.
(Reporting by Stephanie Kelly, Jarrett Renshaw, Leah Douglas and
David Shepardson; Editing by Trevor Hunnicutt, Bill Berkrot and
Chizu Nomiyama)
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