WASHINGTON – On Tuesday, the U.S. Department of the Treasury and Internal Revenue Service released guidance on the 40B GREET model for sustainable aviation fuel tax credits. The new guidance has been long awaited by the agriculture industry and was largely welcomed by members of the industry on Tuesday afternoon.
In a news release from the Treasury Department, U.S. Secretary of the Treasury Janet L. Yellen said “Incentives in the law are helping to scale production of low-carbon fuels and cut emissions from the aviation sector, one of the most difficult-to-transition sectors of our economy. Today’s guidance provides additional clarity and certainty to companies and producers.”
“Sustainable aviation fuel is a key part of the Biden-Harris Administration’s efforts to transition the American economy to a clean energy future and rebuild the middle class from the bottom up to the middle out in rural America,” said U.S. Secretary of Agriculture Tom Vilsack in Tuesday’s news release. “Today’s announcement is an important stepping stone as it acknowledges the important role farmers can play in lowering greenhouse gas emissions and begins to reward them through that contribution in the production of new fuels. This is a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops produced using climate smart agricultural practices. USDA will continue to work with our federal agency partners to expand opportunities in the future for climate smart agriculture in producing sustainable aviation fuel.”
Many members of the agriculture and biofuels industry have weighed in on the new tax credit guidance as well. Geoff Cooper, President and CEO of the Renewable Fuels Association (RFA), said “Today’s guidance and modified GREET model help position ethanol-based SAF for takeoff, but more work is needed to fully clear the runway and get this opportunity off the ground. We are encouraged that, for the first time ever, this carbon scoring framework will recognize and credit certain climate-smart agricultural practices. We’re also pleased to see the integration of other carbon reduction strategies—like renewable process energy and carbon capture and sequestration—into the model. However, RFA believes less prescription on ag practices, more flexibility, and additional low-carbon technologies and practices should be added to the modeling framework to better reflect the innovation occurring throughout the supply chain.”
Growth Energy CEO, Emily Skor said, “This guidance crosses an important threshold in carbon modeling, recognizing for the first time that farming techniques can reduce the carbon intensity of crops, and, by extension, bioethanol production. It’s also the first time Treasury has used the Argonne National Laboratory’s GREET model in federal tax policy. These are promising big-picture developments and signal that agriculture is a key part of our nation’s climate strategy. The new 40B GREET model is trending with scientific consensus when it comes to measuring indirect land use change (iLUC). Years’ worth of peer-reviewed research has shown that this number has been decreasing when it comes to bioethanol production. We hope future guidance for the 45Z tax incentive follows this trend and continues to reflect the falling iLUC values for American biofuels. Still, the administration’s restrictive all-or-nothing approach to recognizing the value of climate smart agriculture practices may ultimately limit innovation and make farmers, blenders, and producers less – not more – likely to invest in emissions-reducing technologies. America’s potential SAF producers and their farm partners need flexibility to find the path that works best for them, but these rigid guidelines will leave carbon reductions on the table.”
““Clean Fuels and its members appreciate the significant work of USDA and other federal agencies to account for the role that U.S. farmers will play in decarbonizing the nation’s aviation fuel,” said Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels. “U.S. farmers and SAF producers will continue to work with the agencies to rapidly expand SAF production over the next few years.”
Josh Gackle, American Soybean Association President, commented on the news saying “For growers like me here in North Dakota, short growing seasons and unpredictable fall weather make the cover crop requirement alone next to impossible. Growers in the Northern Plains do so when possible. However, employing both no till and cover cropping is contrary to what Mother Nature will allow, no matter what the guidance specifies.”
You can view more comments from industry here: https://americanagnetwork.com/2024/04/treasury-department-releases-new-40b-greet-model-for-saf-tax-credits/
Read more from the Treasury Department here: https://home.treasury.gov/news/press-releases/jy2307