The Biden administration is reportedly preparing to announce a revision to its scientific modeling for ethanol, which will likely depict the corn-based fuel as less effective at mitigating greenhouse gas emissions than previously estimated, according to sources familiar with the matter speaking to Reuters.
The adjustment, not previously disclosed, is anticipated to present challenges for ethanol producers seeking to participate in new U.S. tax credits aimed at incentivizing sustainable aviation fuel production, viewed as pivotal for the industry's expansion, the sources indicated. However, avenues for subsidies may still exist for producers collaborating with corn growers employing sustainable farming techniques.
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Sources, who requested anonymity due to lack of authorization to speak publicly, explained that the adjustment seeks to more precisely factor in environmental repercussions stemming from land conversion for corn farming, while also incentivizing climate-smart agricultural practices like no-till farming and covered crops.
Politically, the proposed revision represents a compromise for the White House, navigating pressures from environmental advocates urging reduced reliance on agricultural sources for fuel, alongside the ethanol sector's financial concerns as electric vehicle adoption threatens its market share.
Ethanol is predominantly utilized as a component in gasoline, but demand for gasoline has reached a plateau.
A spokesperson for the White House informed Reuters that no final decision has been reached regarding the climate model adjustment, cautioning against premature speculation on determinations.
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Under Biden's landmark climate legislation, the Inflation Reduction Act, a tax credit of $1.25 per gallon was allocated for sustainable aviation fuel producers, aimed at fostering competition with petroleum-based jet fuel.
The administration aims to achieve a target of supplying at least 3 billion gallons of sustainable aviation fuel annually by 2030, as part of broader efforts to decarbonize the transportation sector, starting from nearly zero at present.
To qualify for the tax credit, producers must demonstrate a carbon score for their sustainable aviation fuel that is 50% better than that of traditional petroleum jet fuel. Incremental increases beyond this threshold result in higher tax credits, incentivizing cleaner technologies.
