The Biden administration is anticipated to issue guidance from the Treasury by the end of this week regarding the potential facilitation of subsidies for sustainable aviation fuel (SAF) derived from corn-based ethanol, according to sources familiar with the administration's deliberations.
The issue has been a subject of internal division within the administration, with strong lobbying efforts from stakeholders in the U.S. Farm Belt, a crucial political constituency in the lead-up to the next presidential election. Corn-based ethanol producers view SAF as a pivotal avenue for industry expansion, particularly in the face of increasing electric vehicle sales. Proponents argue that leveraging existing technology is imperative for swiftly reducing carbon dioxide emissions.
Conversely, environmental groups contend that clearing land for crop cultivation for fuel production is counterproductive to global warming mitigation efforts.
The forthcoming guidance's content remains unclear, and both the White House and the Treasury Department declined to comment on the matter.
A previous Reuters report in September indicated that the Biden administration was likely to defer a decision until December, with the guidance initially expected in September. In late November, Agriculture Secretary Tom Vilsack expressed confidence that ethanol would emerge as a feedstock for SAF.
“They (U.S. Treasury) will provide some direction and guidance, and I think the actual rules and regulations and so forth may take a little bit longer,” Vilsack stated.
The subsidies in question, totaling billions of dollars, are tied to last year's Inflation Reduction Act (IRA), President Joe Biden's landmark climate legislation. SAF producers vying for tax credits must demonstrate, through an approved scientific model, that their fuel produces 50% fewer greenhouse gas emissions over its lifecycle compared to petroleum fuel.
Midwest ethanol producers have urged the administration to adopt the Department of Energy's Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET), a move that would potentially qualify ethanol-based SAF. In contrast, environmentalists advocate for standards favoring inputs such as used cooking oil and animal fat.
The awaited guidance holds significant implications for the trajectory of the ethanol industry and the broader discourse surrounding sustainable aviation fuels.
