US Airlines Support Ethanol SAF Credit Change

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by KnowESG
KnowESG_US Airlines Support Ethanol SAF Credit Change
Image courtesy of Reuters/Shannon Stapleton

Leading American airlines and aviation firms have teamed up with ethanol companies to convey their support to the Biden administration for a regulatory adjustment.

This change aims to streamline the eligibility of sustainable aviation fuel (SAF) produced from corn-based ethanol to receive federal subsidies. This collaborative effort was announced on November 1.

Under the Inflation Reduction Act, President Joe Biden's landmark climate legislation, SAF manufacturers are mandated to demonstrate a 50% reduction in emissions compared to traditional gasoline, as per an emissions model developed by the International Civil Aviation Organisation (ICAO) or a similar methodology, to qualify for these subsidies.

In a joint letter addressed to Treasury Secretary Janet Yellen, major airlines such as Delta, JetBlue, Southwest, along with prominent companies like GE Aerospace and Boeing, have proposed that the Biden administration should consider incorporating the Department of Energy's Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model alongside the ICAO model, aligning with the ethanol industry's request.

The ethanol industry contends that the GREET model is more likely to substantiate the requisite climate benefits for securing IRA subsidies, in contrast to the ICAO model. However, environmental advocacy groups raise concerns that the GREET model may underestimate the emissions associated with activities like land clearing for crop cultivation required for ethanol production.

The collaborative letter emphasises the potential to decarbonise aviation and foster innovation and clean energy job opportunities in the United States with appropriate market incentives. Nevertheless, it acknowledges that the ongoing modelling uncertainties represent a multiyear developmental challenge. Ethanol companies, including Poet and Archer-Daniels-Midland Co., have also lent their support to this initiative.

Notably, this letter coincided with the commencement of a two-week focus on rural America by President Biden and his administration, commencing with a visit to Minnesota on the same day.

The ultimate decision regarding the modelling approach is vested with the Treasury department. However, other relevant departments such as agriculture, environment, and energy have also provided their input, with the White House intervening in mediating discussions, as previously reported by Reuters.

The United States Department of Agriculture (USDA) had previously announced in September its intentions to update the GREET model to ensure the eligibility of ethanol as a feedstock for SAF. A decision from the Treasury department is anticipated in December, according to earlier reports by Reuters.

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Source: Reuters

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