The biofuel industry is criticising the administration of Joe Biden for failing to finalise provisions related to a new tax credit for so-called sustainable aviation fuel.
The critique comes after the US Department of the Treasury last week issued guidance that leaves the incoming administration of president-elect Donald Trump to settle some of the tax credit’s key provisions.
“Unfortunately, today’s guidance does not provide the certainty or flexibility that ethanol producers were looking for, and many questions remain unanswered,” says Renewable Fuels Association chief executive Geoff Cooper.
Groups representing the biofuel and agricultural industries have been urging the government to make clear that crop-based biofuels qualify as SAF for the purpose of new $1.75 per gallon tax credit for fuel producers, which took effect on 1 January.
But environmental and other advocacy groups have pushed back, insisting that common crop-based biofuels are anything but sustainable.
In a letter last month to US airlines and their trade group Airlines for America (A4A), three environmental groups accused the carriers of promoting “low-integrity” SAF that could cause “irreversible environmental and economic damage”. They said the airlines “could face claims of greenwashing”.
“Efforts to obtain federal subsidies for low-integrity SAF by Airlines for America and/or your companies individually are misguided,” said the letter from the Environmental Defense Fund, National Wildlife Federation and World Resources Institute. “They subvert the Congressional intent to establish robust environmental safeguards and channel precious taxpayer subsidies to truly sustainable fuels.”
A4A did not respond to a request for comment.
At issue is what fuel types quality for the new tax credit, which was created by president Biden’s 2022 so-called Inflation Reduction Act and which runs through end-2027.
Because the credits are based on life-cycle emissions, officials are finalising an emission calculation model known as known “45ZCF-GREET”. That model’s design will determine which crop-based fuels qualify.
Other provisions under consideration would let emission figures be reduced if growers use “smart agricultural” methods. That would help crop-based SAF qualify for tax breaks.
The Treasury Department on 10 January finally released its long-awaited guidance on the matter.
But the documents left much unsettled.
The Treasury Department has still not released its emission-calculation model. The guidance also does not address “smart agricultural” provisions, saying regulators will do so in new rules “at a future date”.
It does specify that SAF made from imported used cooking oil will not initially qualify for the tax credit due to concern that such oil could actually be mislabelled palm oil.
Additionally, the guidance opened a 90-comment period, punting key provisions to the incoming Trump White House.
“This long-overdue guidance is far from complete – it still lacks the critical details that are needed to help ensure that American biofuel producers and their farm partners can lead the world in clean fuel production,” says ethanol industry group Growth Energy CEO Emily Skor.
Airlines view tax credits as critical to promoting increased biofuel production and usage.
Environmental groups insist many popular crop-based fuels provide no or little reduction in greenhouse gas emissions compared to fossil-based fuels, and should therefore not be encouraged.
