The US Treasury has issued guidelines for tax breaks aimed at boosting production of sustainable aviation fuel (SAF), Associated Press News (AP News) reported.
Congress approved the credits – from US$1.25-US$1.75/gallon – as part of US President Joe Biden’s 2022 Climate and Health Care bill, the 30 April report said.
To qualify for the tax cuts, SAF had to cut greenhouse gas (GHG) emissions by at least half compared with conventional jet fuel and feedstock producers would need to follow “climate-smart agriculture practices” including specific fertilisers and farming methods.
The US administration’s announcement of the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model was welcomed by the National Oilseed Processors Association (NOPA), which represents US soyabean, canola, flaxseed, safflower seed and sunflowerseed crushing industries.
“NOPA is pleased to see the updated GREET model recognise the positive environmental impact of US-produced biofuels,” NOPA President and CEO Kailee Tkacz Buller said on 30 April.
“However, we are concerned the requirement to implement climate-smart ag practices simultaneously will limit this opportunity, particularly in parts of the country where it may not be possible to plant a cover crop or the cost to implement new practices is too steep.”
Since 2021, the association said NOPA members had invested over US$6bn in supporting a 1bn gallon (3.78bn litre) increase in capacity while reducing the soyabean supply chain carbon footprint by 19%.
“This was made possible through improved soil health and water quality, decreased chemical application, implementation of no till practices, expansion of cover crops and transitions from coal to natural gas fuel sources – all while improving yields,” Buller said.
The ethanol industry had also welcomed the announcement while also voicing concern that producers would have to follow specific agricultural practices to claim the tax credit, AP News wrote.
Meanwhile, environmentalists said they were concerned that a large share of the tax credits would go to ethanol and other biofuels rather than emerging cleaner fuels, the report said.
“The science matters and we are concerned this decision may have missed the mark, but we are carefully reviewing the details before reaching any final conclusions,” Mark Brownstein, a senior vice president for the Environmental Defense Fund, was quoted as saying.
In 2021, Biden set a goal of a 20% reduction in aviation emissions by 2030 as a step toward ‘net-zero emissions’ by 2050.
Although major airlines had invested in SAF and its use had grown rapidly in the last few years, it totalled just 15.8M gallons (59.8M litres) in 2022 – or less than 0.1% of all the fuel used by major US airlines, AP News wrote.
The White House has set a target of increasing production to 3bn gallons (11.35bn litres)/year by 2030.
