Green jet fuel guidance includes corn question

May 16, 2024

President Joe Biden’s administration issued long-awaited guidance on the production of green jet fuel, paving the way for U.S. corn ethanol producers to profit from the new market.

The Treasury Department on April 30 released guidance on the tax credit available for producers of sustainable aviation fuel, or SAF.

U.S. biofuel producers have lobbied the government for months to ensure corn ethanol qualifies for the credit.

The industry is counting on SAF to make up for an expected loss of ethanol demand from autos due to the rise of electric vehicles.

Biden is calling for a surge in U.S. production of SAF by 2030 to clean up an industry that’s tough to electrify. U.S. commercial aviation consumes about 10% of all transportation energy and generates 2% of the country’s carbon dioxide pollution, with those figures growing faster than any other industry, according to John Podesta, a senior adviser to the White House on climate policy.

The tax credit provides incentives for the production of SAF that achieves a life-cycle greenhouse gas emissions reduction of at least 50% versus petroleum-based jet fuel, the Treasury Department said.

The guidance also outlines a so-called safe harbor for SAF makers who use ethanol made from corn grown using certain emission-reduction practices, including use of “energy efficient” fertilizer.

It means the biofuel makers would qualify for the credit without fear of an IRS audit or penalty, U.S. Agriculture Secretary Tom Vilsack said. The same would apply to green jet fuel made from soybeans, he said.

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