A letter supporting a regulatory reform that would facilitate the qualification of sustainable aviation fuel (SAF) derived from corn-based ethanol for government subsidies was sent to the Biden administration on Wednesday by ethanol companies and major U.S. airlines.
Qualification Criteria for SAF Subsidies
President Joe Biden’s centrepiece climate measure, the Inflation Reduction Act, mandates that SAF manufacturers demonstrate that their fuel reduces emissions over gasoline by 50% using an emissions model created by the International Civil Aviation Organization (ICAO) or a “similar methodology” in order to be eligible for subsidies.
In the letter to Treasury Secretary Janet Yellen, airlines such as Delta (DAL.N), JetBlue (JBLU.O), and Southwest (LUV.N), along with businesses like GE Aerospace (GE.N) and Boeing (BA.N), requested that the administration permit the use of the Department of Energy’s Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model in addition to the one created by ICAO.
Request to Include the GREET Model
The ethanol sector thinks that in order to secure IRA subsidies, the GREET model has a higher chance of achieving the necessary climate benefits than the ICAO approach.
Environmental organisations counter that the GREET model understates the emissions of ethanol, especially those resulting from removing land for the crops needed to produce ethanol.
The Potential for Decarbonizing Aviation
“We can decarbonize aviation and launch a new generation of American innovation and clean energy jobs with the correct market signals. But modelling uncertainty today is a multiyear development problem,” the letter stated. Poet and Archer-Daniels-Midland Co (ADM.N), two ethanol businesses, also signed it.
The letter was sent on the same day as Biden and his team began a two-week tour of rural America, which will begin on Wednesday in Minnesota.
The Treasury has the last say on the modelling matter, but according to earlier Reuters reporting, the departments of agriculture, the environment, and energy have also weighed in and the White House has intervened to mediate.
USDA’s Upgrading of the GREET Model
In order to guarantee that ethanol is qualified as a SAF feedstock, the USDA announced in September that it is upgrading the GREET model.
Previous reporting from Reuters indicates that a Treasury decision is anticipated in December.
Additionally, SpiceJet and Air India, two Indian airlines, are among the six that have effectively finished the International Air Transport Association’s (IATA) risk-based approach assessment. IATA is the largest trade association for international airlines.
