Jan 27 (Reuters) - Tax incentives for sustainable aviation
fuel (SAF) in U.S. President Biden's stalled Build Back Better
legislation are not enough for oil refiner Valero Energy Corp
to consider producing it instead of renewable diesel,
executives said Thursday.
Biofuel producers successfully lobbied for a tax credit for
low carbon jet fuel, made from waste and vegetable oils, to be
included in Biden's $1.7 trillion spending package.
SAF generally produces up to 70% less carbon than fossil
fuels but is more costly to produce without tax credits,
particularly as current production volumes are very low at less
than 1% of total jet fuel demand. The White House is targeting
20% lower aviation emissions by 2030.
Refiners such as Valero have been exploring the production
of low carbon jet fuel at their petroleum and biofuel
The latest version of the Build Back Better legislation put
tax credits for SAF between $1.25 to $1.75 a gallon, depending
on the feedstock used.
Valero, which produces renewable diesel as part of its joint
venture with Diamond Green Diesel, said there is still a 70-cent
a gallon gap to make its production economic relative to
"The incentive level proposed in that bill was not
sufficient to attract additional investment to make SAF versus
the base case of producing renewable diesel with an existing
unit," said Martin Parrish, senior vice president of alternative
fuels at Valero, on the company's fourth-quarter earnings call.
Valero is still exploring SAF production through its own
engineering process, Parrish added.
"We're still confident that SAF production is a question of
'when' and not 'if,'" he said.
U.S. Senator Joe Manchin, a conservative Democrat from West
Virginia, pulled his support from the spending plan in December
after citing concerns about the deficit and inflation. Biden has
said he now must consider a pared down spending bill to get
(Reporting by Laura Sanicola; Editing by Richard Chang)