A coalition of industry groups representing producers of biodiesel, renewable diesel and sustainable aviation fuel (SAF), alongside producers of their associated feedstocks, said in a Tuesday letter to one of President Joe Biden's top advisors that the federal government should allow SAF producers to use a domestic emissions model as an alternative to the international model recommended by Congress in a tax credit scheme for the fuel.

The letter comes after Secretary of Agriculture Tom Vilsack announced last week at Growth Energy's Annual Hill Summit that his agency would invest up to $400,000 toward an analysis of one of the models in question--the Department of Energy's U.S. Department of Energy's Argonne National Laboratory's Greenhouse Gas and Regulated Emissions and Energy Use in Transportation (GREET) model, which has long been used in assessments of carbon intensity for biofuel tax credits. The letter was written by leaders of the Clean Fuels Alliance America, the American Soybean Association, the National Oilseed Producers Association, and the U.S. Canola Association.

And it comes as yet another among the cacophony of calls from peers throughout the industry on the subject--who have often implored the agency over the last year to formally recognize GREET alongside the UN's International Civil Aviation Organization's (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a method for gauging relative carbon intensity of SAF.

That modeling preference is key for producers of the biofuel, the group told John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, as the $1.25/gal tax credit for it established in the Inflation Reduction Act of 2022 scales up by 1ct for each additional percentage point in emissions reductions below 50% the carbon content of conventional jet fuel.

And since the more-rigorous CORSIA could prevent many producers of SAF from first-generation feedstocks to be excluded from that scaling reward system, the groups warned in their letter that they may not be able to "follow through on investments in SAF production" made in recent years.

"The ICAO model uses old, inaccurate farming practices data that would effectively prevent sustainable aviation fuels made from crops such as soybean and canola oil from qualifying for the credit," the groups said in their letter.

It would therefore be "inconceivable," the letter continued, that Congress would create such a scheme "that would rely solely on an outdated UN model that arbitrarily discriminates against U.S. farmers and their feedstocks."

The biofuels industry has been pushing for the Treasury to name GREET in its guidance since the job was delegated to the agency upon Biden's signing of the Inflation Reduction Act into law in August 2022. Under the massive omni-bus measure, the federal government said it would offer a tax credit for SAF production through Dec. 31, 2024.

The scalable nature of the credit quickly arose as a source of complication for the novel tax scheme, as the IRA, in a departure from traditional biofuel tax credits, did not solely leave the job of assessing the CI of SAF to DOE's GREET.

Instead Congress chose to delegate that process to CORSIA's ICAO or "any other similar methodology" established under the Clean Air Act.

But due to its less stringent assessments of the associated land use change from production of first-generation feedstocks, the biofuels industry has over the past year expressed its trepidation toward CORSIA and called on the Treasury to explicitly name GREET as an acceptable alternative model for the tax scheme.

And while the influence of those calls has been uncertain as Treasury completes its guidance behind the scenes, Vilsack's comments last week came as a temporary balm to industry proponents uncertain over the decision.

Growth Energy CEO Emily Skor said in a Monday statement that it was "encouraging" to hear that efforts were being taken to resolve the dispute.

"Now comes the most important step--taking concrete actions to ensure America doesn't miss this opportunity for homegrown biofuels to lead us into a low-carbon future," Skor said.

And that step could be sooner than some expect, as Vilsack said last week that a final decision from Treasury should be due "sometime between now and the end of the year."


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--Reporting by Patrick Newkumet, pnewkumet@opisnet.com; editing by Jordan Godwin, jgodwin@opisnet.com


(END) Dow Jones Newswires

09-19-23 1810ET