In a move aimed at reducing air travel’s greenhouse gas emissions, the Biden administration on Tuesday issued new guidelines for how fuel producers — and in particular, corn ethanol producers — could qualify for tax credits as part of a plan to increase the supply of so-called sustainable aviation fuel.
It’s especially difficult to move airplanes away from traditional jet fuel because there are so few affordable alternatives that can get a plane off the ground. The global aviation sector accounts for about 3 percent of total emissions worldwide, and most jet fuel today is produced from fossil fuels.
The proposed guidelines could have significant implications for corn-producing states. The guidelines offer incentives to farmers to use climate-friendly methods to grow crops, such as corn or soybeans, that are used in alternative fuels such as ethanol.
President Biden’s 2022 Inflation Reduction Act offered federal tax credits for sustainable aviation fuel, industry jargon for fossil-free jet fuel, that reduced greenhouse gas emissions by at least 50 percent. For months, federal officials have been evaluating research to decide how to measure whether various biofuel-based alternatives meet that standard.
Sustainable aviation fuel is already occasionally blended with traditional jet fuel, albeit in small, single-digit percentages. That scale is well below the government’s goal of 3 billion gallons a year by 2030. Currently, most of it is made from used cooking oil and costs two to four times more than jet fuel.
Almost 40 percent of U.S. corn production is already used to distill ethanol fuel, which is blended into gasoline. And while ethanol could practically be blended into jet fuel now, uncertainty about how its production could meet stringent carbon emissions and land-use requirements has prevented its inclusion in the mix. Corn production is also water-intensive, and a New York Times investigation last year found that, in some places, it draws from sensitive aquifers.
Biden administration officials have introduced a new pilot program for corn ethanol to be used as jet fuel that could qualify for tax credits if used in combination with certain climate-friendly agricultural practices. They include no-till farming, which minimizes erosion, and covering the soil with crops that leave behind organic matter in the dirt. The program sets similar guidelines for soybeans.
The new formula for claiming tax credits – which runs to 40 pages, is highly technical and still needs to be finalized – will also look at whether producers use carbon capture and storage, low-emission natural gas and renewable electricity in their processes.
“The Act’s incentives help scale up production of low-carbon fuels and reduce emissions from the aviation sector, one of the most difficult sectors of our economy to transition,” Treasury Secretary Janet L. Yellen said in a news release.
Agriculture Secretary Tom Vilsack said the guidelines recognized “the important role farmers can play in reducing greenhouse gas emissions and begins to reward them through this contribution to the production of new fuels.”
Environmental groups were skeptical that some of the practices outlined in the new guidelines are as beneficial to preventing climate change as government officials say. Mark Brownstein, senior vice president at the Environmental Defense Fund, said he was reviewing the proposed guidelines but that “we are concerned that this decision may have missed the mark.”
The powerful corn and ethanol industries were watching the Biden administration’s announcement closely to understand how much corn farmers and ethanol producers would have to adjust and how much detailed recordkeeping would be required to take advantage of the tax credits.
“We understand of course that a level of rigor will be needed,” said Geoff Cooper, president of the Renewable Fuels Association, a leading ethanol lobby. “It’s a balancing act. And there is no way the US will produce 3 billion gallons by 2030 unless corn ethanol is part of that picture.”
While the United States has set ambitious targets for production, building a supply chain will take years. There is not yet a large-scale sustainable jet fuel facility in the United States. The Biden administration’s stated goal is to increase production quickly enough to meet all domestic jet fuel demand by 2050.
Europe is at least a little ahead. The European Union is to introduce a blending mandate requiring airports to supply jet fuel in 2% blends from 2025.
Ethanol producers are looking for a new outlet for their product as the use of electric vehicles reduces demand for gasoline. And with national elections in the United States scheduled for November, politicians can benefit from expanding incentives that are politically popular in the Corn Belt states.
On Monday, major airlines such as American, Alaska, Hawaiian, JetBlue and United announced collaboration with dozens of other organizations, including agricultural businesses, aircraft manufacturers, airports, labor unions and biofuel producers, aimed at scaling up sustainable aviation fuel production. The group “believes in the importance of ethanol as a tool to help decarbonize our industry,” said Lauren Riley, United Airlines’ chief sustainability officer.