Biden backs ethanol industry on low-emission aviation fuel tax credits

The Biden administration said on Friday it will recognize a methodology favored by the ethanol industry in guidance to companies looking to claim tax credits for sustainable aviation fuel, a pivotal win for the politically powerful US corn lobby. But the administration will also update the methodology by March 1, which leaves some uncertainty for corn-based ethanol producers, as it could ultimately tighten requirements around SAF feedstocks. The global aviation industry, which is expected to reap net profits of over $20b in 2023 and accounts for about 2% of global energy-related carbon dioxide emissions, is one of the hardest sectors to decarbonize, as the equipment is not easy to electrify. Airlines argue that incentives are needed to boost the market for SAF, which can generate 50% less greenhouse gas emissions over its lifecycle than petroleum fuel, but is typically two to three times more expensive than fossil-fuel-based jet fuel. For months, the Biden administration has been divided over whether to recognize the Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model. That model enables ethanol-based SAF to qualify for tax credits under the Inflation Reduction Act, President Joe Biden's signature climate law. Ethanol producers and corn farmers in rural states such as Iowa and Illinois have been awaiting updates, as the industry sees SAF as one of the only routes to grow ethanol demand amid rising sales of electric vehicles.<br/>