LINCOLN, Neb. (DTN) -- With President Joe Biden touring the country to tout government investments in rural America, a large segment of the nascent sustainable aviation fuel industry is calling on the administration to use what is considered the gold standard of carbon lifecycle models in determining tax-credit eligibility in the Inflation Reduction Act.
Until now, the call for using the U.S. Department of Energy's Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation, or GREET, model has come largely from biofuels and other ag groups, which have been clamoring for the change.
That changed this week when a group of 70 companies including major airlines, as well as ag equipment companies, ethanol producers, chemical and seed companies, and ag industry giants asked Treasury Secretary Janet Yellen to adopt the GREET model to use in determining how and which companies will receive tax credits.
The IRA's performance-based tax credit is considered a key piece in helping the SAF industry get off the ground.
"As you know, our ability to attract investment and build out U.S. SAF capacity will depend on how the program determines credit eligibility and valuation," the companies said to Yellen.
"This is especially true for a performance-based tax regime that ties the size of the incentive to a product's lifecycle carbon score. While the statute rightly recognizes the carbon lifecycle assessment model developed by the International Civil Aviation Organization as a method for determining SAF credit eligibility and valuation, Congress was right to explicitly allow for the use of 'any similar methodology.'"
The letter is signed by the likes of Archer Daniels Midland, American Airlines, Alaska Airlines, Bayer, Boeing, Bunge, CHS Inc., Delta Airlines, Poet LLC, John Deere, Green Plains Inc., Southwest Airlines and many others.
The companies said there are many reasons why the GREET model is important to developing SAF.
"First, Argonne GREET incorporates the latest biorefining and feedstock production efficiencies and is updated regularly," the companies stated in the letter.
"Accuracy, transparency and predictability are vital to securing private capital in a policy-driven marketplace. Second, and unlike the ICAO model, Argonne GREET allows users to account for climate-smart and regenerative-feedstock production practices. The IRA could unleash a new wave of U.S. bio-innovation practices but will not reach its full potential if those practices cannot be accounted for."
They said tying the SAF credit to just one international model "increases investment risk in direct contravention of the interagency SAF roadmap's goal to "reduce (industry) risk during scale-up and operations."
The companies said they are concerned the Treasury Department needs to carefully consider how important accurate lifecycle emissions modeling is to SAF development.
The GREET model is currently undergoing an update, the letter said, as a "normal course" of business and shouldn't be a reason for the administration to delay adoption.
"Our companies are already engaged in discussions and commercial efforts to ramp up SAF production and feedstocks to meet the goals set forth by the U.S. and global climate leaders," the companies said.
"With the right market signals, we can de-carbonize aviation and spur a new wave of U.S. innovation and clean energy jobs. However, modeling uncertainty today is a multi-year development problem due to the buildout schedules of SAF production facilities. To this end, we underscore the urgency for providing clarity on this issue as soon as possible to ensure the effective implementation and utilization of IRA Section 40B."
The companies urged Yellen to "immediately recognize" the latest GREET version.
"Unlike any new carbon-modeling regime that would invite further delay, recognizing Argonne GREET now gives SAF investors a well-settled, durable, and predictable framework for assessing program eligibility and risk without undercutting ongoing and future modeling updates," the letter said.
Read more on DTN:
"Vilsack: Ethanol's SAF Opportunity Big," https://www.dtnpf.com/…
Todd Neeley can be reached at email@example.com
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