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Biden Admin Delays SAF Credit
Guidance
HOUSTON (DTN) -- A lot of questions arose
Friday at Commodity Classic after Agriculture Secretary Tom Vilsack
announced the Biden administration had missed its deadline for issuing
guidance on the tax credits for Sustainable Aviation Fuel. In a press conference, Vilsack noted SAF is an industry in its infancy, and "the reality is that we're going to see sort of fits and starts" for tax credits involving 2023 and 2024. Still, the secretary noted there is only one commercial plant in operation producing 10 million gallons while the industry is trying to get to 3 billion gallons by 2030. Down the road, the SAF market could top 30 billion gallons annually. "I think it's fair to say that there can be multiple ways that you can create a more sustainable aviation fuel," Vilsack said. "The data has to be collected and analyzed and it has to be put through a modeling process to give you that clear and concise understanding of what's in and what isn't; that may seem like -- from where you all stand -- a relatively simple thing to do ..." Vilsack and biofuel supporters are intent on making the case that on-the-farm practices help lower the carbon footprint for aviation fuels rather than increase the lifecycle carbon emissions for those fuels. WHAT WILL ON-FARM VERIFICATION LOOK LIKE? A major question following Vilsack's announcement is just how much biofuel or SAF facilities will need to model or verify farming practices to qualify for the potentially lucrative tax credits. "These are complex issues. The verification and monitoring piece of climate-smart ag is a hard thing to do and do right," said Geoff Cooper, president and CEO of the Renewable Fuels Association. Cooper held a quick gathering on the Classic expo floor Friday with Vilsack and Regan, along with representatives from Growth Energy, Clean Fuels Alliance America, and Gevo, a company working to develop multiple SAF facilities. "We're not wild about the delay," Cooper told reporters afterward. "We felt March 1 was sort of etched in stone as a deadline, but if it takes more time to get it right ... if we get it right the first time, that's going to be more important than getting it fast." Yet, will on-farm verification of production practices end up as a spot-check verification or an overall aggregate assessment of the grain delivered to a plant? "Is it possible every load of corn has some kind of identity preservation to it?" Cooper speculated. "We don't think that's the direction they're going. We think there are other systems that are more efficient and simpler that can be implemented and still provide that level of assurance and verification that the IRS is looking for," Cooper said. Cooper said the IRS has been getting input from the biofuels industry on what is practical. "They've been very open and transparent and willing to listen to our input and thoughts on how to do this right," Cooper said. "And again, it's just taken a little longer than we all hoped for." If the IRS demands highly detailed identity preservation systems to track the feedstocks and farm practices, then it's going to take more time for biofuel plants to get those kinds of programs in place, Cooper said. A higher level, more aggregate approach to calculating on-farm practices will move things significantly quicker. "That's going to be easier for folks to figure out and would require much less administrative burden," Cooper said. INVESTMENT ON SIDELINE Until the GREET situation is sorted out, Cooper noted there is a lot of investment "on the sideline right now" waiting to see how fast SAF infrastructure can be deployed. That includes airlines that are at the heart of making the biofuels conversion work. Cooper said there are airlines ready to lock in long-term commitments for product purchases. "So, there are a lot of eyes watching this decision, which is why it's such an important one for us," Cooper said. Tom Willis, a sorghum producer from southwestern Kansas and a member of the Growth Energy board of directors, told Vilsack and Regan, "I would say that nobody likes to have things pushed down the road, but for 45Z to work, if I could deliver one message, OK, let's get it right. If it takes a little longer, let's get it right now." Willis added, "The SAF market can become a game changer because it allows me to incentivize production agriculture to use sustainable farming practices." OTHER BIOFUEL GROUPS WEIGH IN Growth Energy CEO Emily Skor said in a statement Friday the delay is frustrating, "but we're optimistic that it's happening for a productive reason. Ultimately, what's most important is getting it right and making sure that the resulting updates provide real opportunities for American farmers to contribute to the SAF market. Officials should follow the science behind Argonne-GREET, the most accurate model and the only one that accounts for all of the climate-smart innovations happening on farms across America's heartland." Skor said American ethanol producers "must be allowed to compete" in the SAF marketplace. "The alternative is making SAF from Brazilian sugar cane, or used cooking oil imported from China, instead of renewable crop-based feedstocks grown on American farms," she said. Brian Jennings, CEO of the American Coalition for Ethanol, said in a statement it is important to get the modeling right: "Since 40B and 45Z are based on lifecycle greenhouse gas emissions, every single point of carbon intensity has value, which makes it essential to get the details around any modifications to the GREET model right. That's why we wrote the interagency working group earlier this week to emphasize the importance of a GREET model for 40B and 45Z which includes meaningful carbon credits for climate-smart agriculture practices. We also cautioned the interagency working group against a final model approach which arbitrarily inflates land-use change penalties that have been disproven by real-world observations of what is actually occurring."
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