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Treasury SAF Tax Guidance Could Signal Take-off For Aviation Biofuel

Sustainable Aviation Fuel just got a huge boost from the Treasury Department that could clear a major new corn ethanol market for take-off. Treasury’s new tax guidance could create a 36-billion-gallon market for Sustainable Aviation Fuel made with biofuels like corn ethanol. The U.S. Treasury Department will use a modified version of the GREET model as a measurement to determine reductions in greenhouse gas emissions. The agency will use the model as it allocates tax credits for sustainable aviation fuels under the Inflation Reduction Act.

Renewable Fuels Association head Geoff Cooper says the Treasury’s accepted a key modeling tool to measure carbon intensity and eligibility for a make-or-break tax credit.

Cooper says, “We were looking for the inclusion of the Department of Energy’s GREET model in this guidance, and we were happy to see that it is, in fact, listed as an approved methodology for doing that analysis.”

GREET, which stands for the Greenhouse Gasses, Regulated Emissions, and Energy Use in Transportation, was developed by the U.S. Department of Energy to measure greenhouse emissions from the field to the car or plane.

The news follows Virgin Atlantic’s first-ever 100 percent SAF trans-Atlantic test flight from London to New York. Cooper says Treasury must still work out the details, but he’s hopeful about revisions expected by next March. Copper says, “We are cautiously optimistic. We’re hopeful that this guidance today is what will open the door to this opportunity for America’s ethanol producers, farmers, and airlines to jump into the aviation fuel marketplace.”

Cooper adds that SAF is a bulwark against a transition away from liquid fuels in the motor vehicle fleet. He says, “Demand for liquid fuels in light-duty transportation we do expect to be flat or declining over the long-term, as we do see greater fuel economy and more electrification in the light-duty fleet. So, we look at aviation as a potential huge new market opportunity.”

The COP 28 Climate Summit in Dubai agreed to triple the use of renewable fuels by 2030 and phase out fossil fuels by 2050. That is to keep the global average temperature from hitting a critical climate changing-benchmark.

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