(WASHINGTON D.C.)– On Friday, the U.S. Treasury Department has issued guidance that they will be adopting the GREET model as one of the methodologies used to determine eligibility for the Sustainable Aviation Fuel (SAF) Tax Credit. The SAF Tax Credit was established under the Inflation Reduction Act. The decision by the U.S. Treasury Department has been widely anticipated by many in the ethanol/biofuel and agriculture industry. Various groups have reacted to the news; read more on this developing story below:
NCGA Pleased to See Treasury Embrace GREET Model
The U.S. Department of Treasury announced today that it will use a modified version of the GREET model as a measurement for determining reductions in greenhouse gas emissions as the agency allocates tax credits for sustainable aviation fuels under the recently passed Inflation Reduction Act.
The National Corn Growers Association (NCGA) said it is pleased that Treasury is embracing the model.
“Given that GREET was created by the U.S. government and is widely respected for its ability to measure reductions in greenhouse gas emissions from the farm to the plane, we are encouraged that Treasury will adopt some version of this model,” said Minnesota farmer and NCGA President Harold Wolle. “At the end of the day, we are eager to help the aviation sector lower its carbon footprint, and we look forward to working with the involved agencies over the coming months to ensure the final model helps us achieve that goal.”
The decision by Treasury Secretary Janet Yellen has been eagerly anticipated since the Inflation Reduction Act was passed in 2022. The law allocates tax credits for biofuels that can demonstrate that they cut greenhouse gas emissions by 50% or more.
GREET, which stands for the Greenhouse Gases, 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.
RFA Welcomes Recognition of GREET Model in SAF Tax Credit Guidance |
| The U.S. Treasury Department today released guidance regarding the implementation of the Inflation Reduction Act’s sustainable aviation fuel (SAF) tax credit. The guidance clarifies that a soon-to-be-updated version of the Department of Energy’s GREET model will be among the methodologies used to determine eligibility for the tax credit. The administration has committed to finishing the GREET model updates by March 1, 2024.
In response to the guidance, Renewable Fuels Association President and CEO Geoff Cooper provided the following statement: “While there are important carbon modeling updates and details that still need to be worked out, we are cautiously optimistic that today’s guidance could open the door to an enormous opportunity for America’s farmers, ethanol producers and airlines. The Biden administration is recognizing that the best way to meet ambitious SAF targets is to maximize marketplace flexibility, make use of existing low-carbon fuel assets, and stimulate innovation and competition across the entire supply chain. “RFA applauds the Treasury Department for ensuring the best available science and data on SAF will be recognized. By specifying that the GREET model will be an acceptable methodology for determining eligibility, Treasury has strengthened the credibility, transparency, and scientific robustness of the SAF tax credit program. We also thank Agriculture Secretary Tom Vilsack and his team at USDA for their continuing efforts to ensure climate-smart farming practices, carbon capture and sequestration, and other technology advances will be recognized in the final SAF tax credit program. “Grain-based ethanol is, hands down, the most abundant and most cost-competitive source for large-scale SAF production. With nearly 200 ethanol biorefineries spread across the country, a well-established transportation and storage network, and the capacity to produce almost 18 billion gallons of low-carbon renewable fuel, the puzzle pieces are already in place to ramp up ethanol-to-jet fuel production. Today’s guidance is a step in the right direction and gives us hope that the U.S. ethanol industry will be able to participate in this remarkable opportunity to decarbonize the aviation sector.” Cooper said RFA will remain actively engaged with the Biden administration as the next steps are taken to finalize the GREET model revisions, develop additional SAF pathways, and iron out other implementation details. Background: Over the past several years, RFA has been working diligently to ensure ethanol is able to participate in future SAF opportunities.
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Growth Energy Statement on Treasury Department’s Guidance for SAF Tax Credit |
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WASHINGTON, D.C.–Today the U.S. Treasury Department issued guidance on eligibility for the Sustainable Aviation Fuel (SAF) tax credit enacted in Section 40B of the Inflation Reduction Act (IRA). Growth Energy CEO Emily Skor issued the following statement in response: “In an important first step, the Biden administration has recognized the merits of using the GREET model in its guidance for eligibility in the 40B Sustainable Aviation Fuel (SAF) tax credit. America’s biofuel producers and their farm partners continue to innovate with myriad technologies that are further reducing the carbon intensity of low-carbon bioethanol, and we are ready to lead the aviation sector into a lower-carbon future. This guidance signals our potential ability to participate in the SAF market.
“New investments in SAF are highly dependent on the pending GREET modeling updates, however, and the industry needs more clarity around the proposed changes before we have certainty around market access. Today, under this guidance, SAF produced from other biofuels including Brazilian cane bioethanol qualifies for the 40B tax credit, but the path for American-made corn-based bioethanol remains unclear. U.S. tax policy shouldn’t advantage foreign firms over domestic ones.
“Any GREET update must follow sound science and account for the proven environmental benefits of American-made bioethanol. The Department of Energy’s Argonne-GREET model —widely accepted as the gold standard carbon model by the nation’s scientists, academics, and researchers—already reflects the latest science showing bioethanol’s limited impact on land use and its significant reduction in greenhouse gas (GHG) emissions. The Biden administration should hold fast to this widely accepted science and ignore those who seek to limit SAF opportunities by pushing an inaccurate and outdated narrative about bioethanol.
“We will work with the Biden administration to ensure that these GREET updates reflect the most up to date science and environmental benefits of bioethanol as we seek to meet the ambitious goals of the president’s SAF Grand Challenge.”
Background
Section 40B of the Inflation Reduction Act (IRA) provided for two years of a sustainable aviation fuel (SAF) tax credit. In 2023 and 2024 SAF will qualify for a standalone blenders credit (40B) if the fuel reduces lifecycle greenhouse gas emissions by at least 50 percent. The value of this credit is determined on a sliding scale, equal to $1.25 plus an additional $0.01 for each percentage point by which the lifecycle emissions reduction of such fuel exceeds 50 percent.
Under the current version of the Department of Energy Argonne National Lab’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model for lifecycle analysis, corn-based bioethanol achieves carbon emissions reductions sufficient to qualify for Section 40B credits. Growth Energy has repeatedly engaged with various federal agencies—including the U.S. Department of the Treasury and the Internal Revenue Service—urging officials there to fully adopt the model.
GREET presents the most accurate picture of the environmental benefits of corn-based bioethanol because it accounts for the differences in carbon intensity that biorefineries can achieve when deploying climate-smart agriculture techniques and carbon capture, usage, and sequestration technology. Growth Energy and the American biofuels industry are not alone in their support for GREET—a number of major airlines and other large companies in the aviation sector have similarly voiced support for the model to federal officials. |
Clean Fuels Welcomes IRS Guidance on Sustainable Aviation Fuel IncentiveIndustry will continue working to keep the GREET model up to date. |
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WASHINGTON, DC – Today, Clean Fuels Alliance America welcomed guidance from the U.S. Department of the Treasury and Internal Revenue Service (IRS) on the new §40B Sustainable Aviation Fuel (SAF) Credit established by the Inflation Reduction Act (IRA). The guidance enables companies currently producing SAF under the Renewable Fuel Standard (RFS) to access the base value of the tax incentive. However, it defers allowing producers to use the Argonne National Laboratory’s Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model to calculate additional credit. The U.S. Department of Energy is expected next year to issue a modified GREET model for use in association with the credit. “We appreciate President Biden recognizing that American farmers and clean fuel producers will be providing essentially all of the sustainable aviation fuel available over the next 20 years to meet the administration’s Grand Challenge,” said Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels. “Enabling U.S. taxpayers to access a lifecycle model developed by U.S. national labs is clearly the best way to provide assurance to fuel producers and meet the demand for low-carbon fuels from airlines and passengers.” Kovarik continued, “We look forward to continuing our productive working relationship with Argonne National Labs, providing real-world data on fuel production and feedstocks, and ensuring the GREET model remains up to date. We will be watching closely for any updates to the model to ensure they accurately reflect the carbon reductions that clean fuels are already achieving.” |
American Carbon Alliance Releases Statement on Adoption of GREET Model
URBANDALE, Iowa (Dec. 15, 2023) – The American Carbon Alliance (ACA) released the following statement from ACA CEO Tom Buis, on the U.S. Treasury’s adoption of the U.S. Department of Energy’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model in the evaluation of the life cycle emissions impact of biofuels, specifically within the realm of sustainable aviation fuel (SAF) production:
“Ethanol is the largest sustainable low-carbon fuel that yields advantages beyond conventional energy uses. GREET is the most realistic model in measuring the carbon intensity of biofuels. The American-made GREET model will allow ethanol to serve as the primary feedstock for Sustainable Aviation Fuel, and help the U.S. to become energy independent in the very near future. This change is the right decision and benefits American aviation, boosts energy security, and enhances our path to independence from foreign oil suppliers.”
