Biofuel makers seeks changes to aviation fuel tax credit in Biden spending plan By Reuters
© Reuters. FILEPHOTO: Roger Hadley is seen harvesting corn from his fields using his John Deere combine. This aerial photo was taken over Woodburn in Indiana on October 16, 2020. REUTERS/Bing Guan
By Jarrett Renshaw
(Reuters) – Biofuel producers are seeking last-minute changes to a proposal to boost production of sustainable aviation fuel tucked in the Democrat’s $3.5 trillion spending plan that they say will allow the nation’s farmers to join the emerging multi-billion market.
These changes will change how carbon-saving benefits from producing fuel are calculated. This could make it difficult for the White House not to pick between environmental groups that believe the use of land and food supplies to fuel is a waste of earth’s resources and groups representing farm and agribusiness interests who want to profit from climate change efforts.
According to the White House, it is aiming to decrease aircraft’s greenhouse-gas emissions by 20 percent by 2020. This will be achieved by increasing sustainable aviation fuel use (SAF) by a significant amount. Current SAF is less than one percent of approximately 21.5 billion US gallons per year of jet fuel. But the White House wants to increase that number to 3 billion gallons in 2030.
The White House has supported an $1.75-$2 per gallon tax credit to sellers and buyers of sustainably produced fuel in order to offset its higher costs, which may be as high as three times that of regular fuel.
SAF is made currently from cooking oil and animal fat. Even supporters of higher goals consider it ambitious.
The biofuels groups argue that it is impossible without access to feedstocks like soybean oil or ethanol. They want the existing model to decide eligibility for the tax credit modified to permit them to take part.
Their argument is that the European-biased model used to calculate eligibility for the tax credit would be unfair and exaggerate the effects on farmland of the biofuel feedstocks. They also argue it will deny farmers the opportunity to access the lucrative credit. They want a U.S. Energy Department model that is more realistic.
Dustin Marquis from Marquis Energy, the director of government relations, stated that if we continue to use outdated modeling or we do not utilize our blessings it will be detrimental for all stakeholders, including farmers.
Brooke Coleman, executive director of the Advanced Biofuels Business Council, stated that White House goals are a “fantasy”. If current legislation is not amended, it will make them impossible to achieve.
Coleman explained that advanced biofuel production will be impossible if there isn’t a farm-based supply of feedstocks.
White House didn’t respond to a request for comment.
WHITE HOUSE TO CHOOSE
In order to be eligible for the tax credit, the current legislation says a producer would have to demonstrate a carbon score that is at least 50 percent better than the fossil fuel alternative.
Based on a European model created by International Civil Aviation Organization (ICAO), the scoring system will have land-use penalties three times greater than that of the U.S. Department of Energy’s GREET model.
Lead sponsor of tax credit legislation in Congress is Brad Schneider of Illinois. The House leader sponsor of the tax credit legislation is Brad Schneider, a Democratic Congressman from Illinois. He wants an amendment that references both models. However, it’s up to the White House to make the final decision.
Pedro Piris-Cabezas (director for Sustainable International Transport, Environmental Defense Fund) says that the ICAO model accounts accurately for both direct and indirect land-use changes due to increased demand for agricultural-based fuels like ethanol, soybeans and soybean oil.
Increased demand for crops leads to land being cleared both in America and overseas, as well as rain forests. The model gives farmers the opportunity to reduce their carbon emissions by using new technologies like carbon sequestration and clean energy.
Piris Cabezas explained that taxpayers should not be paying for anything that has a harmful effect on the environment.
He said that allowing the model to be relaxed or granting discretion will compromise the environment integrity of the plan, and could confuse an industry looking for billions in investment.