Agriculture Secretary Tom Vilsack said Friday the Biden administration would need several more weeks to finalize its carbon assessment of feedstocks for sustainable aviation fuel, but he continued to express confidence that most of the product would ultimately come from agricultural sources.
Friday was the administration’s self-imposed deadline for finalizing details of the modified GREET model that will be used to assess the eligibility of feedstocks including corn ethanol and vegetable oils for new tax credits administered by the Internal Revenue Service. The delay revolves around finalizing details of measuring and verifying the impact of climate-smart farming practices on greenhouse gas emissions.
“We're going to take a few more weeks, and I mean, weeks, not months, to make sure that the guidance is correct, that it acknowledges the work that's being done in reducing greenhouse gas emissions relative to transportation fuels, and the good work that's being done out in the field to embrace climate-smart practices,” Vilsack told attendees of Commodity Classic in Houston.
“I'm confident that at the end of the day, folks will understand and appreciate what President Biden has understood when he said in his view, 95% of sustainable aviation fuel will be connected and produced by farmers over the next 20 years.”
An announcement on details of the updated GREET model had been eagerly anticipated by farm group leaders this week. Commodity Classic, which drew 11,000 people this year, is the annual meeting and trade show for the grain and oilseed sectors and farm equipment manufacturers.
Geoff Cooper, president and CEO of the Renewable Fuels Association, said investors in SAF plants are holding back funding until they see what is going to be required to qualify for the tax credits.
One of the key issues to be addressed is what industry will be required to do to verify the carbon intensity of crops that would go into making SAF, said Cooper, one of several industry officials who met with Vilsack and EPA Administrator Michael Regan on the Classic trade show floor after Vilsack's announcement.
Cooper said the industry doesn't expect rules to require extensive tracking of commodities. "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 that the IRS is going to be looking for," Cooper told reporters.
Tom Willis, who is on the board of the National Sorghum Producers and CEO of Kansas-based ethanol producer Conestoga Energy Partners, told Vilsack and Regan that the tax credits were too important to rush the final details. “If I could deliver one message to both of you. Let's get it right. If it takes a little longer. Let's get it right,” he said.
In December, the Treasury Department issued guidance that will allow the carbon intensity of SAF feedstocks to be calculated using an updated version of the relatively ag-friendly GREET model developed by the Energy Department. But there has been some concern among farm groups and biofuel industry officials about changes to the GREET emissions factors that are used to calculate a product’s carbon intensity.
A new tax credit, known as 40B for its section of tax law, took effect in 2023 and runs through this year. The provision, created by the Inflation Reduction Act, was intended to serve as a bridge to a broader clean fuels production credit that takes effect in 2025 under the law. Key provisions in the guidance are expected to carry over to the clean fuels credit, known as 45Z.
To qualify for the 40B credit, SAF can have no more than 50% of the emissions of petroleum-based jet fuel.
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Vilsack provided little details of any ongoing inter-agency disputes over the GREET update, but he said it was important to “make sure that the latest and best information is utilized in the modeling that will inform the Treasury guidance.”
He said he “wanted to make sure” that feedstocks developed through climate-smart practices such as no-till cover crops and energy-efficient fertilizer qualify for SAF incentives.
"This is going to take a matter of weeks to sort of get through this process," he said. "And once you have that clear, concise understanding of what is in and out, then you also have to have a process by which you can verify that what you say you're doing, you're actually doing. That's a whole different conversation. So it's just – it's complicated."
Growth Energy CEO Emily Skor calling the delay "frustrating," but adding, "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."
She continued: “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. American bioethanol 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.”
In his speech, Vilsack also announced that he would be hosting a meeting later this month with his counterparts in Mexico and Canada and would raise concerns about Mexico’s ban on biotech corn and Canada’s barriers to U.S. dairy exports. Vilsack said the meeting would likely be in Colorado.
Vilsack also warned farmers that they need to diversify export markets away from China. At the same time, he called for a more “nuanced conversation” about foreign farmland ownership.
“The Chinese are obviously paying attention” to the U.S. political debate about foreign farmland, he said. “Just a reminder, they are our No. 1 export market,” he said.
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This story is being updated throughout the day (March 1)
