Ethanol Climate Model Expected Next Week

Reuters reported Thursday that “the Biden administration is expected to release a climate model for its sustainable aviation fuel (SAF) subsidy program on Tuesday, two sources familiar with the matter said. The rule will dictate how ethanol producers can use climate-smart agriculture to qualify for tax credits in the production of SAF. The ethanol industry views SAF as a way to build demand for its products going forward, as gasoline consumption is expected to decline.”

Reuters’ Jarrett Renshaw wrote on X (formerly Twitter) that “the model will chart a path for ethanol producers to qualify for SAF tax credits, seen as a lifeline for the industry.”

What’s Expected in the Model

Renshaw reported in early April that “the Biden administration will release a preliminary climate model for its sustainable aviation fuel (SAF) subsidy program in the coming weeks that is more restrictive than what the corn-based ethanol industry had expected, two sources familiar with the matter told Reuters.”

The model “will make it more difficult for ethanol producers to take part in lucrative new U.S. tax credits for so-called sustainable aviation fuel, seen as crucial to the industry’s growth, the sources said,” according to Renshaw. “It will still leave them a pathway to the subsidies if they can partner with corn growers that use sustainable farming practices.”

“To access SAF subsidies, producers must demonstrate their feedstock is 50% lower in emissions than jet fuel,” Renshaw reported in early April. “Ethanol is expected to miss the 50% threshold after environmental penalties for converting land for fuel, something that would force the industry to rely on smart agriculture practices to get back above the credit threshold.”

The American Ag Network reported Thursday that “Renewable Fuels Association head Geoff Cooper is anxiously awaiting an answer from EPA and the energy and agriculture departments. Cooper says, ‘The last thing we’ve heard from USDA on that is now they’re saying, hopefully, we see this modified GREET model by the end of the month. So, we went from March first to maybe, the beginning of April, and now we’re hearing, it’s more likely the end of April.'”

“As for early reports relayed by Iowa Senator Chuck Grassley, the government may impose tough-to-screen growing conditions on feedstock corn and soybeans, Cooper says, ‘We don’t know…I don’t think we really have the details yet from USDA or from the administration on how they’re going to handle tracking of feedstocks and monitoring of farming practices and things like that. Those are some of the important details that we’re waiting on,'” the American Ag Network reported.