Sustainable Aviation Fuel’s Success Could Depend On New Tax Codes

The fiscal future of producing sustainable aviation fuel (SAF) could depend on how the tax codes associated with crop-based biofuels are written. That was the message delivered at a recent SAF conference in Minneapolis by Todd Becker, CEO of ethanol-fuel manufacturer Green Plains Inc.

According to a Bloomberg report, makers of crop-based biofuels are advocating for full tax credits under the Biden Administration’s Inflation Reduction Act. Controversy over this move stems from disagreements on the methods used for tracking and evaluating emissions from SAF, which is derived from multiple materials, including recycled cooking oils. According to Becker, the U.S. ethanol providers are depending on SAF production to stimulate demand in the future, in part to counteract an expected decline in auto fuel consumption with the increase in the number of electric cars on the roads.

Farmers and politicians representing agricultural states are pressing for the federal government to adopt the U.S. Energy Department model, which provides tax credits for carbon that remains in the soil even after the crops have been harvested. Environmental groups, on the other hand, favor a more “rigorous” model incorporating the effects of alterations in land use resulting from greater production of biofuels.

According to Bloomberg, this model could scuttle the hopes of those who favor the latter plan, as it could fail to qualify for the lucrative tax credits. Becker is facing headwinds from a group of shareholders, Bloomberg reported, as he “attempts to show investors his goal of expanding Green Plains beyond a traditional ethanol maker and into new markets including SAF will pay off.”