SEASON'S GREETINGS — Get ready for a new Inflation Reduction Act tax credit fight. Treasury Department guidance expected out in the next few weeks will establish a tax credit of up to $1.75 per gallon for sustainable aviation fuel. Exactly how much of a spur it will be for various types of fuels depends on the emissions model that Treasury decides to go with, as Brian Dabbs reports for POLITICO's E&E News. Environmentalists and farmers are sparring over the way the rule will calculate emissions generated from switching cropland over to biofuels instead. Biofuels producers want Treasury to use a homegrown model known as U.S. GREET that penalizes them less for land-use change, while green groups prefer an international methodology known as CORSIA that they argue takes better account of emissions-spiking activities such as removal of trees and wetlands. “We see strong benefits with aligning with that international standard,” said Andrew Chen, principal for climate-aligned industries at the environmental group RMI. “The ultimate risk is inaccurate accounting, meaning that you thought you did this much good but you actually did a different amount.” Underlying the debate is the question of whether sustainable aviation fuel should come from food crops — which, in the U.S., means corn-based ethanol. Many environmentalists argue that only waste products such as corn leaves and stalks — not ethanol — should qualify in order to limit environmental degradation, increase farm efficiency and preserve global food supply. Ethanol producers say it's fine. “From a U.S. interest perspective, we have one primary advantage globally," said Brook Coleman, executive director of the Advanced Biofuels Business Council. "It’s arable land.” The Inflation Reduction Act calls on Treasury to authorize the international tool, along with “any similar methodology” that meets Clean Air Act requirements. That could potentially include GREET. If Treasury allows it in, ethanol producers win; if not, environmentalists win. Putting it in context: The Federal Aviation Administration set an original 2012 goal for U.S. airlines to use 1 billion gallons of sustainable aviation fuel annually by 2018. The Biden administration upped the target in 2021 to 3 billion gallons per year by 2030. Last year, U.S. production reached 15.8 million gallons — or less than 0.1 percent of total fuel consumed by U.S. airlines. And, of course, Republicans are suggesting this might all just be a massive waste of money. (A Government Accountability Office report last month faults the Biden administration for not establishing “performance measures to monitor, evaluate, and report the results” of all federal tax and grant programs that could help deliver on the 3-billion-gallon-a-year White House target.) They're wielding the specter of Solyndra, the solar-panel company that went bankrupt after receiving $525 million in loan guarantees from the 2009 American Recovery and Reinvestment Act. “SAF risks becoming the new Solyndra,” Sen. Ted Cruz (R-Texas) said last week at a Senate Commerce Committee hearing.
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