08/02/2023 - Philip's Carbon Market News

Biden Administration split over ethanol's role

Reuters reports - The Biden administration is divided over whether to grant a request from the U.S. biofuel industry that would make it easier for sustainable aviation fuel made from corn-based ethanol to qualify for subsidies under the White House's signature climate law, according to two sources familiar with the discussions.

The indecision has touched off a lobbying battle between two big stakeholders - Farm Belt backers who view sustainable aviation fuel (SAF) as crucial to ethanol's growth and environmental advocates who say clearing land to grow crops for fuel is counterproductive to solving global warming. At issue is a requirement in last year's Inflation Reduction Act (IRA) that SAF producers seeking tax credits must demonstrate with an approved scientific model that their fuel generates 50% less greenhouse gas emissions over its life cycle than petroleum fuel.

The Biden administration has a goal to supply at least 3 billion gallons of SAF per year by 2030 as part of its broader effort to decarbonize the transport sector. By 2050, it hopes the SAF industry - which is now miniscule - will meet 100% of aviation fuel demand at around 35 billion gallons per year.