US ethanol industry expands focus to lower-carbon aviation sector (updated)
27/04/2023 21:47
(Adds detail on methodology in IRA in paragraph 8)
By Stephanie Kelly
NEW YORK, April 27 (Reuters) - The U.S. ethanol industry
is lobbying the Biden administration to ensure lower-carbon
aviation fuel made from ethanol will qualify for subsidies under
the Inflation Reduction Act, arguing such provisions are crucial
to meeting U.S. climate goals.
The campaign reflects the ethanol industry's desire to
expand into aviation following years of stagnant demand for the
corn-based fuel as an ingredient in gasoline, and projections
that motor fuel demand will fall in the future due to better
efficiency and the ascent of electric cars.
"Over the last 18 months, there's been a growing recognition
in our industry that long-term you've got to be looking at new
uses and new markets and nontraditional applications for ethanol
if we're going to continue to grow our industry and its value,"
said Geoff Cooper, president of the Renewable Fuels Association,
one of the organizations involved in the push.
Sustainable aviation fuel (SAF) is considered vital to
decarbonizing the hard-to-electrify airplane industry and the
Biden administration is targeting at least 3 billion gallons
(11.4 billion liters) of SAF production per year in the United
States by 2030 as part of its broader push to fight climate
change.
At issue is a requirement in the Biden administration's IRA
package, signed into law last year, that SAF yield a 50%
reduction in lifecycle emissions compared with petroleum-based
jet fuel before it can qualify for a $1.25 tax credit.
The lifecycle emissions impact of SAF can vary widely
depending on the feedstock that producers use to make it, which
can include a variety of substances ranging from soybean oil, to
used cooking oil and animal fat.
Different methodologies to calculate the emissions of SAF
can also yield different results.
The ethanol industry is asking the administration to use a
methodology developed by the Department of Energy called GREET
that shows ethanol to have a lighter carbon footprint as an SAF
feedstock than does the methodology used by the International
Civil Aviation Organization, which is mentioned in the IRA.
A coalition of ethanol industry representatives and allies
in the airlines industry, known as the "SAF BTC Coalition,"
wrote to the Treasury Department in February asking that the
administration use the Department of Energy methodology.
The coalition includes the Renewable Fuels Association,
Growth Energy, United Airlines Holdings Inc UAL.O , Delta Air
Lines Inc DAL.N , and SAF producers LanzaJet Inc and Gevo Inc
GEVO.O .
Cooper said the RFA has also had numerous conversations
across the Biden administration, including with the Department
of Agriculture, the Treasury Department and with the Federal
Aviation Administration about ethanol as a feedstock for SAF,
and specifically around ethanol's carbon intensity.
The effort mirrors ethanol industry lobbying over emissions
modeling during the creation of the Renewable Fuel Standard
roughly 15 years ago. That policy, which now mandates billions
of gallons of ethanol and other biofuels be blended into the
nation’s fuel pool, also requires a reduction in carbon
intensity compared to petroleum-based fuels.
HANDFUL OF PROJECTS
Ethanol groups say that their supply chain, which already
produces and transports huge volumes of ethanol per year, thanks
to the RFS, would be readily available to help boost production
of SAF to meet the administration's goals.
But so far, only a handful of ethanol-to-SAF projects have
been proposed.
LanzaJet, for example, is building in Georgia an
alcohol-to-jet production facility using ethanol as a feedstock
which is due to be completed in 2023, and which the company says
would be the world's first facility of its kind.
The project would produce 10 million gallons of SAF and
renewable diesel per year – a tiny fraction of the roughly 24.7
billion gallons of petroleum-based jet fuel now produced in the
U.S. annually.
Gevo has said it expects to develop, own, and operate
ethanol-to-jet plants to produce SAF. The company has agreements
with Delta Air Lines and American Airlines Group Inc AAL.O to
supply each with tens of millions of gallons of SAF per year for
several years starting in 2026.
Engineering and aerospace giant Honeywell International Inc
HON.O has also announced a new ethanol-to-jet fuel processing
technology.
(Reporting by Stephanie Kelly;
Editing by Marguerita Choy)
((Stephanie.Kelly@thomsonreuters.com; 646-223-4471; Reuters
Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))