Illustration: Maura Losch/Axios
Biofuels will be allowed to qualify for the IRA's tax credit for producing "sustainable" aviation fuel, the Treasury Department announced Friday.
Why it matters: It's a win for Big Ag, major airlines and farm-state lawmakers — all of whom leaned hard on Treasury to allow flexibility in what fuels can qualify for the credit.
- But it's likely to invite criticism from environmentalists and others that may wage legal challenges.
Driving the news: The department released guidance for the credit this morning that will allow a wide variety of crop-based fuels to qualify.
- It's doing so by allowing the emissions of these fuels to be measured with a model — known as GREET — previously used for the federal renewable fuel standard.
- GREET in its current form is a less stringent model than the international standard explicitly referenced in the IRA for measuring emissions.
- The law did say alternate models could be used, but they must be "similar."
Catch up quick: The IRA created a tax break for companies producing "sustainable" airplane fuel, or SAF.
- To qualify, a firm must certify its products result in at least 50% fewer lifecycle emissions than traditional jet fuel.
- A bipartisan barrage of pro-ag lobbying followed suit, as senators, ethanol producers, airliners and more pleaded for the GREET model to be considered "similar."
- That's despite concerns that opening the credit to lots of biofuel might complicate any climate benefits of the program.
The other side: The National Association of Truck Stop Operators recently told Axios it might sue over Treasury using GREET because it could divert fuel products away from their members.
- "I anticipate that if Treasury comes out with guidance or any type of policy that threatens to prompt feedstock to migrate away from over-the-road use cases, towards aviation, I think it's safe to assume that we'll litigate that," said NATSO legislative director David Fialkov.
What we're watching: The Biden team promises to have an updated version of the GREET model for the tax credit by sometime in March.
